Tony Fernandes to play bigger role in turning AirAsia X around

KUALA LUMPUR: AirAsia X Bhd founder Tan Sri Tony Fernandes has denied that the low-cost medium haul airline is facing management issues, although he expects to play a bigger role in turning the airline around with his partner Datuk Kamarudin Meranun.

He also brushed off media reports that AirAsia X was facing problems paying salaries and allowances to its staff.

“There are no plans to revamp the current management at AirAsia X. Instead, it is going to be a hands-on approach (from now on). I have also not been in Malaysia much, and it is time to return so that we can give the management a helping hand.

“I just want to clarify that we have no problems paying our staff’s salaries and loans. You try and default a loan and see what happens, I will be wearing a cap with no hair (then),” he told reporters after launching the AirAsia Asean Pass.

“The airline industry goes through ups and downs and we are always able to go through them. We will find solutions and are not giving up. This year has also been a tough year for the aviation industry, especially for an airline based in Malaysia,” Fernandes added.

As part of its five-pronged strategy to turn around the airline, AirAsia X will defer delivery of its new planes and halt its capacity expansion for the time being.

“We have a plan in place, but essentially we have four things we are working on. We are looking for an opportunity to increase revenue which will involve a revision of revenue strategy, second we feel there is upside in ancillary income.

“Third, there is a bit of capacity management issue and we will slow down growth a little bit here and we will take a breather here because there has been a breakneck expansion in the last few years. We now have 23 aircraft, which is a good number,” he added.

He said AirAsia X would defer the delivery of the planes that it had earlier ordered by “two to three years” and would conduct a route-rationalisation initiative that included Australia, as most losses were seen in that sector.

“However, we are now also seeing a strong rebound in demand from China (normalising) which earlier dropped pursuant to the twin air tragedies. And the rest of the market has been fairly good. We believe 2015 will be a very good year for AirAsia X,” Fernandes said.

To cut cost, the low-cost airline will also merge some departments to reduce duplicity within the group with its sister company AirAsia Bhd.

Fernandes said AirAsia X was also in a key position to capitalise on the declining fuel price trend to enable cost synergies within the group, as fuel constituted around half of its costs. “Our profits are very much influenced by the price of oil and this is something which is going very much in our favour,” he said.

For 2015, AirAsia X had thus far only hedged 12% of its fuel requirements while for the fourth quarter it had hedged half.

“So we have a 50% upside in the fourth quarter. We usually hedge according to demand but we took a breather from that given declining prices. I have been consistently saying that oil prices are going to go down,” Fernandes said, adding that there were no material plans yet to cut fuel surcharge.

He also noted that the company was expected return to profitability in the full financial year 2015 (FY15) ending Dec 31.

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