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 Load Factor at 85% (up 7 ppts)

 Passengers Carried up 10% YoY

 Revenue up 47%YoY                             Revenue at RM3.38 billion
 Operating Profit up 276% YoY             Operating Profit at RM806 million

 Net Operating Profit up 620% YoY      Net Operating Profit at RM676 million

 Profit After Tax up 229% YoY

 EBIT Margin of 38% (up 23.9 ppts)

 EBITDAR Margin of 52% (up 22.1 ppts)

LOW COST TERMINAL SEPANG, 26 February 2016 – AirAsia Berhad (“AirAsia” or “the Company”)

today reported its results for the quarter ended 31 December 2015 (“4Q15”).


AirAsia posted quarterly revenue of RM2.17 billion, up 47% from the revenue reported in the same

quarter last year. The strong revenue recorded was on the back of a 10% year-on-year (“YoY”) growth

in the number of passengers carried at 6.47 million which was ahead of the 1% capacity growth, allowing

the Company to record a high load factor of 85%, YoY growth of 7 percentage points (“ppts”).

In 4Q15, AirAsia recorded strong operating profit of RM800.69 million (up 276% YoY) and net operating

profit of RM694.33 million (up 620% YoY). During the quarter under review, the Company posted

Revenue per Available Seat Kilometre (“RASK”) of 22.29 sen (up 40% YoY). RASK held up positively

despite the Company’s decision to remove fuel surcharge on 26 January 2015 and passing on the benefit

of lower fuel price to consumers. Average fare similarly witnessed an increase to RM177 (up 4% YoY)

on the back of strong and healthy demand. If excluding fuel surcharge, RASK for 4Q15 would have been

up further at 59% YoY while average fare would have been up by around 26% YoY. Meanwhile, profit

after tax for the period under review was a record breaking RM554.20 million (up 229% YoY).

AirAsia Berhad CEO, Aireen Omar said, “It was a very good quarter indeed for the Malaysian operations.

The increase in RASK (including and excluding fuel surcharge) proved that lower fares stimulate the

market as seen by the significant increase in the number of passengers that travelled with AirAsia who

also received a windfall due to the removal of fuel surcharge. Meanwhile, ancillary revenue as a whole

has increased by 14% YoY with the highest contributor coming from baggage (43% of total ancillary

revenue) followed by cargo (10% of total ancillary revenue) and insurance (7% of total ancillary

revenue). The highest growth seen among our ancillary products are AirAsia Insure (up 43% YoY) and

connecting fees for our ‘Flythru’ service (up 56% YoY). These led to the Company recording an ancillary

income per pax of RM49 this quarter (up 4%), close to our near term target of RM50.”

The Company’s cost, measured in terms of Cost per Available Seat Kilometre (“CASK”) was reported at

14.06 sen, up by 4% YoY. The slight increase in CASK was due to an additional 16 sale and leaseback

aircraft undertaken throughout 2015 which led to an increase in aircraft operating lease expenses of

148% YoY. Meanwhile, maintenance and overhaul expenses increased by 53% YoY. As expected, the

Company is a big beneficiary of the low fuel price environment. The decline in overall fuel expense by

15% YoY was on the back of 21% lower average fuel price at US$75 per barrel as compared to US$95

during the same period last year. This is despite the 7% increase in fuel consumption due to the increased

number of flights and longer average stage length.

On balance sheet, Aireen highlighted, “As mentioned before, the management monitors the Company’s

net gearing level closely to ensure that it is constantly at a healthy and comfortable level. At the end of

4Q15, the Company’s USD denominated borrowings has actually reduced by 6% from USD2.69 billion in

3Q15 to USD2.54 billion due to an additional sale and leaseback exercise on an older aircraft executed

in 4Q15. Cash on the other hand has increased by 1% to RM2.43 billion. The Company’s net gearing

ratio therefore is at 2.29 times at the end of 4Q15, 23% lower compared to the previous quarter due to

lower total debt and an increase in cash.”

AirAsia Group – Consolidated Results of AirAsia Berhad and Associate Airlines

Segment reporting of associates are included in the quarterly Bursa Announcement (Note 9). The

operating segments have been identified by each Air Operating Certificate (“AOC”) held within the AirAsia

Group (“Group”), and are categorised as Malaysia, Thailand, Indonesia, Philippines, India and Japan.

The Group posted quarterly revenue of RM3.38 billion while operating profit for the Group was recorded

at RM805.54 million and net operating profit for 4Q15 stands at RM675.90 million. The Group’s profit

before taxation for the quarter under review is recorded at RM332.44 million.

On consolidation of accounts for the whole Group, the Company’s auditor attempted to revisit their

opinion on this matter and we are hopeful that the Group will be allowed to consolidate and therefore

present a fairer view of the Group’s performance and financial position.

For the next quarter onwards, the Company shall disclose year-to-date segment reporting in addition to

the current quarterly segment reporting in the notes section of the Bursa Announcement.


