SEPANG, 28 August 2020: AirAsia Group Berhad reported Wednesday its results for the quarter ending 30 June 2020 that showed airline revenue plummeting 98% year-on-year.
The unaudited consolidated second quarter 2020 results of AirAsia Group Berhad, identified as the Consolidated Group* (Malaysia, Philippines and Indonesia) 1 reported revenue of MYR119 million, down 96% from MYR2.9 billion in 2Q2019.
Airline revenue declined 98% year-on-year (“YoY”) as capacity was significantly reduced due to the fleet hibernation at the end of March, prior to a gradual resumption of domestic operations from the end of April as travel restrictions eased.
The airline revenue in the quarter was also negatively impacted by MYR60 million in refunds. Less impacted in the quarter, non-airline revenue declined 55% YoY.
The Consolidated Group posted a loss in 2Q2020 EBITDA of MYR683 million, in comparison to EBITDA of MYR254 million in 2Q2019. Net loss for the period was MYR1.2 billion, compared to MYR47 million in profit in the previous corresponding quarter.
The loss was attributed primarily to a shortfall in revenue amidst subdued travel demand due to lockdowns and border restrictions worldwide as well a realised hedging loss of MYR199 million.
Operating & Market Share
As flights gradually resumed from the end of April, the Group saw a pick up in a number of key operational metrics in June as compared to May, including tripling the number of passengers carried by AirAsia Malaysia, doubling the number of passengers carried by AirAsia Thailand, and increasing 10 percentage points in load factor while reaching six times the numbers of passengers carried by AirAsia India, reflecting the strong rebound demand for air travel.
Revenue per available seat km (RASK) increased by 3% to 15.93 sen in 2Q2020, attributed to the adaptation of a better pricing strategy and more rational competitor pricing since 4Q2019. Average fare improved significantly by 34% YoY from MYR178 to MYR239. Load factor was commendable at 59% in comparison to peers.
Cost Performance
All airline operations-related costs reduced by 72% on the back of the Group’s strict cost control. Fuel expenses decreased by 74% attributed to lower capacity, although this was offset by the realised hedging loss of MYR199 million. Staff costs reduced by 38% contributed by headcount rationalisation and pay cuts across the Group. Maintenance and overhaul costs decreased by 93% as the Group optimised assets with the use of newer aircraft that are further away from major checks. User charge expenses decreased by 82% due to lower operational volume, in addition to savings in ground-handling costs as a result of the Group’s implementation of contactless procedures and digital check-in processes. Other operating expenses were down by 65% on the back of lower marketing spend, renegotiation of ICT costs and strict cost control.
“We will be able to maintain sustainable operations on the back of our domestic services for the rest of the year if travel restrictions and border closures remain in place,” said AirAsia Group airlines president, Berhad Bo Lingam.
“Fares have been improving, and we believe that competitors will continue to price rationally. We managed to reduce airline operational expenses by 72% for the quarter with strict cost control and thanks to our staff taking pay cuts across the Group. 70% of our fuel hedging costs were restructured, and we have received support from lessors for deferrals, as seen in the 99% reduction in net cash used for financing activities in 2Q2020.”
“We grew our RASK this quarter as competitors remain rational. AirAsia Indonesia increased RASK the most by 56%. AirAsia Malaysia and AirAsia Philippines saw growth in RASK by 1% and 12% respectively. Average fare has also improved for AirAsia Malaysia and AirAsia Indonesia by 61% and 13% respectively during this quarter.
“By 4Q2020, we expect to run at 70-75% domestic capacity for AirAsia Malaysia, 60% for AirAsia Philippines and 35% for AirAsia Indonesia. AirAsia Thailand and AirAsia India, which have been ramping up at a faster pace, are expected to recover to 105% and 75% of pre-Covid-19 domestic capacity by the end of the year.
* Consolidated Group refers to Malaysia, Indonesia and Philippine airline units and digital subsidiaries. Wholly-owned subsidiary AirAsia Berhad, along with associates PT Indonesia AirAsia and AirAsia Inc. Group of Companies (Philippines) results were consolidated for financial reporting purposes in accordance with MFRS 10 since 1 January 2017.
