Saving Airasia Group and Airasia X: Covid-19 Recovery Thread

[flee 5]

2 hours ago, JuliusWong said:

AirAsia secures five-year term loan facility of up to US$150m

https://www.malaymail.com/news/money/2023/10/03/airasia-secures-five-year-term-loan-facility-of-up-to-us150m/94226

Capital A slipped into PN17 status in January 2022, after its external auditor Messrs Ernst & Young PLT raised material concerns about the airline’s ability to continue as a going concern in its audited financial statements for the financial year ended Dec 31, 2019, and as its shareholders’ equity fell below 50% of its share capital.

Capital A’s shares dropped 1.5 sen to 96 sen on Tuesday, valuing the group at RM4.05 billion. The stock has climbed by 47.7% year-to-date.

Capital A debt ratio remains high, could this be the reason why they have been delaying its PN17 regularisation plan?

I think they are desperate to get more of their planes flying and they need the working capital to do so. Getting out of PN17 will happen if they can generate more revenue and profits. However, competition is hot and they may be facing irrational competition again. Capital A is still a risky counter to invest in.

[Adam Lawrence 0]

AirAsia X Schedules Limited-Time Hong Kong Service in NW23

AirAsia X during Northern winter 2023/24 season plans to add service to Hong Kong, appeared in recent schedule filing. The airline’s schedule is displaying 4 weekly flights between 14DEC23 and 06JAN24, 5 weekly flights from 01FEB24 to 29FEB24.

Following Kuala Lumpur – Hong Kong schedule is effective 01FEB24 – 29FEB24.

D7692 KUL1015 – 1415HKG 333 x13
D7693 HKG1530 – 1925KUL 333 x13

 

https://www.aeroroutes.com/eng/231009-d7nw23hkg

[JuliusWong 0]

Capital A seeks RM1.8bil loan to refinance debt, say sources
https://www.freemalaysiatoday.com/category/highlight/2023/10/12/capital-a-seeks-rm1-8bil-loan-to-refinance-debt-say-sources/

The loan will be in the form of a revenue bond, with investors to be paid out of ticket sales from 10 AirAsia flight routes.

PETALING JAYA: Budget carrier AirAsia, a part of Capital A Bhd group, is seeking a US$400 million (RM1.8 billion) loan, half of it from private credit funds, to refinance debt, according to people familiar with the matter.

The loan will be in the form of a revenue bond, with investors to be paid out of ticket sales from 10 AirAsia flight routes, the people said, declining to be identified because the matter is private.

[flee 5]

Their financial position is still very shaky - but they do have scale. Sometimes, banks have no choice but to keep them afloat because if they collapse, the banks will be hit harder!

[JuliusWong 0]

Capital A asks for more time to submit PN17 exit plan

https://www.nst.com.my/business/corporate/2023/10/963463/capital-asks-more-time-submit-pn17-exit-plan

Quote

KUALA LUMPUR: Capital A Bhd has requested for an extension to submit its regularisation plan to Bursa Malaysia, making it the third request made by the financially-distressed company. 

In a recent interview with Business Times, Capital A chief executive officer Tan Sri Tony Fernandes said the company was on target to submit its regularisation plan by Oct 7 in a bid to exit its Practice Note 17 (PN17) status. 

Missed this news last week. No wonder they are now seeking additional loan to shore up its finance. After the initial USD 150million, they are looking at another RM1.8billion loan. Holy Smoke! AirAsia really need a new management team.

Edited October 13, 2023 by JuliusWong

[flee 5]

Capital A stands to benefit most from MYAirline suspension, says Maybank IB

https://theedgemalaysia.com/node/685988

[flee 5]

-deleted-

Edited October 18, 2023 by flee

[JuliusWong 0]

Bursa Securities rejects AirAsia X's application for relief, PN17 upliftment
By Kang Siew Li / theedgemalaysia.com

https://theedgemalaysia.com/node/686802

19 Oct 2023, 01:44 pm

KUALA LUMPUR (Oct 19): Medium-haul low-cost carrier AirAsia X Bhd (AAX) suffered a setback on Thursday in its attempt to get itself uplifted from its Practice Note 17 (PN17) status.

In a bourse filing, AAX said Bursa Securities had, vide its letter dated Oct 18, 2023, rejected the airline’s application for proposed relief and PN17 upliftment.

Bursa, however, has granted AAX an extension of time until Jan 17 next year to submit its regularisation plan to the regulatory authorities. Its latest extension is due to expire on Oct 28. AAX had been granted an extension to submit its regularisation plan on two occasions, first for six months to April 28, and then for a further three months till July 28 this year.

