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2019 Q3 Financial Results for Airasia Group/Airasia X

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MFRS 16 effect keeps AirAsia X in the red for 3Q

KUALA LUMPUR (Nov 13): Low-cost long-haul carrier AirAsia X Bhd (AAX) saw its third-quarter net loss increase 16.4% year-on-year (y-o-y) as it recognised depreciation on the assets leased under the Malaysian Financial Reporting Standard 16 (MFRS 16).

Net loss widened to RM229.89 million for the three months ended Sept 30, 2019 (3QFY19) from RM197.47 million a year ago. This resulted in a bigger loss per share of 5.5 sen per share for 3QFY19 compared with 4.8 sen per share for 3QFY18.

Revenue for the quarter fell 6.4% to RM1.01 billion, from RM1.08 billion a year ago.

According to a filing with Bursa Malaysia today, AAX reported a depreciation of RM234.52 million in 3QFY19 compared with RM48.63 million a year ago.

Full report here: https://www.theedgemarkets.com/article/mfrs-16-effect-keeps-airasia-x-red-3q

Bursa Malaysia filing: http://disclosure.bursamalaysia.com/FileAccess/apbursaweb/download?id=207030&name=EA_FR_ATTACHMENTS

Press Release: http://www.airasiax.com/newsroom/Press_Release_3Q19.pdf

Analysts' Presentation: http://www.airasiax.com/misc/qr/presentation_slide_3Q2019.pdf

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4 hours ago, Pall said:

Doesn't look too promising for things at RedX. 

Yes, they have run out of routes with good yields. Their loads are good but they are not making money as fast as they burn it! They cannot go on like this - they need to re-think their business model. Also Indonesia Airasia X does not work - best to close it down and maybe move that to Japan.

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3 hours ago, flee said:

Yes, they have run out of routes with good yields. Their loads are good but they are not making money as fast as they burn it! They cannot go on like this - they need to re-think their business model. Also Indonesia Airasia X does not work - best to close it down and maybe move that to Japan.

Highly doubt Japan would do any better. Airports in Japan have one of the highest operation cost around the region and NH, JL and American carriers won't be too kind to AirAsia Group for barging into their territory. Let's not forget NH has three A380 and JL will soon launch their Zip Air. Long haul LCC profit margin has always been razor thin for D7. Unless you are backed up with rich sugar daddy like QF-JQ, SQ-TR, or upcoming JL-ZG....you might just wanna stick to your thin profit margin or be doomed.

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1 minute ago, JuliusWong said:

Highly doubt Japan would do any better. Airports in Japan have one of the highest operation cost around the region and NH, JL and American carriers won't be too kind to AirAsia Group for barging into their territory. Let's not forget NH has three A380 and JL will soon launch their Zip Air. Long haul LCC profit margin has always been razor thin for D7. Unless you are backed up with rich sugar daddy like QF-JQ, SQ-TR, or upcoming JL-ZG....you might just wanna stick to your thin profit margin or be doomed.

I think any ops they have in Japan will be based in NGO. So I am sure their biz dev people are looking at the sums...

Philippines is also able to take an X while India is also wanting an X. However, India is a terrible place for long haul airlines too. Jet fuel is too highly taxed - so that may be a non starter.

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6 minutes ago, flee said:

I think any ops they have in Japan will be based in NGO. So I am sure their biz dev people are looking at the sums...

Philippines is also able to take an X while India is also wanting an X. However, India is a terrible place for long haul airlines too. Jet fuel is too highly taxed - so that may be a non starter.

The local feed at AirAsia Japan is really small, compared to Peach or Jetstar, I don't think that would help as well if they are to send their A333 over to Japan, unless AirAsia Group wide suddenly starts flying into NGO in large amount and their passengers transit at NGO. AirAsia Japan operation is wobbly too. After 7 years of operation, it only has 3 A320 with Chitose, Taipei and Sendai route. Cancelled Busan, Seoul and Fukuoka, pale in comparison to Jetstar Japan and any local carrier.

Philippines will be bloodbath to compete with Cebu Pacific as their local feed is small and India as you have mentioned is highly taxed. Vistara has the trump card here. GoAir, IndiGo and Spicejet have upper hand at lower end. Air India and Vistara have higher end. AirAsia is the smallest player among all mainline airlines in India.

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So in summary, we may see the inevitable merger with Airasia Group. They are just not strong enough to be an independent public company.

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GROUP REVENUE UP 18% TO RM3.1 BILLION PASSENGERS CARRIED GROWTH OF 20% ANCILLARY REVENUE UP 26% ALL ASEAN AOCS REPORTED POSITIVE EBITDA POSITIVE OPERATING CASH FLOW GOING INTO WAR WITH OTAs

SEPANG, 27 November 2019 – AirAsia Group Berhad (“AirAsia” or the “Company”) today reported its results for the quarter ended 30 September 2019 (“3Q2019”).

Unaudited Consolidated Results of AirAsia Group Berhad

The Consolidated Group posted 3Q2019 revenue of RM3.1 billion, up 18% from RM2.6 billion in 3Q2018 despite a reduction in lease income. The double-digit growth in revenue was driven by a 20% year-on-year (YoY) increase in passengers carried to 13 million. Ancillary revenue also grew by 26% YoY to RM686 million, with traditional airline ancillary revenue up 16% while non-airline ancillary revenue up 72%.

EBITDA for the Consolidated Group was up 119% to RM691 million. Non-airline EBITDA was down 33% YoY to RM29 million as BigPay and AirAsia.com saw larger EBITDA losses as BigPay expands user base and AirAsia.com ramps up operations. Nonetheless, Teleport reported EBITDA of RM62 million in 3Q2019, up 15% YoY. All Asean airline entities of the company reported a positive EBITDA.

More: https://ir.airasia.com/misc/press-release-3Q19_latest.pdf

Bursa Malaysia Filing: https://ir.airasia.com/misc/quarterly_report_20190930.pdf

Analyst Presentation: https://ir.airasia.com/misc/3Q19-presentation-airasia_latest.pdf

Investor Presentation: https://ir.airasia.com/misc/AAGB Investor Deck 2019-09 (1).pdf

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