The aviation business of Malaysia’s Capital A – formerly the AirAsia Group – saw aviation revenue plummet by two thirds in a brutal 2021 financial year.

For the year ended 31 December 2021, the group’s aviation business posted revenues of MYR997 million, down 65% from 2020, according to its full-year earnings release.

AirAsia A321neo

Source: AirAsia

AirAsia commenced A321neo services in January 2020

The aviation group’s EBITDA (earnings before interest, taxes and depreciation) loss narrowed to MYR789 million from MYR3.4 billion a year earlier.

The EBITDA improvement during 2021 was due to the halving of staff costs at the aviation unit, as well as a reduction in ‘other operation expenses’ from to MYR238 million in 2021, from MR2.3 billion a year earlier.

Passengers carried in 2021 fell 64% to 4.8 million, while ASKs dived 70% and RPKs 71%.

Reflecting a pick-up in air travel amid a loosening of coronavirus-related travel restrictions, aviation revenue for the fourth quarter of 2021 more than doubled to MYR463 million, while fourth quarter’s EBITDA losses narrowed to MYR330 million from MYR2.3 billion a year earlier.

The fourth quarter also saw passengers carried double to 2.7 billion, ASKs rise 72%, and RPKs rise 109%. Load factors during the quarter were 80%, the highest number since coronavirus pandemic emerged from Wuhan, China in early 2020.

“AirAsia Aviation Group’s performance in the last quarter was encouraging, backed by the festive holiday season and easing travel restrictions,” says chief executive of AirAsia Aviation Group Bo Lingam.

“The performance indicated a V-shape resumption of air travel demand in domestic markets in 2021 as compared to the preceding quarter when AirAsia Malaysia, AirAsia Indonesia and AirAsia Thailand experienced a slight setback due to a surge in cases and the re-imposition of movement control restrictions.”

Given positive developments in regard to travel restrictions, Lingam is optimistic things will continue to improve.

“The aviation group is moving in a positive direction as we anticipate a stronger rebound, enabling us to grow further with a lean operating structure. It is our hope that governments especially in [Southeast Asia] will continue to ease travel restrictions and reduce or remove onerous entry requirements, for the benefit of the recoverability of the tourism industry.”

Across AirAsia’s Malaysian, Indonesian, Philippines and Thailand units, Capital A observed improving load factors in the last part of 2021, mainly owing to the year-end holiday season.

In the fourth quarter, Capital A derived 64% of its MYR717 in total revenue from aviation. The balance derived from its digital businesses and its Teleport logistics unit.

“Capital A is an investment company with a broad portfolio of businesses which all deliver the best value at the lowest cost, supported by strong data built up over two decades,” says chief executive Tony Fernandes.

“The Group also has one of Asia’s leading brands to ride on, a strong people-first culture and an underlying promise of remaining committed to serving the underserved in all that we do. Just like what the airline has done from day one, all of the Group’s different lines of business will deliver the same strategy that is underscored by doing what we do best - making travel and everyday lifestyle services affordable, accessible and inclusive to all.”