"In this regard, the airline will consider all available options (including the possibility of an appeal) and announce the next course of action to be undertaken in due course," said AAX.

While the reason for Bursa's rejection was not disclosed, an investment analyst believes it could be due to increased scrutiny of airlines after what happened to another low-cost peer MYAirline Sdn Bhd recently. Cash-strapped low-cost carrier MYAirline abruptly suspended operations on Oct 12, citing financial pressures 10 months after it took to the skies.

"The knock-on effect is AAX's sister company Capital A Bhd having its own PN17 regularisation plan knocked back.

"Capital A needs AAX to get out of PN17 first, then sell its four short-haul airlines to AAX to get out of its own PN17 status," the analyst tells The Edge Malaysia.

He expects a knee jerk reaction to both AAX and Capital A counters after the midday break.  

At noon close on Thursday, AAX shares were still up two sen or 0.89% at RM2.27, while Capital A shares settled down one sen or 1.08% at 92 sen.

[JuliusWong 0]

Bursa moved the goal posts for AirAsia X with new requirements, sources say
By Kang Siew Li / theedgemalaysia.com
25 Oct 2023, 04:04 pm

https://theedgemalaysia.com/node/687599

Quote

"Under Bursa Malaysia’s guidelines, a company can apply to exit [the] PN17 status, following two consecutive quarters of net profit after completion of its financial regularisation scheme. However, AAX is now required to show four consecutive quarters of net profit due to concerns about the sustainability of its business,” an analyst pointed out.

KUALA LUMPUR (Oct 25): AirAsia X Bhd’s (AAX) bid to lift itself out of Practice Note 17 (PN17) status was rejected by Bursa Securities, as the regulator set out additional requirements for the medium-haul, low-cost airline, according to sources.

Sources said for one, the regulator wants the airline to define what is — or what isn’t — a one-off item following differences of opinion.

“Aside from ticket sales, buying and selling of aircraft, for instance, is a normal income stream for airlines. They are not extraordinary items.

“Likewise, provisions for travel vouchers that are distributed to passengers and travel agents are considered normal business from an airline perspective, such that there will be a write back if they are not redeemed before the expiry date in the next quarter, effectively reversing the provisions that have been made in the prior periods. Travel vouchers are accounted for as ancillary income to the main business of selling tickets,” a source told The Edge.

But Bursa Securities didn’t see it that way. The regulator has requested that AAX’s external auditor Messrs Ernst & Young PLT (EY) provide a certificate to state that there are no one-off items on AAX’s income statements and therefore considered part of ongoing operations, said the sources.

Sources said AAX is crying foul over Bursa Securities’ additional requirement, as there currently isn’t any definition of what items can be one-off or what can be recurring for the airline industry. “There is no accounting definition detailing an airline’s one-off items. Different industries have different one-off items,” said a source.

In the fourth quarter of 2022, AAX made a write-back in provision of RM600 million for travel vouchers to passengers and travel agents, which had resulted in a sharp increase in net profit of RM153.48 million for the December 2022 quarter, from RM25.09 million in the September 2022 quarter.

Still, the analyst does not expect the requirement to be much of a problem for AAX, as it has managed to turn around its financial position from 12 quarters of losses since the quarter ended June 30, 2019, to register four consecutive quarters of net profit. The airline posted a net profit of RM25.09 million in 3Q2022, RM153.48 million in 4Q2022, RM328 million in 1QFY2023 and  RM5.54 million in 2QFY2023.

At end-June 2023, AAX recorded a positive shareholders’ equity of RM96.13 million, which exceeded its share capital of RM51.03 million, while it had a cash balance of RM268.96 million. However, the latest balance sheet data shows that AAX’s net current liabilities for 2Q2023 were RM65.2 million. It is worth noting that its independent auditor had highlighted that the airline's net current liabilities position as at end-June 2021 as the basis for disclaimer of opinion report.

A lot of juicy details revolving AirAsia X's recurrent failure in getting out pf PN17 status. The collapse of MYAirlines certainly made the situation even more difficult.

Edited October 26, 2023 by JuliusWong

[JuliusWong 0]

AirAsia parent plans to raise more than US$1bil in debt, equity - FT
Wednesday, 25 Oct 2023 2:00 PM MYT

https://www.thestar.com.my/business/business-news/2023/10/25/airasia-parent-plans-to-raise-more-than-us1bil-in-debt-equity---ft

Capital A Bhd, the parent of AirAsia, is planning to raise more than $1 billion in debt and equity, and will list some of its businesses through a blank-cheque company, the Financial Times reported on Wednesday.

