It foresees a challenging operational environment in 2H19 due to the global economic situation and pressure facing the ringgit

By MARK RAO / Pic By RAZAK GHAZALI

AIRASIA X Bhd said loss on sales of aircraft and foreign-exchange (forex) translation losses led to a net loss of RM207.11 million for its second quarter ended June 30, 2019 (2Q19), and expects the remainder of the year to remain challenging on external and domestic risks.

The net loss incurred by the low-cost carrier (LCC), — which was higher compared to the RM57.46 million loss in 2Q18, — was mainly due to the RM72.5 million loss on disposal of three aircraft under sale and leaseback, and forex losses.

While average fuel price recognised came in 3% lower year-on-year (YoY), thus bringing down fuel expenses, cost per available seat kilometres for the airline rose for the quarter under review.

Turnover for the group also declined 4.7% YoY to RM1.01 billion in 2Q19, despite average passenger fares coming in higher at RM437 (against RM418 in 2Q18).

This comes on the back of the reductions in seat capacity, passengers carried and load factors.

For the first half of 2019 (1H19), the LCC’s net loss widened to RM163.78 million from a RM15.96 million loss in the corresponding period in 2018, while revenue came in 6.4% lower YoY at RM2.18 billion.

AirAsia X noted that it foresees a challenging operational environment in 2H19 due to the global economic situation and pressure facing the ringgit.

It is concerned that the impending departure levy coming into effect at the start of next month could impact air travel demand, especially when 3Q19 is typically a leaner period for the mid-to-long segment.

“The company expects 4Q19 to remain reasonably healthy as management continues to push for efforts to mitigate cost pressures and remains committed to ensure sustainable growth amid these challenging circumstances,” it said in an exchange filing yesterday.

It will continue further to drive revenue and sale of ancillary services to mitigate higher operational costs brought on by the weakening of the ringgit against the US dollar, while demand and load factors are expected to remain at a reasonably healthy level.

“It is worthwhile to note that average base fare is under pressure due to the increase in capacity on core established routes, in addition to new routes,” it stated.

The airline added that it is aware of the slowdown in the tourism sector, especially for the China and South Korea markets, and said efforts have been made to mitigate this risk by shifting a portion of its future capacity into other core markets.

For its operations in Thailand, the company’s second-largest revenue base, AirAsia X Thailand added up to five aircraft through operating leases in 2019.

AirAsia X is expected to remain with 24 aircraft as it focuses on maximising aircraft utilisation and realigning its business model to ensure continued sustainability and commercial viability in the coming quarters.

Malaysia is AirAsia X’s largest market by revenue.

Malaysia Airports Holdings Bhd (MAHB) is reportedly taking measures to collect some RM41.5 million in outstanding passenger service charges (PSC) from the AirAsia Group which comprises AirAsia Group Bhd and AirAsia X.

This comes after the Kuala Lumpur High Court ruled in favour of MAHB in a July 18 decision this year.

The estimated amount to be collected by the airport manager accounts for the difference in the previous and current PSC for international non-Asean passengers, as well as late payment charges.

Shares in AirAsia X and AirAsia closed flat at 19.5 sen and RM1.82 respectively yesterday.