AirAsia X

AirAsia X

Postby winston » Sun Sep 14, 2014 8:51 am

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Affin Research maintains Sell on AirAsia X
August 20, 2014


KUALA LUMPUR: Affin Research has maintained its Sell call on AirAsia X (AAX) with a target price of 65 sen based on FY15 P/BV multiple of 1.3 times.


In a note on Wednesday, the research house said it has made no changes to its earnings forecast, as its anticipated some earnings recovery in 2H14 in tandem with the seasonally stronger holiday period.

“AAX reported a larger-than-expected 2Q14 core net loss of RM150.4mil. This pushed 1H14 core net loss to RM210.7mil, which was grossly below both street and our expectations.

“Note that our definition of core net loss excludes 1H14’s deferred tax rebate of RM40.5mil and forex gain of RM30.1mil from the strengthening of the RM againsts the US$.

“The discrepancy against our forecast was mainly due to lower-than-expected average fares (average fares fell by 24.0% yoy, from RM564 in 1H13 to RM428 in 1H14),” it said.

It added that AAX reaffirmed its strategies which include introducing unique routes, to increase frequency on popular routes and increase ancillary income per passenger as well as lower its operational costs.

“AAX guided that it will continue to be load active, with a load factor target of about 80%.

“This, we believe will continue to be at the expense of yields. That said, management has also guided that capacity growth will slow down to 24% and 12% respectively for the remaining quarters as it charters out more aircrafts,” it said.

Source: The Star
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Re: AirAsia X

Postby winston » Sun Sep 14, 2014 8:57 am

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CIMB Research lowers AirAsia X target price
August 20, 2014

KUALA LUMPUR: CIMB Equities Research has lowered AirAsia X’s target price from 75 sen to 72 sen which is 12.2% below the last traded price of 82 sen after wider-than-expected losses and the recent run-up in its share price.

It said on Wednesday AAX’s Q2, 2016 results were below expectations, with H1, 2014 core net loss of RM225mil already exceeding its previous full-year loss estimate due to weaker-than-expected yields.

“As such, we more than double our loss forecasts for FY14-15 and reduce our target price, based on its average P/BV since IPO of 1.75 times (from 1.5 times previously).

“We believe that Malaysia Airlines (MAS) will be forced to cut back capacity deployments in 2015 and AAX’s FY15 losses should be reduced. With the share price already up 19% from its recent low, however, we downgrade the stock from Hold to Reduce.

“De-rating catalysts include likely continuing annual losses in Malaysia until FY16 and at least two years of start-up losses from new associates in Thailand and Indonesia. Switch to AirAsia,” it said.

AAX’s revenue per ASK capacity (RASK) fell 19% on-year during 2Q14, continuing from 1Q’s 18% on-year decline and 4Q13’s 17% drop, due to excessive capacity expansion since 3Q13.

Australia’s RASK fell 23% on-year in the quarter, a slight improvement from 1Q’s 30% fall, but North Asia’s RASK decline worsened from a 5.2% on-year fall during 1Q to a 6.6% on-year decline during 2Q14 as Nagoya was launched in mid-March.

The 49%-owned associates, Thai AAX and Indonesia AAX, reported combined start-up losses of RM14mil as TAAX began operations in April and started flying to Seoul in June. Malaysia losses to narrow in 2H14 and FY15

“The 2Q is AAX’s seasonally-weakest quarter and the 2H14 should see a natural seasonal uplift,” said the research house.

CIMB Research also pointed out as much of FY14’s capacity expansion was put in place in 2H13, the on-year RASK declines should narrow over the next half year as demand picks up to fill the available capacity.

It forecast losses should narrow further in FY15 as AAX is only adding two to three planes to the Malaysia fleet next year, with the remaining five to six deliveries allocated to TAAX and IAAX. This is less than half the pace of the 11 plane additions to AAX’s Malaysia fleet over 2013-14.

“Potential MAS capacity cutbacks will also directly benefit AAX. But associate losses will pick up. TAAX will record losses when new Tokyo Narita and Osaka flights start in September, as will IAAX when it starts flights in 4Q14. These are necessary long-term investments and investors will need to be patient in the near term,” it said.

Source: The Star
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Re: AirAsia X

Postby winston » Sun Sep 14, 2014 12:15 pm

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Time to X the spot again BY TEE LIN SAY
July 26, 2014

Could it be time to relook at AirAsia X Bhd? This long-haul, low-cost affiliate carrier of the AirAsia Group will be turning around in the second half of the year. Very likely in the third quarter to Sept 30 too.

