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2014 Q3 Financial Results for Malaysia Airlines & Air Asia Group

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MAS says delays Q3 results to include more details

 

Malaysian Airline System Bhd (MAS), the loss-making airline that was hit by two separate jet disasters this year, has delayed the release of its third-quarter results to November 28 to allow time to include more details, a representative said.

 

See more at: http://www.themalaysianinsider.com/business/article/mas-says-delays-q3-results-to-include-more-details#sthash.BRevcVqF.dpuf

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"AirAsia X said operating expenses increased 54.6% from RM1.575bil a year ago to RM2.435bil mainly due to higher staff costs, which rose 40.4% to RM225.8mill from RM160.8mil a year ago."

 

That's a huge increase in operating cost......

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AirAsia X cuts back on expansion

 

http://www.therakyatpost.com/business/2014/11/19/airasia-x-cuts-back-expansion/

 

Apart from selling off two planes on order, it is also delaying deliveries scheduled for the next three years. The long haul budget carrier is also cutting frequencies on certain routes.
  • For 2015, 6 A330-300 to be delivered, originally 8. Two sold off. No buyer identified yet.
  • For 2016, 4 A330-300 to be delivered, originally 8.
  • For 2017, 5 A330-300 to be delivered, originally 8.
  • The remaining nine new planes would now be delivered from 2018 onwards.
  • Total aircraft to be delivered: 24
For 2007 (15 A330) and 2008 top-up order (10 A330): 17 A330 has been delivered.
The sole A330-200 and two A340-300 will be returned to lessor.
In cutting flight frequencies, the biggest impact would be flights to Australia – though the exact details were not disclosed.
The airline will also dedicate six planes to its Thailand and Indonesia routes, which are expected to generate positive cashflow and have more growth upside.
Edited by JuliusWong

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AirAsia pre-tax profit slightly higher at RM26.46m

 

KUALA LUMPUR: Low-cost carrier AirAsia Bhd posted profit before tax of RM26.46mil in the third quarter ended Sept 30, 2014, which was a slight improvement from the RM25.11mil a year ago.

AirAsia reported on Wednesday profit after tax was RM5.39mil compared with RM35.48mil a year ago. Earnings per share were 0.2 sen compared with 1.3 sen.
The group recorded revenue of RM1.317bil for the quarter ended Sept 30, 2014 (Q3, FY14), 3% higher than the revenue of RM1.280bil recorded a year ago.
“The revenue growth was supported by a 0.5% increase in passenger numbers and a 3% increase in unit passenger revenues to RM216 as compared to RM210 achieved in Q3, FY13.

