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April 18, 2024
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AirAsia Aviation Group expects to recover to full capacity by the second quarter of 2023. The low-cost airline group of four airlines has seen a strong recovery in Q2 this year, which has continued into August. AirAsia reaffirmed its order for 362 Airbus A321neo’s and will resume deliveries in 2024. AirAsia back to full capacity in Q2 next year.

The recovery, which it anticipated last year, is reflected by the number of active aircraft in the quarter: from 72 in Q1, this grew to 90 in Q2 and is at 108 in August of the 205 in its fleet. AirAsia Aviation Group, which is part of the rebranded Capital A Group that includes other non-aviation brands, plans to grow this number to 157 aircraft at the end of 2022.

“AAAGL posted a strong quarter on quarter and year on year upward revenue momentum, benefiting from the reopening of international borders in core operating countries alongside less stringent travel restrictions in many key markets”, President and Group CEO Bo Lingam said. He made it clear that AirAsia is back after two very difficult years with deep losses, caused by the Covid-crisis.

The airline group produced its first positive EBITDA since the pandemic at RM151.5 million in Q2 compared to RM-125.2 million in the same period of last year. Revenues increased to RM1.379 billion from RM239.6 million as it carried 5.6 million passengers, up from 759K in 2021. Ancillary revenues were RM214.4 million versus RM36 million, mainly from checked-in baggage.
Yields were good on international flights, which saw strong demand, and were back to 159 routes in Q2. Higher yields were negated by 68 percent higher fuel costs (RM701 million), partly offset by a fuel surcharge on tickets. Fares were on average RM20 higher at RM214.

Costs per available seat kilometer (CASK) excluding fuel dropped from $0.1503 to $0.047 year on year. The target is to reduce CASKs ex-fuel by twenty percent compared to 2019 levels once all capacity is reinstated. AirAsia suffered from the high US dollar versus Asian currencies. Lingam also noted that the carrier incurred extra maintenance costs from bringing back the fleet to active status.

Domestic capacity was at 84 percent

Domestic capacity was 84 percent, international 62 percent. The consolidated load factor was 84 percent, the highest since the start of the pandemic. AirAsia Philippines reached 93 percent, up from 78 percent in Q2 2021, as it carried 994K passengers and operated at 44 percent capacity. The Malaysian subsidiary reached 84 percent, up from 76 percent in Q1 and 64 percent in Q2 last year. AirAsia Malaysia carried 3.8 million passengers versus 280K last year. The load factor for AirAsia Indonesia was 77 percent with 715K passengers carried. With travel restrictions in place for the quarter, AirAsia Thailand produced an RM -285 million loss. It operated at 33 percent capacity.

The group’s logistics subsidiary, Teleport, produced a lower EBITDA of RM25.3 million compared to RM19.8 million, with revenues down to RM98.8 million from RM160.9 million. Tonnes carried was 22.122, a 27 percent drop. It attributes the lower results to gradually moving away from using belly-hold capacity on AirAsia’s aircraft to only using its single Boeing 737-800 full freighter, the lockdowns in China, and rising fuel costs.

No labor shortages

Lingam said that AirAsia hasn’t suffered from labor shortages “due to our prudent manpower management during the pandemic.” He added: “During the downtime in flying, AAAGL kept flight crew on furlough and trained many in other parts of the operations to supplement their incomes, including to support our growing digital businesses. Pilot licenses 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. Our people are always our biggest asset and we are proud to say that as of August, we have brought back 78% of our furloughed flight staff and expect the balance will be filled by the end of the year.”

Lingam expects the recovery to continue during the rest of the year. Capacity should grow from forty percent of pre-Covid levels in Q2 to 54 percent in Q3 and 72 percent in Q4, reaching 100 percent in Q2 2023. “Collectively across the Group, jet fuel prices came down from its peak in July and this downward trend is expected to continue until at least next year based on a report by the International Air Transport Association. AAAGL 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.”

A321neo deliveries resume in 2024

With this positive outlook, AirAsia has reaffirmed its fleet plans and will resume Airbus A321neo deliveries from 2024 through 2035, with financing secured for deliveries until 2029. The group still has 362 undelivered A321neo’s on order from 366 that were ordered over the past six years. It first ordered 100 of them at the 2016 Farnborough Airshow but converted 253 A320neo’s to A321neo’s at the 2019 Paris Airshow. In October 2021, it did the same with another thirteen A320neo’s. This brought the total to 366, of which four have been delivered. The AirAsia fleet also includes 170 A320ceo’s, and forty A320neo’s or 215 in total, but this number will be reduced to 205 by the end of December. Excluded are twenty A321XLRs that are on order from AirAsia X.

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Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016.
Richard is contributing to AirInsight since December 2018. He also writes for Airliner World, Aviation News, Piloot & Vliegtuig, and Luchtvaartnieuws Magazine. Twitter: @rschuur_aero.

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