That’s not all. The viability of AirAsia X flying to favoured destination London appears much stronger than before.

For the better part of this year, the hype and bluster on AirAsia X has died down significantly, following the announcement of two straight quarters of losses.

Long before that, the cancelling of the popular London and Paris routes in 2012 had already cast aspersions on the low cost carrier’s model.

Perhaps flying long haul for a low cost carrier was never viable in the first place.

Not surprisingly, its share price has been heading south, down 16.5 sen to 83 sen on a year to date basis.

It’s also 25.6% or 42 sen down from its initial public offering (IPO) price of RM1.25.

Even during the day the company was floated in July 2013, its share price never performed. The stock finished the day just 2 sen above its IPO price.

Were many already lacking faith for low cost long haul flights at that point?

Over the week, rumours of a merger between Malaysian Airlines Systems Bhd (MAS) and AirAsia X intensfied, as many speculated that a privatisation of MAS would fuel some kind of a tie-up.

On Thursday, Khazanah issued a statement quashing the rumours, saying that the media reports were unfounded and speculative.

Launched in 2007, AirAsia X competes with the likes Singapore Airlines’ Scoot and Qantas Airways’ Jetstar. Its biggest shareholder is the Tune Group with a 17.83% stake while AirAsia Bhd owns a 13.76% stake.

AirAsia X currently serves 19 destinations across Asia, which mainly consist of Japan, Taiwan, China and Australia. It also flies to Jeddah and Kathmandu.

Raking in a profit in the second half

During the Farnborough Airshow in London, AirAsia X chief executive officer Azran Osman-Rani confidently said that AirAsia will be turning around in the second half of the year. Analysts say there is a strong likelihood that this will happen in the upcoming third quarter results.

What’s more, now that AirAsia X has signed a memorandum of understanding (MoU) with Airbus to buy 50 ‘energy efficient’ A330Neos for US$13.8bil with an additional 50 purchase rights, this allows AirAsia X to once again revisit flying to London - the unspoken compulsory route needed for traveller endorsement.

The deliveries will take place between 2018 to 2024.

The key feature of the A330neo is that it is able to save fuel consumption by 14% compared with the normal A330. This makes it the most efficient, medium range widebody aircraft in the market.

Apart from expanding AirAsia X’s fleet size, the new A330neo will be used to replace some of its existing aircraft which will be 12 years old by 2020.

On turning around, Azran first explained that the low cost carrier model for long haul flights is viable.

“The losses had nothing to do with an unsustainable business model but was due to the typical start up costs related with setting up a new business,” he says.

“For every new route AirAsia X goes into, there will be an average of a 12-month start up losses incurred. AirAsia X will be turning around because we are reaching the end of that 12 month period for many of our routes,” he explains.

Some may say that AirAsia X is walking on egg shells with its borrowings of RM1.66bil and cash position of RM75.08mil as of March 31. However, the airline business is a lot more capital intensive than other sectors.

Azran says that when a company starts a new business, it would have to invest in new capacity, stimulate demand and throw in promotions to fill up the flight. All these were typical start up costs invested by AirAsia X in the last two years.

AirAsia X has been expanding aggressively in the last one year.

To its credit, it has carried th most number of passengers to North Asia in 2013. The north Asian markets consist of China, Korea, Japan and Taiwan.

Looking at its first quarter to March 31, 2014, the statistics for the expansion are very telling.

Its average seat kilometre (ASK) which is the number of seats per kilometre, increased 60.12% to to 6.22 million from 3.89 million in the previous period.

Heavy discounting was seen in average passenger fares, which dropped to RM467.11 from RM623.53 previously.

The total number of passengers carried over the three month period increased 66.9% to 1.08 million from 647.366 passengers. Thus, load factor improved to 85.8% from 84.2% previously.

This resulted in AirAsia X recorded losses of RM11.28mil from a previous profit of RM50.2mil for its first quarter to March 31, 2014. This was on the back of a 40% increase in revenue to RM749.48mil.

The carrier consumed 930,616 barrels of jet fuel for this period, a 72.4% increase from 539,676 consumed previously.

“The increase of AirAsia X’s capacity in its Australian routes as well as capacity expansion by its competitors had led to major losses in the fourth quarter of 2013 and the first quarter of 2014,” says MIDF analyst Chua Boon Kian.

He points that tourist statistics during the first quarter showed a healthy growth trend in arrivals, particularly from South Korea, which registered a 37% year-on-year increase and 19% jump from visitors from Australia.