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AirAsia X Records Revenue of 16.2% to RM698.8 million In Third Quarter 2014 And Re-Strategizes For 2015
• Capacity Reductions Through Deferrals and Allocation to Associates
• Yields Improving Since September and Benefit from Capacity slowdown
• Fuel Price Declining: US$10/barrel drop = RM120 million bottom-line
• Positive Cash Flow and Strengthened Liquidity From Sale-Leasebacks
• TAAX and IAAX Cash Flow Positive and Will Anchor 2015 Growth
SEPANG, 19 November 2014 – AirAsia X Berhad (“AAX” or “the Company”), the long-haul low-cost airline affiliate of the AirAsia Group today reported its financial results for the Third Quarter (“3Q14”) and
9 months ("9MFY14") ended 30 September 2014.
Azran Osman-Rani, CEO of AirAsia X said, “Our third-quarter financial performance was set back by the second shock suffered by the aviation industry in July and the resultant demand slowdown. However, we have seen the critical measure of year-on-year yield rebounding back into positive growth by September and October. With the observed rationalisation of industry capacity and the significant drop in global fuel prices in recent weeks, we expect this positive momentum to contribute to a turn- around this current fourth quarter”.
"With the recent launch of Indonesia AirAsia X ("IAAX"), we have now already accomplished the primary strategic objective of achieving market leadership in our core markets through the aggressive capacity expansion we embarked in 2013-2014. In light of the changing market landscape in Malaysia where travel demand has softened and the industry capacity moderating, we see less need to continue expansion in our core Malaysian route network in 2015. This will allow more time for routes and capacity added in 2013-2014, to mature and reach profitability as average fares increase in line with demand".
The Company plans to slow down aircraft capacity growth by making the following fleet changes:
• 2015: From a planned delivery of 8 aircraft, reduce to 6 with two planned outright sale
• 2016: From a planned delivery of 8 aircraft, reduce to 4, with deferrals to NEO models from 2018 onwards
• 2017: From a planned delivery of 8 aircraft, reduce to 5, with deferrals to NEO models from 2018 onwards
"The growth strategy for 2015 will shift to a consolidation phase, where no new aircraft capacity to be allocated to core routes in Malaysia’s network in 2015, although ASK capacity is expected to increase by 5% vs 2014 due to the 12-month effect of capacity introduced mid-2014".
"Capacity allocation in 2015 will see a drop in the number of flights to Australia, while North Asia and Other regions will see an increase in number of flights".
"A majority of the 6 aircraft deliveries will be allocated to associates in Thailand and Indonesia, which are generating positive cash flow and have more growth upside".
"Meanwhile, in Malaysia, the capacity will be tactically managed with frequency reductions during lean seasons in Q2 and Q3, to reduce the need to lower yields to fill up excess capacity. We have firmed contracts to redeploy aircraft capacity from Malaysia to wet lease operations that coincide during our lean season where there are short-term peak demand elsewhere (e.g, Peak European summer season and Umrah travel season). By deploying our excess capacity, instead of incurring low yields, the capacity will instead be generating healthy margins during this period. These wet lease aircraft capacity will then be returned back to Malaysia operations during our peak period in the fourth quarter where it will be able to contribute positive returns. The charters and wet lease operation is expected to generate about 13% of 2015 revenues, and 23% of 2015 operating income. Between the charters and wet lease operations and income from aircraft lease to associates, over 12% of 2015 revenues will be denominated in US-dollars, providing the Company with better currency mix as a natural hedge against adverse foreign exchange movements”.
"Operationally, AirAsia X will continue to pursue further unit cost reduction initiatives through greater operational consolidation and resource sharing with the rest of the AirAsia Group".
"We continue to work on maintaining our financial integrity and have implemented a number of key initiatives to deliver positive cash growth in 2014 and strengthen our liquidity position and balance sheet. AirAsia X has executed a sale-and-leaseback of two A330-300 aircraft from its operating fleet, currently on its balance sheet on a finance lease, to AirCastle Limited. This will see the early retirement of RM420 million of debt, and generate net proceeds of approximately RM150 million from the sale. The two aircraft will remain part of AirAsia X’s operating fleet. This reduction in net debt and increase in cash will bring down the Company’s net gearing ratio from 2.15 as at 30 September 2014, to an adjusted level of 1.71. This transaction turns around the Free Cash Flow (“FCF”) for the year-to-date of –RM126 million to an FCF of +RM444 million, on an adjusted basis".
"In addition, there is another series of aircraft and engine related transactions currently being finalised this quarter that will have a similar positive cash accretion. This includes expected cash gains from net proceeds of sale-and-leaseback of two additional new aircraft next week and another in mid-December. On top of this, the Company has raised RM84 million through its recent schedule extension sale".
"These various cash raising initiatives, together with any additional increases in working capital and debt facilities that will be raised on the back of these additional cash injection, will increase the Company’s cash position in the current quarter, and put the Company on track to complete the full year with positive free cash flow. Oil price declines since the current quarter will be a big advantage, as every USD10/barrel drop in fuel price will give us a savings of about RM120 million in 2015", concluded Azran.
The Company posted revenue of RM698.8 million for 3Q14, 16.2% year-on-year ("y-o-y") growth from RM601.5 million, and 9MFY14 revenue of RM2.1 billion, 30.2% y-o-y growth during the same period under review.
The Available-Seat-Kilometre ("ASK") capacity grew 24% y-o-y to 6,366 million from 5,137 million in 3Q14 given that less new routes and frequencies were added as compared to 3Q13. The quarter-on- quarter ("q-o-q") capacity growth was a mere 1.6%, mainly for a new route - Xian, China, which commenced on 2 July 2014. The ASK capacity will taper off in subsequent quarters as planned to allow the previously added capacity to mature and be profitable. Passenger traffic volume in Revenue- Passenger-Kilometre (“RPK”) grew by 21% in 3Q14 to 5,129 million from 4,227 million. The Company maintained a healthy passenger load factor of 80.6% in 3Q14, and above 80% during the 9 months period, on the back of a softer market environment.
The Company trimmed its frequencies of scheduled flights and deployed capacity to charters and wet- leases in other regions during this lean period, which contributed a 83.5% y-o-y growth to RM65.7 million in 3Q14, from RM35.8 million in 3Q13 revenue from this segment, and a 211.2% y-o-y growth to RM214.2 million for 9MFY14. These flights are not captured in the ASK and RPK tabulations as they are unscheduled flights. Ancillary revenue grew 36.1% y-o-y to RM432.8 million for 9MFY14, as compared to RM318.0 million in the previous period, resulting in an ancillary revenue per passenger of RM135.93 from the 3.1 million passengers carried. Fuel surcharge revenue gained 41.0% y-o-y from RM175.7 million to RM247.8 million for 9MFY14. Cargo segment contributed RM85.2 million for 9MFY14 and increased 32.7% y-o-y from the previous corresponding period.