Capital A CEO Tony Fernandes has agreed to a deal with Aetherium Acquisition, a special purpose acquisition company, and plans to list several businesses through it next year, the FT reported, citing two people familiar with the deal.

This includes a new business extending the AirAsia brand to companies hoping to start airline franchises in developing countries, the report said.

The group has been evaluating fundraising options for a planned U.S. listing after it was hit by pandemic travel restrictions in Asia, leading Bursa Malaysia Securities to classify it as a PN17 company, or financially distressed, last year.

The potential fundraising also includes a $150 million loan from Bangkok Bank this month, FT said.

Capital A and Aetherium Acquisition did not immediately respond to Reuters' requests for comment. - Reuters

[JuliusWong 0]

AirAsia X hits 80% passenger load factor in Q3
AAX carried 807,000 passengers in Q3 2023 compared to just 80,500 passengers a year ago.

Bernama - 24 Oct 2023, 8:52pm

https://www.freemalaysiatoday.com/category/business/2023/10/24/airasia-x-hits-80-passenger-load-factor-in-q3/

Quote

PETALING JAYA: AirAsia X Bhd achieved a passenger load factor (PLF) of 80%, up 7% year-on-year (y-o-y), even as capacity surged over nine times y-o-y to 1.01 million seats in the third quarter of 2023 (Q3 2023).

AirAsia X said the performance came on the back of a 10 times y-o-y increase in the number of passengers, as over 807,000 passengers were carried in Q3 2023 compared to just 80,500 passengers in the same period last year.

Passenger load factor measures the ratio of passengers to the available seats i.e. the percentage of available seats that are filled by passengers.

“Available seats per kilometre (ASK) surged close to 12 times higher y-o-y at 4.4 billion, bolstered by the increase in seat capacity and the continued recovery of the company’s network.

“AirAsia X’s seat capacity grew by 24% quarter-on-quarter (q-o-q) while ASK capacity rose by 26% as the number of serviceable aircraft increased by three aircraft q-o-q in Q3 2023,” it said in a statement today.

The carrier said during Q3, AirAsia X Malaysia launched its second route to India with flights to Amritsar (four times weekly) and its fourth route in China with flights to Chengdu (three times weekly), reinforcing its commitment to return first to the core markets that it served before the pandemic.

“Flight frequency soared to 114 flights per week by the end of Q3 2023 compared to 23 flights during the end of the same period last year. Flight frequency was up 19% q-o-q, with Shanghai and Perth ramping up frequencies to daily flights,” it said.

Meanwhile, its associate AirAsia X Thailand carried a total of 342,078 passengers, with a healthy PLF of 82% for the quarter under review. In Q3, its ASK capacity grew by six times higher y-o-y at 1.8 billion while seat capacity jumped five times higher y-o-y at 416,053 seats.

Additionally, in terms of network, it said AirAsia X Thailand’s overall flight frequency grew by 15% q-o-q, with frequency on the Shanghai route increasing to six times weekly during the quarter.

AirAsia X’s total fleet size remained at 17 A330s as of the end of September 2023, with 14 aircraft now activated and operational, while AirAsia X Thailand’s total fleet size stood at eight A330s, with six aircraft activated and operational.

 

[jahur 0]

Transport Ministry: AirAsia to suspend Singapore-Miri, Singapore-Sibu flights from Feb 21, 2024

KUCHING (Nov 14): The Sarawak Ministry of Transport (MoT) today informed that the AirAsia airline will be suspending their flight between Singapore-Miri and Singapore-Sibu from Feb 21, 2024.

The reasons quoted by the airline via its Nov 7 email to Sarawak MoT were that they are receiving low load factors, heavy losses, and the decision was part of their attempt to rationalise their fleet operations and fleet restriction due to global aircraft shortages.

The airline’s email also stated: “We will ensure all affected pax will be moved to fly-thru flights to ensure that they still get to their respective destinations. All passengers will be reached out to, to be informed of this by the end of this week and be notified of the next course of action for their affected flights”.

[JuliusWong 0]

1 hour ago, jahur said:

Transport Ministry: AirAsia to suspend Singapore-Miri, Singapore-Sibu flights from Feb 21, 2024

KUCHING (Nov 14): The Sarawak Ministry of Transport (MoT) today informed that the AirAsia airline will be suspending their flight between Singapore-Miri and Singapore-Sibu from Feb 21, 2024.

The reasons quoted by the airline via its Nov 7 email to Sarawak MoT were that they are receiving low load factors, heavy losses, and the decision was part of their attempt to rationalise their fleet operations and fleet restriction due to global aircraft shortages.