“If Malaysia Airlines exercises capacity restructuring by the end of FY14, AirAsia X will be able to recoup some of its earlier losses through the recovery of fare yield in the second half of 2014,” he said.

Thus, Chua maintains a “buy” stance on AirAsia X with unchanged target price of 96 sen, premised on an FY15 price earnings ratio of 10 times.

Cheap flights to London again?

AirAsia X had previously flown to Paris and London, offering connections from its Australian routes, but halted serving the routes in 2012.

During the Airshow, AirAsia X co-founder and director Tan Sri Tony Fernandes said that with the orders for the A330neo, this is a huge sign that it will only be a matter of time before an AirAsia X operates in Japan and India.

With AirAsia X in India, Fernandes added that AirAsia X can then fly to Africa and London, with Bangalore being a big hub. Meanwhile from Japan, it can start flying to South America.

“Now that we have the A330neo, it certainly makes London a whole lot more viable. We learnt from our old mistakes. The last time we didn’t have the support and it wasn’t aggressive enough. The rule of thumb is to have 20/30 short haul planes as a feeder, to make the long haul attractive and use it as a base,” says Azran.

Chua says that the longer range capability of A330neos will be more fuel-efficient for AirAsia X to resume its European route and the possible opening up of the US west coast route by 2018. “As the Asean region’s income per capita continues to grow, we believed that demand for leisure travel, especially for long haul destinations, should grow simultaneously,” he says.

This year, AirAsia X will take delivery of seven aircraft, hence bringing its fleet size to 23 Airbus A330-300s by the end of this year.

AirAsia X will take delivery of between seven and eight planes yearly.

Azran adds that AirAsia X started operations in Thailand earlier this year. For the first three months, it has already recorded a load factor of 88%. AirAsia X’s Indonesian affiliate will start operations later this year.


Source: The Star
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Re: AirAsia X

Postby winston » Mon Nov 10, 2014 1:44 pm

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10 Nov 2014

DJ AirAsia X Slows Capacity Growth to Guard Margins -- Market Talk

0529 GMT [Dow Jones] AirAsia X Bhd. (5238.KU) Monday says it has slowed capacity growth, to protect its margins after its fleet grew by seven aircraft over the last year.

The long-haul associate of Malaysian discount carrier AirAsia Bhd. (5099.KU) says it put more aircraft on charters and lease during lean periods to improve margins.

It adds that it plans to "allow the previously added capacity in 2013 to mature and progress towards profitability."

AirAsia X also reports that its passenger load factor dipped to 80.6% in the July-to-September quarter, from 82.3% in the same period last year.

Fleet grew to 24 planes, mostly Airbus Group N.V. A330 widebody jets that can carry nearly 400 passengers on routes with five to ten hours of flying time.

Source: Dow Jones Newswires
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Re: AirAsia X

Postby winston » Mon Nov 10, 2014 5:17 pm

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AirAsia X achieves passenger load factor of above 80%

KUALA LUMPUR: AirAsia X has achieved a passenger load factor of above 80%, on the back of 24% on-year growth in Available-Seat-KM (ASK) to 6.36 million in its third quarter 2014.

In a statement on Monday, AirAsia X said the capacity added was lower than earlier planned, as more aircraft capacity was withdrawn from scheduled services during lean periods and re-deployed to charters and wet leases in other regions that generated positive margins.

"In terms of on-quarter growth, ASK grew by 2% from 6.265 million recorded in the second quarter, primarily contributed from the launch of new a service to Xian, China.

The intended slower injection of capacity growth from 3Q14 onwards is to allow the previously added capacity in 2013 to mature and progress towards profitability.

For its direct flights between Malaysia to Australia and North Asia, the group has achieved passenger traffic in Revenue-Passenger-KM (RPK), from 4.227 million to 5.129 million, where 1.04 million passengers were carried during the quarter as compared to 0.84 million passengers carried same period last year.

Mwanwhile, cargo segment saw an improvement of 21% on-year in total cargo carried to 9.771 tonnes from 8.079 tonnes same quarter last year, with 41% load factor for the quarter.

The group also took delivery of one A330-300 on operating lease, bringing its total number of A330-300s to 21, 2 A340-300s, and 1 A330-200.

Its fleet size has now expanded to 24 aircraft from 17, in the same period last year.

Source: The Star
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Re: AirAsia X

Postby winston » Thu Nov 13, 2014 7:44 pm

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Weak marts, new route launches expected to hurt AirAsia X profit
12 NOVEMBER 2014

AIRASIA X, the long-haul arm of AirAsia Group, is expected to record a core net loss of RM73 million in its third quarter financial result compared with a modest RM16 million profit in the same period last year.

