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Capacity cuts lead AirAsia X to wider Q2 loss

Lower capacity as it terminated some routes led AirAsia X to post an operating loss of MYR110 million ($26.3 million) for the second quarter.

The loss was a 14% increase compared to the the previous corresponding quarter loss of MYR96 million.

Total revenue for the three months ended 30 June fell 4.5% to MYR1.01 billion, and total expenses were up 8.6% to MYR1.14 billion driven by higher depreciation costs.

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AirAsia X

CASK including fuel was unchanged at MYR0.13, while excluding fuel it was at MYR0.08. RASK was up 2% to MYR0.12 as average fares rose 5% despite a 6% decline in ASKs. RPKs were down 6%, while seat load factor contracted one point to 80%.

The fall in unit capacity and revenues was linked to its termination of flights to services to Auckland, Kathmandu and Tehran, as well as other capacity adjustments on its core network.

Its net loss swelled nearly fourfold to MYR207 million, also influenced by new accounting standard on leases, and adjustments related to the sale-and-leaseback of three aircraft.

At 30 June the company's cash and cash equivalents amounted to MYR276 million,up from MYR252 million at the start of the quarter.

Both Thai AirAsia X and Indonesia AirAsia X reported operating losses for the quarter.

The Indonesian unit reduced its operating loss by 66% to MYR9.3 million, as it ceased scheduled services in favour of charter and wet-lease operations. As a result, revenue was sharply lower at MYR1.9 million, although its loss before tax improved 11% to MYR16.8 million.

Thai AirAsia X fell into an operating loss of MYR48.5 million, reversing the MYR20.5 million profit it made last year. Revenue was up 11% to MYR389 million, while its loss before tax came in at MYR36.6 million - compared to a profit before tax of MYR30.8 million in the previous corresponding period.

AirAsia X Malaysia chief executive Benyamin Ismail says that after terminating its Auckland route, the carrier now has a "clean slate" and will focus on enhancing yields across its core network, as its fleet of 24 A330-300s will remain stable.

"With our network rationalisation undertaken over the past two quarters we are now poised to focus our growth and presence in our key markets in Northern Asia, India and Australia as we look towards ramping up capacity and driving up utilisation going into the third and fourth quarter of 2019," he adds.

The carrier also flagged that it will commence short-haul flights on the Kuala Lumpur-Singapore and Taipei-Okinawa routes in a bid to boost revenue and increase fleet utilisation.

For the rest of 2019, the company has also hedged up to 85% of its fuel requirements at an average fuel hedging price of $77.

AirAsia X indicated that it will introduce high-density configuration on some of its aircraft that could be used on routes of less than six hours, while it is also planning an "aggressive" fleet substitution plan to replace its A330-300s with new -900s as they are delivered.

"In the face of dampening global economic backdrop, we remain confident on the future prospects of the company as the wider AirAsia Group continues to advance in terms of digital transformation," adds group chief executive Nadda Buranasiri.

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