The airline’s email also stated: “We will ensure all affected pax will be moved to fly-thru flights to ensure that they still get to their respective destinations. All passengers will be reached out to, to be informed of this by the end of this week and be notified of the next course of action for their affected flights”.

These two routes are only popular during CNY and occasionally school holiday. Singapore being an expensive destinations, and Sarawakians are known to be thrifty, to lesser extent poorer, the routes have death notice written all over them since their launch.

[jahur 0]

8 hours ago, JuliusWong said:

These two routes are only popular during CNY and occasionally school holiday. Singapore being an expensive destinations, and Sarawakians are known to be thrifty, to lesser extent poorer, the routes have death notice written all over them since their launch.

Scoot increases flights from Spore to Kuching Sibu and Miri.

One leaves another enters lol. 

[JuliusWong 0]

20 minutes ago, jahur said:

Scoot increases flights from Spore to Kuching Sibu and Miri.

One leaves another enters lol. 

Haha! Gotta maximise the utilisation rate of the fleet with all those new A320neo and A321neo!! Kind of curious the load factors. Hope to see them using E2 on Sarawak and Sabah routes. Routes to Sarawak and Sabah are like just one airline is good enough (but comes with expensive ticket price tag), if two airlines are plying, both will make loss. 

[jahur 0]

2 hours ago, JuliusWong said:

Haha! Gotta maximise the utilisation rate of the fleet with all those new A320neo and A321neo!! Kind of curious the load factors. Hope to see them using E2 on Sarawak and Sabah routes. Routes to Sarawak and Sabah are like just one airline is good enough (but comes with expensive ticket price tag), if two airlines are plying, both will make loss. 

Am not sure if those routes(except Kuching) would work. The main issues lies on passenger volume. 70% average passenger load is not a break even value for low cost airline nowadays. Utilisation of regional jet would not bring down the average ticket cost this is very evident on many regional jet and turboprop operations around the world.

Only potential long term survival of such routes depends on whether the state can attract people and industries that would drive the economy and it not being solely reliant tourism passengers.

[flee 5]

3 hours ago, jahur said:

Am not sure if those routes(except Kuching) would work. The main issues lies on passenger volume. 70% average passenger load is not a break even value for low cost airline nowadays. Utilisation of regional jet would not bring down the average ticket cost this is very evident on many regional jet and turboprop operations around the world.

Only potential long term survival of such routes depends on whether the state can attract people and industries that would drive the economy and it not being solely reliant tourism passengers.

Yes, Sarawak keep talking big about airlines not flying to the state but does not do enough to find out the cause of the low traffic volumes. Why is BKI more popular than KCH? If they can find an answer to that, they would have solved the problem.

Airasia is a ULCC and needs load factors of at least 80% all the time. Post pandemic, Airasia has also put more emphasis on getting cargo onto its flights. Is it any wonder that they terminate their flights as demand is only good enough during festive periods or school holidays? So they need to deploy their assets on routes that have more traffic.

[BC Tam 2]

On 11/15/2023 at 3:06 PM, flee said:

Yes, Sarawak keep talking big about airlines not flying to the state but does not do enough to find out the cause of the low traffic volumes. Why is BKI more popular than KCH? If they can find an answer to that, they would have solved the problem.

Airasia is a ULCC and needs load factors of at least 80% all the time. Post pandemic, Airasia has also put more emphasis on getting cargo onto its flights. Is it any wonder that they terminate their flights as demand is only good enough during festive periods or school holidays? So they need to deploy their assets on routes that have more traffic.

Much as BKI appear to be the apple in Capital A's eyes, should not distract from reality they too have substantially downscale operations ex BKI to the few Chinese stations (eg PKX, WUH ... ) and MFM terminated 

It is good though to see they are responding quickly to market demand/reactions 

[jahur 0]

1 hour ago, BC Tam said:

Much as BKI appear to be the apple in Capital A's eyes, should not distract from reality they too have substantially downscale operations ex BKI to the few Chinese stations (eg PKX, WUH ... ) and MFM terminated 

It is good though to see they are responding quickly to market demand/reactions 

Flights to China have been a bit lackluster post pandemic. The same was also reported by other carriers in vietnam, Japan, South korea for their china numbers.

This is affecting BKI as it is more reliant on that market. Some forecast say it may recover in the end of 2024 but that is subjected to the current geopolitical situation of SCS.

[Craig 0]

10 hours ago, jahur said:

Flights to China have been a bit lackluster post pandemic. The same was also reported by other carriers in vietnam, Japan, South korea for their china numbers.