 

Two A330-300 aircraft were leased to Thai AirAsia X (“TAAX”) and one A330-300 aircraft was leased to Indonesia AirAsia X ("IAAX"), its affiliates, generating RM55.7 million in lease income revenue in 9M14. In September 2014, IAAX was awarded the Air Operator's Certification ("AOC") to operate from its Bali hub, and in October 2014 announced its maiden route to Melbourne, with the first flight commencing on 26 December 2014.
The resultant unit-revenue yield, as measured by Revenue-per-Available-Seat-Kilometre (“RASK”) improved 2.1% q-o-q to RM11.02 sen but declined -7.8% y-o-y in 3Q14. The slower than expected yield improvement is due to the two aviation incidents. Post the first event, the year-on-year growth in RASK was on an improving trend from -13% in April, -8% in May and -3% in June. However, after second event it retracted to -12% in July and -11% in August before turning positive in September at +0.1% and also October +1.5%, with November and December expected to reach double digit positive growth after the 12-month maturity period from capacity increases initiated in the fourth quarter of 2013.
Operating expenses increased 54.6% y-o-y from RM1,575.1 million to RM2,435.6 million in 9MFY14. Unit-cost as measured in Cost-per-Available-Seat-Kilometre (“CASK”) for 3Q14 increased 12.5% y-o-y to RM13.10 sen, CASK-excluding fuel increased 22.2% y-o-y to RM7.31 sen relating to higher maintenance and overhaul cost as well as higher aircraft lease. Average fuel price increased from US$130/barrel in 3Q13 to US$132/barrel in 3Q14. This is due to more aircraft were deployed to charters and wet lease operations, and leased to hubs, which incurs costs but does not contribute to ASK tabulations. Adjusting for these non-scheduled flight operational activities, CASK was flat for 9MFY14 versus the same period last year.
Earnings Before Interest, Tax, Depreciation, Amortisation and Rental (“EBITDAR”) margin for 3Q14 was -1.3% and for 9MFY14 was +2.1%.
Air Asia X Presentation:

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I'm guessing that they'll cut SYD frequency down to daily and possibly the same for MEL as well. Will they pull out of ADL?

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For Perth, they should just do KUL-DPS-PER using A320 like most LCC. TR and 3K come to mind. Heck, 3K even do SIN-MNL-ITM and SIN-TPE-ITM using A320!

DPS-PER is already serviced by QZ.

 

Airasia "rules" dictate that flights over 4 hours will be operated by X.

 

Maybe they should think about using the A321neo in future, for the long and thin routes. This will allow some premium seats plus 32" seat pitch and still carry about 170 pax.

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Cutting Australia's capacity definitely will have impacts on the feeding traffics to AK's flights from / to KUL. From my observation, approx. 75% of pax from my last D7 SYD-KUL flight were transiting in KUL.

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Cutting Australia's capacity definitely will have impacts on the feeding traffics to AK's flights from / to KUL. From my observation, approx. 75% of pax from my last D7 SYD-KUL flight were transiting in KUL.

