AirAsia X to Lease A343s

[Mohd Azizul Ramli 2]

The following is the only article that I had came across that mentioned about D7's profitability.

 

Air Canada group chief invests in AirAsia X

The Star, 25 March 2008

By C. S. TAN

 

KUALA LUMPUR: Robert A. Milton, chairman and chief executive officer of Ace Aviation Holdings Inc, parent company of Air Canada, is an investor in AirAsia X Sdn Bhd, and advising it as it charts a course as a low-cost, long-haul carrier.

 

Milton, who was CEO of Air Canada from 1999 to 2007, said he owned “a very small piece of Aero Ventures Sdn Bhd”, which holds a 48% stake in AirAsia X. He is a founding shareholder of Aero Ventures although this was not revealed by the company until yesterday. Milton invested in his personal capacity with the approval of the Ace Aviation board.

 

Although Air Canada is a full-service airline, Milton told the media here yesterday that he could advise AirAsia X. “I know where the pitfalls are in the long-haul business,” he said. Furthermore, Air Canada is an innovative airline group. Its frequent-flyer programme, a cost centre for other airlines, was formed into the Aeroplan Income Fund and spun off and listed on the Toronto Stock Exchange.

 

Aeroplan, with a market value of RM9.6bil, had a larger market cap than many airlines, he said. Ace Aviation, which owns 75% of Air Canada, holds a 20% stake in Aeroplan. Air Canada sells seats to Aeroplan, and while the banks pay the airline on day one, the points “live” for 30 months. However, 17% of that didn't get used, he said.

 

When Milton led Air Canada, he looked at ways for the 70-year-old airline to operate differently. “We pursued a low-cost approach. For our domestic routes, 65% of sales are made on the Internet. That's extraordinarily high for a full-service airline,” he said. The airline is also transparent with its charges for the choices passengers make. “If you want food, you pay for it. If you don't have check-in luggage, we give you a C$3 discount,” he added.

 

He will also be helping AirAsia X source for long-haul aircraft. AirAsia X chief executive officer Azran Osman-Rani said the airline had just one leased plane but would have three by the end of the year. These would be for regional routes and he is looking to lease an Airbus A340 for the London route. Azran said he was thrilled to have Milton on board AirAsia X as the latter had so much experience for the fledgling airline to capitalise on. AirAsia X was able to make share placements at a good valuation partly because of the participation of the Virgin group and Milton, he said. “Ultimately, billions of dollars of debts will be required for aircraft financing and the banks will want to see a company that is well guided, well advised,” he added.

 

Aero Ventures' founding shareholder Datuk Tony Fernandes said he was against in-flight entertainment systems, even on long-haul flights, but after looking at how Air Canada charged for that, it was being considered. AirAsia X, which started flying last November, “is already profitable, with a net income of RM300,000 last month,” he added.

 

[fendy 2]

owe so much to MAHB still can buy aircraft?

[Kenneth T 0]

Net income of RM300K per month is still a conservative figure since the company is still expanding. Not to mention that, it is a heavy debt company.

[Azmir I. 1]

owe so much to MAHB still can buy aircraft?

 

 

Ouch,you must be pretty pissed off with AXM/AK,but were talking about XAX/D7.

[Mohd Azizul Ramli 2]

I think the amount of debt is shrinking as we speak. When MAHB revealed that AK owed them some MYR 100 million of airport related charges, by right at that time AK is owing them about MYR 60 million, and payments have been made in progress ever since, as revealed by AK in their counter press release.

[Waiping 12]

Yes, Ramani. I think I recalled you mentioned something about D7 acquiring Air Canada's A345 and the reason behind ex-CEO of Air Canada was made a shareholder of D7.

 

So the rumours about D7 is getting the A346 from QR, CX or direct from Airbus is now officially off. Too bad it's not an A346.

 

Aye. A346 would be very very nice indeed.

[Mushrif A 3]

owe so much to MAHB still can buy aircraft?

 

The details will suggest that the amounts owed were really due to a dispute on pricing, which was pending a resolution, hopefully an amiable one.

[Gavin Andrew David 6]

Their 340 from Air Canada should be arriving sooooooooon ..

[Nabiel Haniff 1]

I thought A340-300

[Mohd Azizul Ramli 2]

Wow, my old thread being brought back to live. It's nice to see the progress of the subject from the 'rumour' phase into final materialisation. I remember someone posted a photograph of the very A343 that D7 will acquire from Air Canada somewhere here in MW. I will try to dig on it and post it here.

[Mohd Azizul Ramli 2]

Found it. Air Canada Airbus 340-313X C-GDVZ (cn 278).

 

 

And the interior of that very aircraft, which I think D7 will inherit.

