Struggling AirAsia X Announces Leadership Changes

The board of directors of financially troubled AirAsia X (AAX) has announced the appointment of Datuk Kamarudin Meranun as Group CEO, AirAsia X and Benyamin Bin Ismail as acting CEO of AirAsia X Berhad as part of an on-going re-organization exercise. AirAsia X former CEO, Azran Osman-Rani, left the company on January 30, 2015.

Together with Tony Fernandes, Datuk Meranun is one of the founders of the AirAsia group.

In this newly created role, Meranun will develop an overall strategy for the AirAsia X Group, which includes AirAsia X Berhad, AirAsia X Thailand and Indonesia AirAsia Extra.

In a statement, AAX said that Ismail, together with Meranum, will lead the reorganization and turnaround exercise to strengthen the company's balance sheet and to maximize profitability to ensure a stronger financial footing for the company.

Loss making ops
AAX reported a net loss of MYR211 million (U.S.$66 million) and an operating loss of MYR140 million (U.S.$44 million) for the third quarter of 2014. The airline has been highly unprofitable last year, racking up net losses of MYR351 million (U.S.$108 million) and operating losses of MYR308 million (U.S.$95 million) through the first nine months of 2014 on a revenue base of only MYR2.12 billion (U.S.$654 million).

AAX earlier suspended the expansion of its Malaysian operation and cut capacity to Australia. It also announced it was selling two of the eight A330-300s it had committed to adding to its fleet in 2015. The original fleet plan for this year had both these aircraft allocated to the Malaysian market.

Deferred aircraft deliveries
AirAsia X also decided to defer four of the eight A330-300 deliveries that were initially slated for 2016 and three of the eight deliveries that were slated for 2017. Two of these aircraft have been deferred until 2018 while the other five have been converted to A330-900neo orders, raising the group’s commitment forthe new type to 55 aircraft. AirAsia X expects to begin taking the A330-900neo in late 2018 and take all 55 by the end of 2026.

Although predominantly a low-cost passenger airline, the carrier is optimizing the belly space of its A330 fleet to bring in revenue, by offering cargo services at rates considerably lower than its competitors.

Operating statistics for the third quarter 2014 show an improvement of 21% y-o-y in total cargo carried to 9,771 tonnes from 8,079 tonnes in the same quarter last year, with 41 % load factor for the quarter.

Unwilling to deliver cargo data
As a reaction to CargoForwarder Global’s request for an update on the cargo performance of the Air Asia Group (including AirAsiaX) in 2013 and 2014, AirAsia’s head of communications, Mr Aziz Laikar responded that the company was “unable to participate in this story.” However, based on preliminary figures and growth estimates announced by the company in previous months the total tonnage carried for 2014 will be most probably around 38,200 tonnes, based on an estimated growth figure of some 10% compared with 2013.
This still leaves plenty of room in the holds of the AirAsia X fleet for the carriage of air freight. If the cargo load factor could be increased to around 75 percent then this would surely help the carrier’s bottom line somewhat.
Not a saving factor but maybe a step towards it.

Nol van Fenema