I think SYD and MEL should still retain their double daily flights as D7 cannot afford to give up those hard earned slots.

 

However, I can see cuts at PER (double daily), ADL and OOL (daily) to better balance the capacity with demand.

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Tony Fernandes Upbeat On AirAsia X's FY2015 Outlook


KUALA LUMPUR, Nov 20 (Bernama) -- AirAsia Group Chief Executice Officer Tan Sri Tony Fernandes is confident that loss-making long-haul airline AirAsia X will be profitable in the 2015 financial year.


In achieving profitability, Fernandes said the airline would revise revenue strategy, increase ancillary income and undergo capacity management.


"For AirAsia X, most losses came from Australia, so we are rationalising a bit of capacity in that market, and there is a little bit of demand drop from China after the MH370 incident.


"However, we are seeing demand coming back whereby demand from China has rebounded to normal while the rest of the market has been fairly good," he told a press conference after announcing AirAsia Asean Pass.


The pass enables travellers to utilise pre-purchased credits to book flights at a fixed rate across selected routes throughout Asean.


Fernandes noted that there was an upside to AirAsia X's ancillary income, given that its parent company AirAsia's ancillary income had grown by 15 per cent.


"We are seeing yields improving quite quickly for the fourth quarter, 2014 is a tough year and 2015 will be better for AirAsia X," he said.


On moves to save cost, the aviation tycoon announced that the airline would defer the deliveries of aircraft for the next two to three years in Malaysia, as well as merge some of AirAsia and AirAsia X's departments.


"An external factor that is beneficial for our turnaround plan is the current downtrend in oil prices. On fuel hedging, we do not speculate, we just match our revenue with our cost.


"We hedge according to the booking curve whereby if we sell 50 per cent of our seats in advance, we will hedge 50 per cent three months ahead," he said, adding that the airline had a massive upside in fuel as it only hedged 12 per cent for 2015.

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MAS Q3 Pre-tax Loss Rises To RM572 Mln


KUALA LUMPUR, Nov 28 (Bernama) -- Malaysian Airline System Bhd's (MAS) pre-tax loss for the third quarter ended Sept 30, 2014 widened to RM572 million from RM370 million pre-tax loss in the same quarter last year.


In a filing to Bursa Malaysia, the national airline company said its revenue declined to RM3.38 billion from RM3.90 billion previously.


The company said the impact of MH370 and MH17 incidents and the continued intensified competition resulted in lower seat factor by 11.5 percentage points to 73 per cent.


For the nine months ended Sept 30, 2014, its pre-tax loss surged to RM1.31 billion from pre-tax loss of RM815 billion in the same period a year before.


Its revenue declined to RM10.57 billion from RM11.22 billion previously.


MAS said it continued to struggle despite efforts to reduce the financial bleeding and declining fuel prices that had helped stem losses.


"Certain markets, particularly China, continue to pose challenges to return to previous levels.


"However, we are encouraged with recovery in other markets as reflected in the higher new booking intakes system wide compared to the previous year," it said.


Bursa Malaysia filing:


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MAS Q3 Pre-tax Loss Rises To RM572 Mln
KUALA LUMPUR, Nov 28 (Bernama) -- Malaysian Airline System Bhd's (MAS) pre-tax loss for the third quarter ended Sept 30, 2014 widened to RM572 million from RM370 million pre-tax loss in the same quarter last year.
In a filing to Bursa Malaysia, the national airline company said its revenue declined to RM3.38 billion from RM3.90 billion previously.
The company said the impact of MH370 and MH17 incidents and the continued intensified competition resulted in lower seat factor by 11.5 percentage points to 73 per cent.
For the nine months ended Sept 30, 2014, its pre-tax loss surged to RM1.31 billion from pre-tax loss of RM815 billion in the same period a year before.
Its revenue declined to RM10.57 billion from RM11.22 billion previously.
MAS said it continued to struggle despite efforts to reduce the financial bleeding and declining fuel prices that had helped stem losses.
"Certain markets, particularly China, continue to pose challenges to return to previous levels.
"However, we are encouraged with recovery in other markets as reflected in the higher new booking intakes system wide compared to the previous year," it said.
Bursa Malaysia filing:

 

 

Loss RM 815 BILLION in 2013.

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