AirAsia X posts Q4 net loss on impairment, higher fuel expense

AirAsia X says it provided an impairment due from a joint venture amounting to RM24 million during the fourth quarter. (Reuters pic)

KUALA LUMPUR: AirAsia X Bhd recorded its third consecutive quarterly loss on Thursday, dragged down by an impairment provision while rising fuel costs also dented its performance in the October-December period.

The long-haul offshoot of Malaysia’s flagship budget airline AirAsia Group said in an exchange statement it provided an impairment due from a joint venture amounting to RM24 million during the fourth quarter.

The airline’s average fuel price rose 29% from US$69 to US$89 per barrel during the period, and it also accounted for higher deferred tax.

AirAsia X said it will be adding up to five aircraft through operating leases this year, via its Thai operation.

Its Malaysian operation is expected to remain with 24 aircraft. It will maximise utilisation of its current fleet, including new route launches as well as increasing frequencies of core routes.

The airline expects its prospects to remain encouraging, it said, with forward booking trend and average fares in the first quarter of 2019 performing within expectations.

AirAsia X Group CEO Nadda Buranasiri said in a statement that with fuel prices declining from 2018 highs, the airline has begun to hedge a significant portion of its fuel requirements at lower prices to improve cost management this year.

“The group intends to solidify its mark on the North Asian market and continue to fine-tune our network as we continue our strategy of strengthening market share in our core markets,” he said, adding that route expansion to Europe was a possibility.

Routes to Japan and Indonesia were hit by natural disasters during the quarter, while new destinations, increased flight frequencies and redeployment of capacity to core markets led to the airline’s load factor – which measures how full plane are – to drop by 5%age points to 78%.

The number of passengers carried fell by 3% to 1.49 million on the back of a 2% increase in capacity.

The airline posted a net loss of RM99.27 million for the fourth quarter versus a net profit 84.4 million a year ago.

Excluding the impact of the impairment, its net operating profit fell 77% to RM27.4 million.

Revenue was 6% lower at RM1.15 billion.

Its year-ago performance was boosted by favourable foreign exchange and stronger passenger volume in the seasonally busier quarter.