By Chan Quan Min
Azran Osman-Rani
AirAsia X, the long-haul unit of homegrown budget airline AirAsia, will tomorrow announce a new business strategy in response to less-than-ideal market conditions, said CEO Azran Osman-Rani.
The new strategy will call for “redeployment” of aircraft to the airline’s newly formed associates based in Bangkok, Thailand and Bali, Indonesia where there is more demand for flights longer than four hours, he told KiniBiz when contacted by telephone today.
AirAsia X could also announce delays to its aircraft delivery schedule much like what parent AirAsia did earlier this year.
Azran said business strategy changes were necessary to better “adapt to the market” as “Malaysian aviation has taken a short-term hit”. In comparison, the Thai and Indonesian markets are just “rebounding” and can better absorb additional capacity.
He was not able to comment on the airline’s financial position ahead of the release of their third quarter results tomorrow. However, indications are that AirAsia X will post a fourth consecutive quarter of pre-tax losses.
The long-haul budget airline has been expanding at breakneck speed and has to date received delivery of six out of a total of seven Airbus A330-300 widebody planes to be added to the fleet this year, about a 35% increase in capacity from 2013.
Competition with Malaysia Airlines over the past year and a half has resulted in excess capacity in the skies and loss of pricing power for airlines. Until mid-year, Malaysia Airlines was expanding rapidly to Australian destinations also served by AirAsia X.
A report in The Edge Financial Daily today found AirAsia X to be facing problems in paying staff salaries on schedule. Citing a circular to AirAsia X employees, the paper said that part of staff allowances will be delayed by between one to two weeks.
The news report also said, quoting unnamed sources, that group CEO Tony Fernandes could return to take managerial control over AirAsia X in light of its poor financial performance.
The airline posted an operating loss of RM130 million for the second quarter (2Q14), more than tenfold in the same quarter. Last year a capacity expansion put pressure on earnings performance.
AirAsia X shares were the most actively traded this morning. At the midday break, the stock was valued at 72 sen per share down 3 sen as investors sold down their holdings ahead of the release of third quarter results.
The stock saw minor rallies in recent months that turned out to be false starts as investors bet on the airline as the main beneficiary of a plan to downsize and restructure Malaysia Airlines.
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