Author: Tan KW | Publish date: Wed, 1 Jun 2016, 03:35 PM
This article first appeared in The Edge Financial Daily, on June 1, 2016.
SEPANG: Fresh from reporting a second straight profitable quarter, AirAsia X Bhd (AAX) warns of a challenging second quarter for the three months ending June 30, 2016 (2QFY16), as it faces pressure of sustaining earnings with a “very tough budget”.
The second quarter is also “normally the most challenging quarter” to the long-haul arm of AirAsia Bhd, according to AAX group chief executive officer (CEO) Datuk Kamarudin Meranun.
Kamarudin told reporters after the company’s annual general meeting yesterday that the company had drawn a “very tough” budget to ensure the group meets its financial targets for 2QFY16.
“Right now, we are able to reach the targets [in 2QFY16]. It is not as great as 1QFY16, but as long as we can sustain [our momentum in] 2QFY16, we are still positive on 2QFY16,” he said. He also reiterated that the company expects to return to the black in the current financial year.
“The forward numbers look great. Even the 3QFY16 numbers look great,” he added.
The company, which has been in the red for three financial years since FY12, returned to profitability with a net income of RM201.59 million in 4QFY15, on a revenue of RM853.94 million.
Last week, it reported its second consecutive profitable quarter, with a net profit of RM179.49 million, compared to a net loss of RM125.92 million a year ago, as revenue rose 25.2% to RM970.67 million from RM775.37 million previously.
Besides a foreign-exchange gain of RM122 million and an operating profit of RM105 million, the progress of its turnaround plan initiated in 2015, and a strong return of business in its China and Australian markets also contributed to the favourable results.
On AAX’s expansion plans in China, AAX CEO Benyamin Ismail said the company plans to add one or more routes there.
“A lot of it (plan in China) is trying to focus on current routes. We are [only] looking at one or two more routes we want to add because after that, our capacity is pretty tight,” he added.
He said the company is currently waiting for regulatory approvals for these two additional routes. The group, meanwhile, will not be receiving any more deliveries of aircraft until the second half of 2018.
“The new deliveries that are expected to come in are for the [Airbus A330]neo, which has a fuel efficiency of up to 20%,” he added. The group has an order of 55 neos that are expected to be delivered from the second half of 2018.
Kamarudin said the group is also looking at expanding its Australian market. “There are some issues in Australia we have to address. [South] Korea has been good and we are confident in [South] Korea as well as Japan. We have put in some routes for the Middle East. We want to make sure the routes remain profitable.”
Separately, Kamarudin, who is also executive chairman of Air-Asia, said shareholders can expect a special dividend should AirAsia Group monetise its aircraft-leasing business, Asia Aviation Capital Ltd, which has reportedly received an offer valued at about US$1 billion (RM4.13 billion).
Kamaruddin also revealed that there is more than one bidder for Asia Aviation, all of whom are international companies. “We have various bidders. The plan is to look at the best option,” he said.
If the deal goes through, AAX could be looking at distributing the proceeds via better or special dividends, he said, adding that the company is now finalising the papers on the offers it received for Asia Aviation.
“Once it’s finalised, we will table it to the board and call for an EGM (extraordinary general meeting),” he added.
SEPANG: Fresh from reporting a second straight profitable quarter, AirAsia X Bhd (AAX) warns of a challenging second quarter for the three months ending June 30, 2016 (2QFY16), as it faces pressure of sustaining earnings with a “very tough budget”.
The second quarter is also “normally the most challenging quarter” to the long-haul arm of AirAsia Bhd, according to AAX group chief executive officer (CEO) Datuk Kamarudin Meranun.
Kamarudin told reporters after the company’s annual general meeting yesterday that the company had drawn a “very tough” budget to ensure the group meets its financial targets for 2QFY16.
“Right now, we are able to reach the targets [in 2QFY16]. It is not as great as 1QFY16, but as long as we can sustain [our momentum in] 2QFY16, we are still positive on 2QFY16,” he said. He also reiterated that the company expects to return to the black in the current financial year.
“The forward numbers look great. Even the 3QFY16 numbers look great,” he added.
The company, which has been in the red for three financial years since FY12, returned to profitability with a net income of RM201.59 million in 4QFY15, on a revenue of RM853.94 million.
Last week, it reported its second consecutive profitable quarter, with a net profit of RM179.49 million, compared to a net loss of RM125.92 million a year ago, as revenue rose 25.2% to RM970.67 million from RM775.37 million previously.
Besides a foreign-exchange gain of RM122 million and an operating profit of RM105 million, the progress of its turnaround plan initiated in 2015, and a strong return of business in its China and Australian markets also contributed to the favourable results.
On AAX’s expansion plans in China, AAX CEO Benyamin Ismail said the company plans to add one or more routes there.
“A lot of it (plan in China) is trying to focus on current routes. We are [only] looking at one or two more routes we want to add because after that, our capacity is pretty tight,” he added.
He said the company is currently waiting for regulatory approvals for these two additional routes. The group, meanwhile, will not be receiving any more deliveries of aircraft until the second half of 2018.
“The new deliveries that are expected to come in are for the [Airbus A330]neo, which has a fuel efficiency of up to 20%,” he added. The group has an order of 55 neos that are expected to be delivered from the second half of 2018.
Kamarudin said the group is also looking at expanding its Australian market. “There are some issues in Australia we have to address. [South] Korea has been good and we are confident in [South] Korea as well as Japan. We have put in some routes for the Middle East. We want to make sure the routes remain profitable.”
Separately, Kamarudin, who is also executive chairman of Air-Asia, said shareholders can expect a special dividend should AirAsia Group monetise its aircraft-leasing business, Asia Aviation Capital Ltd, which has reportedly received an offer valued at about US$1 billion (RM4.13 billion).
Kamaruddin also revealed that there is more than one bidder for Asia Aviation, all of whom are international companies. “We have various bidders. The plan is to look at the best option,” he said.
If the deal goes through, AAX could be looking at distributing the proceeds via better or special dividends, he said, adding that the company is now finalising the papers on the offers it received for Asia Aviation.
“Once it’s finalised, we will table it to the board and call for an EGM (extraordinary general meeting),” he added.
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