Malaysian low-cost carrier AirAsia Group said Monday (22 November) that its third-quarter net loss widened due to COVID-19 quarantines and border restrictions in two of three of its operating markets. The group said in a stock exchange filing that it suffered a net loss of 887 million ringgit (US$212 million) for the July-September quarter, 4.1 percent more compared with a loss of 851.8 million ringgit a year earlier. Revenue for the period dropped 37 percent to 295.9 million ringgit. The company said its Teleport logistics business tripled its revenue, contributing 53 percent to the group total revenue.
AirAsia’s said in its filing that it had a foreign exchange loss of 216.9 million ringgit during the period and said investments in technology, talent and network for its digital businesses and in Teleport also added to its losses. The airline carried 351,971 passengers in the third quarter, 82 percent less than 1.9 million a year ago, while the load factor – which measures how full planes are – was little changed at 67 percent.
AirAsia said it has seen “an upward trajectory of sales with the gradual recovery of travel” since domestic travel reopened in the region. “We expect the current sales momentum and reduced cash burn trend to continue into (the following quarter) as the group is well positioned to serve the pent-up leisure travel demand,” it said. It has also completed two rounds of renegotiation with lessors for lower lease rental in the future and expects to complete the renegotiations with all lessors by the end of the year. AirAsia maintained that it will have sufficient liquidity to sustain the business operations throughout 2021 and 2022. Earlier this month, the airline won shareholder approval for a rights issue to raise 1 billion ringgit.
On the airline performance results and outlook, group CEO of AirAsia Aviation, Bo Lingam said: “Load factor for the Group remains healthy in 3Q2021 at 67 percent, up 1 ppt attributed to active capacity management to match demand. Growth during the quarter was driven by AirAsia Philippines which grew its passengers by 167 percent YoY and pushed the load factor up to 77 percent. AirAsia Malaysia, AirAsia Indonesia and AirAsia Thailand experienced subdued momentum QoQ due to limited operations as travel was restricted for the most part of the quarter. Nonetheless, in a month-on-month (MoM) breakdown, AirAsia Malaysia more than doubled the number of passengers carried in September as compared to August, which resulted in a 13 percentage point higher load factor improvement. The encouraging growth was primarily driven by the opening of the Langkawi travel bubble from 16 September. Since then, we have observed a continuous improvement in bookings, as travel demand gradually recovers following the authorization of nationwide interstate and some limited international travel, since 11 October onwards.
“We continued to improve our cost base through stringent cost containment measures. Our 3Q2021 fixed costs reduced 23 percent YoY, as airline staff costs were down 38 percent YoY due to headcount rationalization & attrition. Other operating expenses reduced by 11 percent YoY and another 33 percent QoQ due to strict cost control measures implemented for marketing, rental and IT spend. We have been reporting a zero fuel swap loss since 2Q2021. Many countries have started to reopen and allow vaccinated travellers in. Most recently, the governments of Malaysia and Singapore announced the commencement of the Vaccinated Travel Lane (VTL), which paves the way for a gradual flight resumption between these two countries. We look forward to kick starting our Kuala Lumpur-Singapore flights at the end of this month and we are hopeful of the establishment of similar initiatives in other key markets in the near future.”
On Asia Digital Engineering (ADE)’s performance and outlook, CEO of ADE, Mahesh Kumar said: “Asia Digital Engineering is actively ramping up its service offerings to become the leading maintenance repair and overhaul (MRO) provider in Asia. In 3Q2021, ADE obtained foreign approval from the Indonesian authority to conduct base maintenance works in Malaysia. ADE also received the relevant approvals to carry out base maintenance services for the A320neo aircraft type in Malaysia. While rapidly expanding its service capabilities, ADE expects to receive a number of additional approvals by the end of 2021. To further support our expansion plan, we have embarked on a fundraising exercise which is expected to complete by the end of first half next year. Having successfully completed the first cargo-on-seat conversion for Teleport and carried out the first ka-band installation for airasia wifi, ADE is actively exploring strategic partnerships and collaborations with service providers, including an inflight broadband solution, to further enhance its position as a one-stop solution for all MRO requirements.”