 

Economy Class (No PTV?)

 

Business Class

 

Now, let's see whether this is the one which will be coming or something else.

Edited January 27, 2009 by Mohd Azizul Ramli

[S V Choong 4]

Wouldn't expect a no frills airline to provide PTVs anyway.

 

Interior of the Air Canada looks comfy though

Edited January 28, 2009 by S V Choong

[Walter Sim 1]

PTW = More $$$ for no frills airline!

[Yusoff 1]

Why no PTV? They can squeeze more $$ from pax, i reckon.. Reduce AC weight = reduce fuel consumption? I thought we pay for the fuel, no?

 

I love the seat covers. Soothing...

[Mohd Azizul Ramli 2]

Wouldn't expect a no frills airline to provide PTVs anyway.

D7's owned A333s (9M-XXA and 9M-XXB) are all equipped with PTVs.

[Peter Smith 1]

Guys, i think you'll find it won't have that interior. If you read the articles on other pages it states that it will take a while to "refurbish" the a/c which I imagine includes completely new interior, just like -XAA is getting down at SASCO in Singapore right now

[Fitri Shukri 0]

I can't believe that the Air Canada A340 doesn't have PTV. I mean if D7 doesn't install PTV, is understandable considering its an LCC, but Air Canada?

[Syed A Ridhwan 0]

Insider info:

 

A340-313E MSN273 C-GDVW will depart from Montreal on 2nd February. She will be the first 9M registered A340 in Malaysia, and the registration will be 9M-XAB. Arrival time TBC - Gavin would be in best position to advise

[jani 0]

Theoretically the A343 would be able to fly direct from Montreal, eh?

[Mohd Azizul Ramli 2]

So, it'll be Airbus 340-313E C-GDVW (cn 273) instead of Airbus 340-313X C-GDVZ (cn 278) then. And will be the second aircraft in the series of 9M-XA_ (AirAsia's leased aircrafts).

 

C-GDVW in action.

 

 

[Mohd. Helmi 0]

I can't believe that the Air Canada A340 doesn't have PTV. I mean if D7 doesn't install PTV, is understandable considering its an LCC, but Air Canada?

 

It's an old aircraft, before project XM was implemented, AC's cabin refurbishment program. With project XM all of Air Canada's fleet have PTVs, economy class even actually have AVOD, it's nice that it's fleet wide and this includes from the smallest puny Embraer to their latest 777LR, that's what i call product consistency, you know that on economy class on AC you know you'll always get ptvs regardless of aircraft. The A340 never went for project XM, in fact it's already out of AC's fleet.

 

Bit of day dreaming, wouldn't it be great if MH went through a little Project XM, their fleet is feeling a little aged, you notice it and no matter what change of color on the seat covers MH comes up with, even the stark bright colors won't change this fact.

 

Anyways back to topic, It's interesting that D7 is servicing Europe with leased birds, surely this is a temporary thing as their A330's can't reach London from KL, in that case, what's the permanent solution for D7? Actually buying the particular aircraft? Which one?

 

Somehow, I don't think their focus is Europe at the moment, looking at their business model, quickish turn around, direct point to point flights and their choice of aircraft ordered, seems D7 is more Aust, North and South Asia orientated. London seems to be a freak destination, especially specifically leasing 2ac just for that route??

 

[Azri M. 0]

Guys, i think you'll find it won't have that interior. If you read the articles on other pages it states that it will take a while to "refurbish" the a/c which I imagine includes completely new interior, just like -XAA is getting down at SASCO in Singapore right now

I stumbled upon a response by Azran about the A340 on AirAsia blog. We afterall may be getting the seats shown by Azizul.

 

http://blog.airasia.com/index.php/entertai...l-flights#c1226

Azran wrote: 01/29/09, 17:36

Hi Adrian,

 

For our London Stansted route, we will be deploying an A340-300 variant. It is the same size as our standard A330-300 but is equipped with 4 engines instead of 2.

 

This means it can fly from London to KL direct, non-stop.

 

This aircraft comes to us with the same configuration from a full-service carrier, so the seats are the same size and comfort.

 

The XL seats are full business class seats, so you get max comfort, while saving significantly compared to biz class fares on premium carriers.

 

We intend to deploy our portable media players onboard, for personalized video-on-demand type entertainment, available for those that elect to rent them.

 

Once the aircraft goes in for a full re-fit next year (2010), it will be equipped with in-seat entertainment units in every seat.

 

-azran

 

So those flying this year, you'll get the original seats (with portable AirAsia X IFE), while in 2010 you will get the crammed seats with inseat IFE. So Good LUCK

Edited January 30, 2009 by Azri M.

