AirAsia X busts forecasts in 3rd straight quarter of losses
After-tax loss of RM211m puts pressure on it to turn around and prove that expansion is the way to go
Kuala Lumpur
AIRASIA X (AAX) has racked up a third consecutive quarter of net operating losses.
The long-haul budget carrier ran up a loss before tax (LBT) of RM224.5 million (S$86.9 million) - from RM19 million a year ago - as a result of a 42 per cent increase in operating expenses and higher forex losses.
Netting off tax allowances of RM13.6 million, its loss after tax (LAT) was RM211 million - about three times more than projected. In the corresponding period last year, it had posted a profit after tax of RM26 million on the back of a RM46.3 million tax allowance.
Revenue for the three months ended Sept 30, 2014, rose 16 per cent to RM699 million, from the previous corresponding quarter's RM601 million.
The airline's LAT for the cumulative nine months was RM351 million, compared to its profit after tax of RM44 million in the year-ago period; its cash holdings plunged 58 per cent from RM151 million a year ago to RM 64 million.
Despite these numbers, the airline expects its prospects to remain positive - barring unforeseen external circumstances such as terrorist attacks, natural disasters, epidemics, fuel price hikes and fluctuations in foreign currencies against the ringgit.
AAX attributed the third consecutive quarter of losses to significant year-on-year average seat per km (ASK) increases of more than 40 per cent, which pushed yields lower as more fares were sold at promotional prices to stimulate new demand.
The grimmer-than-expected losses, which came in the wake of media reports of delays in staff salaries and allowances, sent AAX's shares falling a further 8 per cent on Wednesday to a new low of 64.5 sen.
Having shed about half its price since listing at RM1.25 in July last year, the underperformer is under increasing pressure to show that it can reverse its losses soon and that its aggressive fleet expansion is the right move.
AirAsia group founder Tony Fernandes is reportedly set to assume a larger role in the management of the airline that has said that, based on an average 12 months for the new capacity to break even and on forward sales, it expects to begin "generating positive year-on-year revenue per average seat km (RASK) growth in the last quarter of the year".
For the cumulative nine months, AAX's revenue rose 30 per cent to RM2.1 billion.
While passenger load remained at 82 per cent, RASK fell 17.3 per cent to 9.81 sen while average passenger fares were slightly more than a fifth lower to RM425.87 from the significant rise in ASK and promotional fares on new routes.
A RM92 million increase in LBT in the third quarter from the preceding quarter of RM132 million was attributed to seasonally lower demand for air travel and higher unrealised forex losses - the result of a stronger US dollar against the ringgit.
The stronger greenback will likely bite harder in the last quarter, given the local currency hit a 4 1/2-year low of 3.3565 to the US dollar this week.
