Without the 2 factors, the company might have posted a PBT of RM300,000

by NURUL SUHAIDI / pic TMR FILE

AIRASIA X’s (AAX) revenue was down 5% to RM107 million for the quarter ending June 30, 2022, compared to the previous quarter ended March 31, 2022.

AAX also posted a loss before tax of RM652 million during the period under review.

The company said its earnings were affected by the one-off provision and debt restructuring exercise.

“AAX would have returned to profitability and posted a profit before tax (PBT) of RM300,000 if it excludes the one-off provision for travel vouchers distributed to passengers and travel agents who were affected by the debt restructuring,” it said in a statement.

The total one-off provision was RM653 million, which was borne on the quarter ended June 30, 2022, primarily for issuance of the travel vouchers, it added.

AAX is also bound by terms of the debt restructuring scheme in respect of its debts and liabilities as it is restricted from providing any cash refund to passengers and travel agents.

However, the group noted that the completion of its debt restructuring which was formalised on March 16, 2022, by way of a lodgement of court sanction, AAX is now on steady course to significantly increase scheduled passenger flight operations to meet strong pent-up demand. 

During the period under review, the total number of sectors operated solely for scheduled passenger flights stood at 81 sectors, a multifold surge from the 12 sectors flown during the three-month period until March 31, 2022.

It noted that the group has been through a series of shifts in its expense structure including increased staff costs due to minimum wage requirements, as well as increase in maintenance and overhaul costs attributed primarily to the reactivation of aircraft in preparation for the major operational ramp-up trajectory in the coming months.

Nonetheless, despite the increase in fuel price, total fuel expenses were reduced on the back of a decline in charter flights. 

In terms of balance sheet and cashflow, AAX charted a cash balance of RM25 million for the period ending June 30, 2022, mainly from a progressive business opportunity centred around the resumption of scheduled passenger flights, charter and cargo flights. 

AAX Malaysia CEO Benyamin Ismail said the airline is now on the strong path to recovery despite operating in the strenuous environment, high fuel prices, weakened ringgit as well as travel restriction in key markets such as China, Japan and Taiwan.

“The financial provision provided reflects our value for the passengers and commitment to complete to the completion of debt restructuring.

“However, in terms of average base fare, we continue to see a healthy trend of circa RM757, a pleasing uptrend from pre-Covid-19 levels, while still providing the best-valued fares in our category in the market,” he said.

Moving forward, AAX is optimistic about its advanced partnership with Capital A Group to leverage on a broad range of resources for its robust operational scale-up strategy.

Post restructuring, with the intention to enhance the ramp up of the airline’s operations, AAX had announced on Aug 18, 2022, that it intends to seek shareholders’ approval in respect of the partnership through a proposed shareholders’ mandate at the company’s EGM. 

Meanwhile, AAX acting group CEO Tan Sri Dr Tony Fernandes said the company is currently lean in its infrastructure as a result of debt restructuring with perhaps the lowest operating cost base of any airline in its category.

However, given certain travel restrictions in many countries still apply, the investment in infrastructure and staff to support the ramp-up of airline’s operations will result in some additional costs and time for the short term. 

“We intend to seek shareholders’ approval at the upcoming EGM for the purpose of entering into agreements with Capital A to bolster and scale up the company’s operations seamlessly.

He is convinced that the company will be able to leverage on the capabilities within Capital A in terms of commercial requirements, cargo flight operations and technical maintenance requirements to name a few.

Adding to it, in the coming months, AAX will be reactivating more aircraft to return to popular medium haul leisure destinations in Australia, South Korea, Japan, Saudi Arabia apart from the existing ones.

It also expects to launch new short-haul services to Bali for the first time and more exciting new longer haul destinations to Istanbul, Dubai and London, which will start its operations by year end.

“We expect to ramp up flight frequencies and return to daily services to most destinations before 2023, with optimised aircraft utilisation of 15 hours by December,” Fernandes said.

“We also see positive signs for a stronger return to China and travel restrictions removed in all of our core markets soon which will provide a significant boost to our operations.

“In terms of our associate’s performance, AAX Thailand posted revenue of US$14.8 million (RM66.45 million) during the quarter, and reported a net loss of US$40.5 million,” he added.

As AAX Thailand embarks on its rehabilitation plan, cash balance was recorded at US$13.3 million on the back of prudent cash management. Further details on AAX Thailand’s rehabilitation plan will be announced in due course.

“Once successful, we are confident that AAX Thailand’s revamp of the company’s administration process and revised debt structure will deliver greater efficiencies and a solid platform for robust future growth,” Fernandes said.

AAX operates a fleet of five A330s from a fleet of 11 A330 aircraft.

The airline expects to increase its operating fleet to 15 A330 aircraft by the first half of 2023 to meet strong consumer demand.