[Mohd Azizul Ramli 2]

How AirAsia X (D7) is doing at the moment?

 

Saturday January 31, 2009

AirAsia X targets RM200mil profit

By JAGDEV SINGH SIDHU

http://biz.thestar.com.my/news/story.asp?f...mp;sec=business

 

AIRASIA X Sdn Bhd, which started business just over a year ago, is projecting revenue of RM1bil and a net profit of RM200mil this year. The long-haul associate company of AirAsia Bhd posted a modest profit in the last quarter and says the big leap in the business will come as it takes delivery of more planes and flies to more destinations this year.

 

“We have more seats per plane and we fly more hours,” chief executive officer Azran Osman Rani tells StarBizWeek. “These two things give us a 50% unit-cost advantage over a traditional long-haul carrier.”

 

Azran Osman Rani

 

The huge improvement forecast by AirAsia X is a stark contrast to what most airlines around the world are saying and experiencing. Mounting losses and sluggish load factors have cast a long shadow over the industry that has been rocked by one problem after another, the latest being high fuel prices and poor demand.

 

The International Air Transport Association has forecast airlines would lose billions of dollars globally as passenger travel is expected to decline by 3% and cargo by 5% in 2009. The global economic slowdown will depress travel demand, but AirAsia X feels whatever passengers it will lose would be made up by those who opt for cheaper fares. “This is a climate where people will be more value-conscious,” Azran says. “The bottom market will fall and the top end of the market will trade down.”

 

The path to profitability for AirAsia X began in November last year when, after using just one leased plane since November 2007, it took delivery of two new aircraft. The new A330s had 383 economy class seats as opposed to the traditional layout of between 280 and 295 seats.

 

“By having more seats, our unit costs were lower,” Azran says, adding that the new planes also mean higher fuel efficiency. He is targeting a cost of 2.5 US cents per available seat km in 2009, as opposed to what the benchmark of between 6 cents and 7 cents for traditional full service airlines.

 

The airline has also been lucky that it has been buying fuel from the spot market and is not paying the penalty of hedging fuel costs at much higher prices. Azran says even though hedging is something the airline will look at as its fleet grows, that will not be done at the moment.

 

Another plus for AirAsia X is that its planes fly more hours per day than a traditional full service airline because it does not employ a spoke and hub model. By connecting into AirAsia’s regional network from the low-cost carrier terminal, AirAsia X has been able to cater to travellers who do not have Kuala Lumpur as their final destination. Those factors - high turnaround, lower cost and more seats - mean it can charge far less for each ticket and make a good profit at the same time.

 

Helping growth and profitability are the high load factors enjoyed since its launch. The original routes to the Gold Coast in Australia and Hangzhou in China enjoyed a load factor of 80% and newer routes to Perth and Melbourne saw load factors of 72% and 78% respectively. “That shows we can quickly get volume - and at prices that make the business work,” says Azran.

 

More seats and flights led to AirAsia X posting a profit of US$10mil and a profit margin of 30% during the last quarter. For 2008, revenue was RM250mil but AirAsia X sold RM375mil worth of tickets for the year.

 

The forward sales, currently RM125mil, are expected to grow dramatically this year as more destinations and planes are added to the fleet, and this would help fund the purchase of new aircraft this year. AirAsia X is expected to take in three new A330s this year from September, four in 2010, six in 2011, six in 2012 and four in 2013.

 

The airline will fly to Stansted Airport on the outskirts of London from March 11 and will use a A340 that will be configured much like a full service aircraft with business class seats and economy class seats. Azran believes the flight to London, even though the profit margin would likely be in the single-digit range, would be a key driver for the airline in other aspects.

 

“London will be a challenge but it’s more for brand recognition and it enhances our credibility with suppliers and financiers,” he says, adding that it should also appeal to the growing number of cost-conscious business class travellers.

 

The airline plans to take delivery of two A340s this year and have daily flights to Stansted. Apart from London, AirAsia X will be exploring more routes to China, Australia and India this year.

 

Should AirAsia X achieve its targeted financial performance for 2009 and based on what it thinks it could do in 2010, Azran says, that would make it an attractive listing candidate. Timing of a listing will, however, depend on the health of the global equities market.

[Peter Smith 1]

A340-313E MSN273 C-GDVW will depart from Montreal on 2nd February. She will be the first 9M registered A340 in Malaysia, and the registration will be 9M-XAB. Arrival time TBC - Gavin would be in best position to advise

Its a "X" not an "E." The E stands for Enhanced which are the newer planes with all the A345/346 tech upgrades

[Sharil Abdul Rahman 0]

I wonder how many of us in M-W will be in one of the flights to london?

I know i will be in one around april.

 

Any others?