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2017 Q1 Financial Results for Air Asia Group

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AirAsia X 1Q net profit plunges 94.2% on higher operating expenses, lower forex gain

 

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KUALA LUMPUR (May 23): AirAsia X Bhd (AAX), the long-haul, low-cost affiliate of AirAsia Bhd, saw its net profit plunge 94.2% to RM10.34 million or 0.2 sen a share in the first quarter ended March 31, 2017 (1QFY17) from RM179.49 million or 5.3 sen a share a year ago, on higher operating expenses including fuel prices, which rose to US$66 per barrel compared with US$64 per barrel in 4QFY16.

Total operating expenses rose 27.6% to RM1.12 billion in 1QFY17 from RM879.05 million in 1QFY16. Out of this total, aircraft fuel expenses amounted to RM377.69 million in 1QFY17, up 55.4% from RM243.06 million a year ago.
The airline also realised considerably lower foreign exchange gain of RM3.41 million in 1QFY17 compared with RM122.19 million in 1QFY16.

Quarterly revenue, however, rose 21.6% to RM1.18 billion from RM970.67 million in 1QFY16, on strong passenger numbers, which grew by 33% year-on-year (y-o-y) on the back of a 28% y-o-y increase in seat capacity.
In a filing with Bursa Malaysia today, AAX said its load factors were 2 basis points higher at 84% in 1QFY17 from 82% in 1QFY16.
However, it saw average base fare fall by 4% to RM544 in 1QFY17 from RM566 in 1QFY16, while ancillary revenue per passenger remained constant at RM150 for both 1QFY17 and 1QFY16.
More:
Bursa Malaysia filing:

 


The Star Report:

http://www.thestar.com.my/business/business-news/2017/05/23/airasia-xs-profit-hit-by-higher-fuel-expenses/

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AirAsia X profitability remains very fragile despite increase in load factor. The decrease in average fare and ringgit performance against USD are dragging the figures down. I am kind of skeptical of their venture into Hawaii tbh; Scoot its nearest competitor is now in better position to outperform AirAsia X. Not to mention their 20 B787 fleet and Tigerair-Scoot integration will start churning money soon enough.

Edited by JuliusWong

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AirAsia X profitability remains very fragile despite increase in load factor. The decrease in average fare and ringgit performance against USD are dragging the figures down. I am kind of skeptical of their venture into Hawaii tbh; Scoot its nearest competitor is now in better position to outperform AirAsia X. Not to mention their 20 B787 fleet and Tigerair-Scoot integration will start churning money soon enough.

D7 is doing well operationally but the forex risks and oil price volatility is causing them major headaches.

 

Gearing has been reduced too due to no new aircraft arriving until 2H2018. With the A330Neo delayed, they might not even receive them till late 2018 or early 2019.

 

The industry is now in danger of overcapacity - this will reduce the ability to increase fares as competitors will cut their fares to fill their planes. I think Scoot will face similar overcapacity issues too. Fortunately for D7, their capacity growth will be very limited as they have no new aircraft scheduled for delivery this year.

The KUL-HNL route is doing OK - first three months sold out with very strong demand from Japan. We will have to wait and see what happens in the longer term.

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AirAsia sees 2017 results surpassing that of 2016 despite lower profit in 1Q

 

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KUALA LUMPUR (May 25): AirAsia Bhd, Asia's largest budget airline, saw net profit drop 29.8% to RM615.81 million or 18.4 sen a share in the first quarter ended March 31, 2017 (1QFY17) from RM877.79 million or 31.5 sen a share a year ago, mainly due to higher fuel cost as average fuel price rose 20% to US$67 per barrel in 1QFY17 from US$56 per barrel in 1QFY16 and a strong US dollar.
Staff costs also went up sharply by 27% to RM363.5 million in 1QFY17, mainly due to revised staff remuneration package that was introduced in 4QFY16.
As a result, total net operating profits fell to RM267.1 million in 1QFY17 from RM337.7 million in 1QFY16.
Full report:
Bursa Malaysia Filing:

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It seems d7 break even point is about 80% load. Profit is subject to forex rate and fuel cost.

