AirAsia X falls to Q1 loss as capacity soars

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AirAsia X recorded a operating loss of M$38 million ($11.8 million) for the quarter ended 31 March 2014 as the carrier expanded capacity aggressively across its network.

Revenue compared to the same period the year prior soared by 40% to M$750 million, although that was outpaced by a 64% increase in operating costs to M$786 million.

Both figures were affected by a massive 60.1% rise in ASKs over the quarter, and RPKs rose 63.3%, resulting in load factor increasing by 1.6 percentage points to 85.5%. Revenue per ASK declined by 18% to 3.67 US cents, while CASK including fuel rose 2% to 3.83 US cents.

Net loss for the period came to M$20.9 million, compared to a profit of M$50.2 million over the previous corresponding period.

The carrier’s cash and cash equivalents amounted to M$75 million at the end of the period, down from M$212 million from the start of the quarter. The drawdown was mostly due to a M$399 million investment in new aircraft and its Thai and Indonesian affiliates. That overshadowed the M$131 million in cash generated from its operations.

During the three months, AirAsia X took delivery of three Airbus A330-300s, including one on financial lease and two on operating leases. Flightglobal's Ascend Online Fleets database shows that it ended the quarter with a fleet of 17 A330s. Two A340-300s were placed in storage.

In its outlook, AirAsiaX says that it expects capacity over the coming quarters to grow in the region of 30%, which will put pressure on short-term earnings. Nevertheless, chief executive Azran Osman-Rani was upbeat that there will be some improvement in yield over the coming quarters.

“As new capacity typically takes 12-months to reach break-even, we expect to see yield improvement and an earnings turnaround in the second-half of this year, after the seasonally weakest second quarter, and taking into account the aviation industry starting to stabilise its capacity roll-out,” he says.