AirAsia Aviation Group expects to recover full operations by mid-2023, as capacity ramp-up continues amid optimism that travel demand will remain robust.
The group, the airline business of Malaysia-based Capital A, turned a modest profit in its second-quarter profit on the back of “upward revenue momentum” from the easing of travel restrictions in its key markets.
For the three months to 30 June, AirAsia Aviation swung to a positive EBITDA of MYR151 million ($33.8 million) – its first profit since the pandemic struck in 2020. The figure compares to a restated EBITDA loss of MYR125 million in the same period last year.
The aviation business saw a significant uptick in revenues at MYR1.38 billion in the second-quarter this year, nearly six times higher than revenue reported last year.
Passenger numbers across airline units in Malaysia, Indonesia, Thailand and the Philippines surged more than sevenfold to 5.6 million, with capacity up nearly sixfold.
The increase was due largely to the relaxation of border restrictions relating to the pandemic, coupled with “robust travel demand” in key markets such as Malaysia, Thailand, Indonesia and Singapore.
Costs for the quarter tripled to MYR1.2 billion, on the back of a uptick in fuel costs, which made up 51% of overall expenses. AirAsia Aviation adds that staff and maintenance costs also increased “significantly” as its airlines restored flights through their networks.
AirAsia Aviation chief Bo Lingam adds: “Despite the industry headwinds, the airline business was able to mitigate the effects of the steep rise in jet fuel prices. [The group] has undertaken numerous counter strategies including the implementation of a fuel surcharge, and increasing the ticket fares, together with improved ancillary revenue to help offset the rising cost.”
OUTLOOK TO IMPROVE FURTHER
Lingam also contends that the airline group has been spared the manpower crunch facing other operators, “due to our prudent manpower management during the pandemic”.
The group put its crew on furlough during the pandemic, when flying activity dwindled amid movement control restrictions.
Adds Lingam: “Pilot licences were kept active and recurrent training was maintained. Therefore, the group is able to reestablish our pilots and cabin crew as soon as they are required.” To date, it has reactivated close to 80% of its furloughed flight staff, with the remainder to be brought back by year-end, in line with the capacity ramp-up.
Lingam states that the group’s carriers will also continue returning parked aircraft to operations, and is targeting a fleet size of 160 by year-end, up from the current 108.
“[AirAsia Aviation] foresees our aviation business performance to continue to improve across all key metrics in the near term provided no further extraneous cost pressures affect the airline industry,” adds Lingam.
Parent company Capital A, meanwhile, posted a positive EBITDA of about MYR109 million for the quarter, swinging from last year’s EBITDA loss of MYR197 million. However, foreign exchange losses and depreciation costs meant the company continued to post a net loss MYR491 million.