The Airasia X CEO has said that for this year, their focus is on boosting RASK, and on the routes that they ply, they want to achieve dominance. So existing routes will get frequency increases once the load factors are high enough. E.g Taipei now has 3 flights a day on some days of the week. They are also trying to push aircraft utilisation to 16 hours a day.

 

Yes, forex is a major headache for Airasia X - we have seen this many times in the past. But the management are wary of excessive hedging as it is like taking your chances in a casino. Airlines like CX have suffered losses from forex hedging - so Airasia X management are operating a conservative hedging policy on forex.

 

Over at Airasia, the CEO has said that their single most important number is CASK - so they are watching that number closely to make sure that their costs do not spiral.

Airasia X investor slide presentation:

http://airasiax.listedcompany.com/misc/qr/presentation_slide_1Q2017.pdf

Airasia X Press Release:

http://airasiax.listedcompany.com/newsroom/PressReleases_1Q2017.pdf

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The Airasia X CEO has said that for this year, their focus is on boosting RASK, and on the routes that they ply, they want to achieve dominance. So existing routes will get frequency increases once the load factors are high enough. E.g Taipei now has 3 flights a day on some days of the week. They are also trying to push aircraft utilisation to 16 hours a day.

 

Yes, forex is a major headache for Airasia X - we have seen this many times in the past. But the management are wary of excessive hedging as it is like taking your chances in a casino. Airlines like CX have suffered losses from forex hedging - so Airasia X management are operating a conservative hedging policy on forex.

 

Over at Airasia, the CEO has said that their single most important number is CASK - so they are watching that number closely to make sure that their costs do not spiral.

 

Airasia X investor slide presentation:

http://airasiax.listedcompany.com/misc/qr/presentation_slide_1Q2017.pdf

 

Airasia X Press Release:

http://airasiax.listedcompany.com/newsroom/PressReleases_1Q2017.pdf

Increase rask will have corresponding negative impact on load factor. D7 is operating near their break even point, it won't be easy to increase rask.

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Increase rask will have corresponding negative impact on load factor. D7 is operating near their break even point, it won't be easy to increase rask.

We will have to wait and see. Maybe they are placing emphasis on cash flow and not so much on yield. But they are also saying that they want to boost their ancillary income as it was flat.

 

TF has said that they do not pay too much attention to chasing quarterly numbers - they want to stay focussed on strategic moves as quarterly numbers fluctuate from quarter to quarter and is seasonal.

 

The D7 CEO has also said that they are putting off a return to Europe so that they can focus on achieving their targets for existing markets.

 

They are there for the long haul, not quarters!

Edited by flee

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AirAsia Bhd., the low-cost carrier that flies only Airbus SE planes, would consider using newly developed aircraft such as the Chinese-made C919 as the airline expands its fleet and destinations.


“I think as an airline you have to look at everything,” AirAsia Group Chief Executive Officer Tony Fernandes said in a Bloomberg Television interview, when asked whether the carrier would consider the C919. “We will be foolish not to look at new planes.”




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This year, Airasia Group had to take three A320ceo's because Airbus could not find slots for more A320neo's. Having a second supplier is no bad thing, especially since the C919 has the same CFM International LEAP engines as the A320neo.

 

If the deal is right, it would be something very positive for Airasia China. They can be the first Airasia affiliate to operate the C919 - great PR!

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They previously looked at Bombardier CS100 and CS300 but nothing came out it. I will take the news with pinch of salt.

Edited by JuliusWong

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Bombardiers have the troublesome PW engines.

 

The CS919 is still at least 3-4 years from first delivery. John Leahy may also retire by then. So, anything can happen!

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AirAsia Bhd., the low-cost carrier that flies only Airbus SE planes, would consider using newly developed aircraft such as the Chinese-made C919 as the airline expands its fleet and destinations.
“I think as an airline you have to look at everything,” AirAsia Group Chief Executive Officer Tony Fernandes said in a Bloomberg Television interview, when asked whether the carrier would consider the C919. “We will be foolish not to look at new planes.”

 

 

He said to consider, not to buy.

 

Of course, everything will be considered but only the best or most suitable will be bought.

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He said to consider, not to buy.

 

Of course, everything will be considered but only the best or most suitable will be bought.

 

One more point to note - the C919 will only be certified in China but not by other certification authorities. So its usefulness outside China will remain a question mark until the manufacturer submits it for certification elsewhere.

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