I am curious if the lackluster in tourist numbers goes beyond China. SCMP is reporting that Thailand is seeing less than expected tourists arrivals from Japan. And Korea tourists is similar to that of pre-pandemic now.  
 

KUL hasn’t seen full 2019 capacity recovery from Korean/Japanese carriers (nothing major) but I believe JHB lost Jin Air. BKI may have surpassed 2019 KR capacity with OZ’s new seasonal flights? 

[jahur 0]

5 minutes ago, Craig said:

I am curious if the lackluster in tourist numbers goes beyond China. SCMP is reporting that Thailand is seeing less than expected tourists arrivals from Japan. And Korea tourists is similar to that of pre-pandemic now.  
 

KUL hasn’t seen full 2019 capacity recovery from Korean/Japanese carriers (nothing major) but I believe JHB lost Jin Air. BKI may have surpassed 2019 KR capacity with OZ’s new seasonal flights? 

Global travel is still not back to 2019 but it has made significant recovery. However if we account to china itself its one of the few remaining operating on very low numbers. The unemployment rate went up earlier this year and many other factors has been contributing to it. It may have also deem mass tourism as no longer beneficial to its own economy. 

[Sii Lw 0]

On 11/14/2023 at 11:12 PM, JuliusWong said:

These two routes are only popular during CNY and occasionally school holiday. Singapore being an expensive destinations, and Sarawakians are known to be thrifty, to lesser extent poorer, the routes have death notice written all over them since their launch.

Hm... I might be biased (since I live in Miri myself) but I beg to differ. If it was doomed to fail, AK, being a company that is for-profit only, would not have increased MYY-SIN from x4 weekly to 1 daily in December 2017. This was only paused during COVID. Heck, this was also part of the reason, I believe, that MH had to drop MYY-KCH-SIN routing (which existed since MH dropped BKI-KCH-SIN and moved BKI service to MYY) in 2018 due to AK's low pricing, at roughly ~RM170 one-way, even cheaper than MYY-JHB-MYY.
TR is going strong in MYY-SIN sector is because they have an extensive network in SIN (which AK didn't really have since AK didn't allow Fly-Thru service to other destinations in its AirAsia Group network from SIN), allowing pax from around MYY to connect easily to other TR destinations or SQ. The pricing of TR ex-MYY is extremely enticing, at ~RM90 at times. The timing of TR at MYY also easily allows for red-eye connections from SIN, which I believe TR is aiming for. Loads from MYY is good as far as I know. This had impacted AK, reducing their loads to only ~69% on average even after frequency reduction from x5 to x4 weekly after re-instating post-COVID.
If it is doomed to fail from day one in MYY, then MYY-SIN sector would've been gone not long after it was introduced in the early 2010s, much like MYY-MNL and MYY-PNK.

Introduction of E2s to Sarawakian destinations makes very good sense imo, where they can opt for frequency but not seats since most pax are connecting passengers (whether on the same tix or not). Of course, CNY and other important festivals are a different story.

[flee 5]

13 hours ago, Sii Lw said:

The pricing of TR ex-MYY is extremely enticing, at ~RM90 at times. The timing of TR at MYY also easily allows for red-eye connections from SIN, which I believe TR is aiming for. Loads from MYY is good as far as I know. This had impacted AK, reducing their loads to only ~69% on average even after frequency reduction from x5 to x4 weekly after re-instating post-COVID.
If it is doomed to fail from day one in MYY, then MYY-SIN sector would've been gone not long after it was introduced in the early 2010s, much like MYY-MNL and MYY-PNK.

Introduction of E2s to Sarawakian destinations makes very good sense imo, where they can opt for frequency but not seats since most pax are connecting passengers (whether on the same tix or not). Of course, CNY and other important festivals are a different story.

If what you illustrate here is true, then TR is not really interested in developing the route but more as a feeder to the SIA group network. So it is sacrificing profit on this route for the greater aim of profit on other connecting routes in the SIA group network. It is much like the days when KUL-SIN flights were offered FOC to those who were catching long haul SQ flights.

Against the post Covid background, air fares have risen significantly and revenge travel demand is starting to fade. AK does not need to offer flythru flights to/from SIN as pax can catch flythru from KUL. As such its MYY-SIN flights are for point to point pax. There are simply not enough such pax.

[Chris Tan 0]

1 hour ago, flee said:

It is much like the days when KUL-SIN flights were offered FOC to those who were catching long haul SQ flights.

There has never been such thing as a “free” connecting flight. Fares are priced based on O&D. KUL-SIN-LHR for example has always been priced very differently than SIN-LHR. 

[jahur 0]

Former myairline 9M-DAB spotted in hybrid airasia livery.