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AirAsia X Berhad • Annual Report 2014
Overall, although it has been an extremely challenging
year financially, many developments in 2014 put AirAsia
X in a more strategic position to take our growth to a
higher level. Despite the increase in CASK, leveraging on
synergies within the AirAsia Group, we have managed
to maintain our position as the world’s lowest unit cost
operator at US3.94cents in 2014, 50% lower than the 10
largest full service carriers (FSCs) in Asia-Pacific. This in
itself serves as an excellent launch pad for the new team
here at AirAsia X. And, with the guidance of our newly
appointed Group CEO, Datuk Kamarudin bin Meranun who,
together with Tan Sri Dr. Tony Fernandes, pioneered and
grew AirAsia to become the world’s best low-cost airline,
there is every reason to believe that we will be able to
turn around our current loss-making position to truly take
to the skies.
FINANCIAL PERFORMANCE
Given our expanded capacity and increase in number of
guests flown, as well as revenue from chartered flights,
freight and cargo, and ancillary income, AirAsia X’s
revenue grew by 27% to RM2,936.7 million in 2014 from
RM2,308.4 million in 2013. Of this, revenue from scheduled
flights increased by 16% to RM1,630.1 million; charters
contributed RM171.6 million, representing an increase of
60% from 2013; freight and cargo revenue increased by
26% to RM113.9 million; while ancillary revenue grew
by a significant 30% to RM586.5 million. At the same
time, heavy promotions on the new routes brought down
our average passenger fare, contributing to a 0.7% dip in
revenue per available seat kilometre (RASK) from 12.06
sen in 2013 to 11.97 sen.
The Group’s operating expenses, meanwhile, increased
44% to RM3,303.7 million, mainly due to an increase in
number of Allstars, and a larger number of aircraft on
lease.
Although the price of oil plummeted in the second half of
the year, we had hedged up to 52% of our fuel prior to
it dropping below USD100 per barrel in September and
then further to below USD50 per barrel in January 2015,
locking in our price at an average of USD118 per barrel.
Accordingly, coupled with an increase in consumption with
added capacity, our fuel expenses surged by 38%.
While we stand to benefit from low oil prices in 2015, the
plunge in price so far has acted like a double-edged sword,
as it has also led to a devaluation of the Ringgit. At the
close of the financial year, the Ringgit had depreciated
6% year-on-year against the US Dollar. Given that 60%
of our operating costs and 95% of our borrowing are
denominated in USD, this resulted in an unrealised forex
loss of RM118.8 million in 4Q2014.
Together with an increase in various maintenance and
other operating expenses, and reduced net tax allowance,
AirAsia X recorded a loss after tax of RM519.4 million in
2014 as compared to loss of RM88.3 million in 2013.
STRENGTHENING OUR EDGE
WITH REGIONAL AFFILIATES
Emulating the growth strategy of AirAsia, AirAsia X is
developing a regional network of associates. This got off
to a positive start in 2014 with the establishment of IAAX
in January 2014, and the official launch of TAAX in April
2014.
IAAX launched its inaugural flight from Bali to Taipei on 19
January 2015 and has since added flights to Melbourne
to its network. TAAX saw its first flight from take off
Bangkok’s Don Mueang International Airport to Seoul on 17
June 2014 and, three months later, introduced routes from
Bangkok to Narita International Airport, Tokyo and Kansai
International Airport, Osaka. Despite the political turmoil
in 2014, our Thai associate still recorded a strong average
load factor of 85% on all its routes.
As at 30 April 2015, TAAX was operating with three Airbus
A330-300 aircraft while IAAX had two. Both associates
plan to increase their fleet size by end 2015.
These regional bases add to AirAsia X’s edge as they
afford more room for further growth, strengthening our
market position in each of our destinations as customers
have multiple direct flight options to choose from. Today,
passengers are able to connect to 25 routes over 11
countries from North Asia to Australia within the AirAsia
X Group. Bringing in AirAsia Group’s extensive short-
haul feeder network of over 190 routes throughout Asia-
Pacific, the growth opportunity is unlimited. In 2014, 60%
of passengers made connections between the AirAsia X
and AirAsia Groups. And, according to the CAPA Centre
of Aviation, together with AirAsia, we carried 26.4 million
passengers representing 42% of the approximately 63.2
million passengers who flew to, from or within Malaysia.
CAPACITY MANAGEMENT
As part of AirAsia X’s capacity management, we have
entered into wet lease contracts with third parties that
would enable us to redeploy some of our aircraft during
the second and third quarters of the year which typically
represent our lean season. Fortuitously, this period
coincides with peak summer season in Europe as well as
the Umrah travel season, hence there is demand for our
aircraft during these mid-year months. Aircraft that we
lease out will return to Malaysia in time for the fourth
quarter, when travel in the region starts to pick up again.
The arrangement is strategic as not only will our wet lease
ACTING CEO’S STATEMENT