The expected loss would be due to several factors, according to a research report by Maybank Investment Bank Bhd (Maybank IB).

These include lower yields by five per cent year-on-year, given the weak markets and also the impact of new route launches.

Maybank IB added that the loss would be due to an increase of unit cost by 3.8 per cent year-on-year, due to lower aircraft utilisation and its forecast of a 1.8 per cent year-on-year decline in average stage length.

The second half of this year (2H14) has been a seasonally strong period for AirAsia X and this was where the airline historically derived all of its annual profits from, Maybank IB said.

“However, things have been challenging in 2H14 and the published fares suggest continued weak yields. Despite all the rhetoric on Malaysia Airlines’ plans to cut capacity, we see no evidence as such and the fare war is pretty much still rife,” the bank-backed research firm said in its note to investors yesterday.

AirAsia X’s load factor from July to September this year or in its third quarter fell 1.7 percentage point to 80.6 per cent from 82.3 per cent in the same period last year.

However, the airline did carry more passengers in the three-month period as the number of passengers rose by 24 per cent to one million from 843,693 in the same quarter a year ago.

According to Maybank IB, the yield environment for the long-haul segment remains distinctively weak and it coincides at a time when AirAsia X is taking a record number of new aircraft deliveries and launching many routes.

“Furthermore, the recent weakening of ringgit against the US dollar may result in record forex translation losses in fourth quarter this year and sink AirAsia X’s capital base to an all-time low,” the research house added.

AirAsia X will receive eight new aircraft next year. During the third quarter, it took delivery of one A330-300 on operating lease, bringing its total number of A330-300s to 21 as well as two A340-300 and one A330-200 (which will be returned by end-2014).

Maybank IB maintained a “sell” call on AirAsia X, with a target price of 62 sen as it tweaked the airline’s earnings forecast.

The airline’s share price inched one sen higher to close at 77 sen on Bursa Malaysia yesterday.

Source: NST
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Re: AirAsia X

Postby winston » Tue Nov 18, 2014 10:02 am

Sold

AirAsia X flies into greater turbulence

By Yen Ne Foo & Jose Barrock

Source: The Edge Financial Daily

http://www.theedgemarkets.com/my/articl ... turbulence
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Re: AirAsia X

Postby winston » Tue Nov 18, 2014 12:11 pm

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AirAsia X falls 4% on news of financial woes

KUALA LUMPUR (Nov 18): AirAsia X Bhd ( Financial Dashboard) fell as much as 4% among most actively traded stocks as investors reacted to a report by The Edge Financial Daily on the airline’s financial constraints.

The Edge Financial Daily, quoting sources, reported today that long-haul low-cost carrier AirAsia X faced difficulties in paying staff wages.

Describing the unprecedented payment issue as a “temporary setback”, the management of AirAsia X blamed the payment delay to the “late arrival of incoming funds”

http://www.theedgemarkets.com/my/articl ... ncial-woes
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Re: AirAsia X

Postby winston » Wed Nov 19, 2014 1:54 pm

AirAsia X 3Q net loss at RM211m vs RM26m net profit a year earlier, revenue higher at RM699m

AirAsia X ( Financial Dashboard) 3Q net loss at RM211m vs RM26m net profit a year earlier, revenue higher at RM699m

Source: The Edge
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Re: AirAsia X

Postby winston » Thu Nov 20, 2014 9:59 am

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Affin Hwang Research maintains Sell on AirAsia X

KUALA LUMPUR: Affin Hwang Research has maintained its Sell call on AirAsia X (AAX) with a target price of 45 sen as it lowered AAX's forecast to losses instead of profit.

In a note on Thursday, the research house said AAX's 9M14 core net loss was way below Affin Hwang's and market estimates.

AirAsia X reported a larger-than-expected core net loss of RM176mil, taking 9M14 core net loss to RM333mil.

"This was grossly below our and street estimates. The discrepancy against our forecast was mainly due to lower-than-expected average fares as well as higher fuel cost which was US$132/barrel vs our assumption of US$120/barrel," it said.

As part of its business turnaround plan, Affin Hwang said AAX is implementing three main strategies which are capacity management – deferring aircraft delivery and redeploying capacity; raising cash via sale of aircrafts and implementing sale and lease back option instead of owning aircraft; and cost cutting through amongst others, some consolidation of backroom office with AirAsia.

Source: The Star
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