Thai AirAsia (“TAA”) posted revenue of THB7.68 billion in 4Q15, a decrease of 3% from the same period

last year while operating profit decreased by 32% YoY to THB585.19 million. This led the associate to

post a profit after tax of THB542.96 million (down 32% YoY) in 4Q15. AirAsia Group CEO, Tony Fernandes

commenting on TAA’s performance, “During the quarter, TAA recorded 17% YoY increase in passenger

numbers with load factor increasing by 3 ppts to 82%. Revenue was slightly down YoY due to the drop

in international passengers impacted by the explosion at the Ratchaprasong intersection on top of the

bad haze situation in Southern Thailand. This led to a 12% decrease in RASK at THB1.59. Meanwhile,

CASK reduced by 8% YoY to THB1.47 due to 21% drop in fuel expenses. Besides the impact of the

depreciation in Baht, the increase in other costs such as maintenance and user charges are expected

from a fast growing airline like TAA due to the increased number of flights and aircraft in operation.”


Indonesia AirAsia (“IAA”) recorded revenue of IDR1.10 trillion in 4Q15, down 37% YoY which is in-line

with the planned 34% decrease in capacity that led to the 33% decrease in the number of passengers

carried. Load factor in general was recorded at a healthy level of 80%. During the quarter, IAA recorded

an operating loss of IDR41.87 billion which led to a loss after tax of IDR1.09 trillion, mainly due to forex

loss on weaker Rupiah YoY. Tony highlighted, “IAA’s turnaround plan is showing good signs especially

on the cost side. Costs decreased 35% from a year ago mainly on lower fuel cost, aircraft lease rentals,

maintenance and staff cost. The underlying strategy behind the turnaround plan in Indonesia is to

remove in total seven aircraft from IAA’s fleet size and redeploy them to the other associates which need

the aircraft more. In 4Q15, three additional aircraft managed to be redeployed to MAA and AAI. To date,

four aircraft have been redeployed and taken out of IAA’s fleet and the benefits of this can be seen in

the quarter under review where aircraft operating lease expense has reduced by 36% and maintenance

and overhaul cost have decreased by 26%.”


Philippines’ AirAsia (“PAA”) posted a 51% increase in revenue at PHP2.29 billion and strong growth in

the number of passenger (up 47% YoY). Capacity grew by 30% that has led to a 9 ppt increase in load

factor. In addition to the 47% increase in ticket revenue, total ancillary revenue also experienced a 1%

growth while cargo increased by 13%. This led to a good double digit growth of 21% in RASK at PHP2.01.

CASK decreased by 25% to PHP2.11 on the back of lower aircraft related costs. Further guided by the

management’s turnaround plan, operating losses reduced to PHP110.64 million. Tony said, “The cost

reduction and refleeting exercise has enabled us to successfully almost break even this quarter. As a

result operating losses came in 90% lower than the previous year and PAA experienced profitability in

November and December while still posting a loss in 4Q15. Operational improvement has significantly

lowered total losses which came in at PHP118.8 million or 91% lower than losses in 4Q2014.”


AirAsia India (“AAI”) recorded a 232% increase in revenue at INR2.08 billion and strong capacity growth

of 133% YoY. Meanwhile, average fare increased steadily by 12% to INR3,626 while ancillary revenue

per passenger grew by 133% to INR492. Tony stressed, “Our operations in India are geared to grow

further after a year in service as we believe our low fares and excellent product appeals to travellers in

India who remain underserved by air travel. Load factor improved to 84% amid heightened competition

by other players while total passengers carried increased 134% YoY to 0.51 million passengers carried.”

During the quarter, AAI posted an operating loss of INR256.57 million.


Commenting on the Company’s outlook, Tony said, “In Malaysia, we are benefiting from the weaker

currency environment that has led to local consumers trading down when going on their travel and other

nationalities looking at Malaysia as a value for money holiday destination. Regional destinations are also

more appealing as compared to higher currency destinations such as Europe and North America.

Meanwhile, we will continue to introduce new routes that primarily connect secondary airports across

our vast network. Through our newly launched hub in Langkawi, we intend to introduce more ‘unique

routes’ which no other airlines fly and to improve connectivity across the region, giving travellers greater

options. Adding on, demand from Chinese travellers has remained resilient and with the visa waiver

initiative for Chinese nationals intending to visit Malaysia throughout 2016, this will significantly boost

arrivals in the coming quarters. Similarly, fuel trended lower in the quarter which undoubtedly remains

favourable for all airlines. We saw a great end to 2015 with record profitability and look to 2016 with a

positive light”.

Adding on the outlook of cost environment, he said, “As seen in 4Q15, we are beneficiary of the low fuel

price. As of now, the Group has hedged 52% of its fuel requirement for 2016 at an average cost of

USD59 per barrel on jet kero. Passing on this benefit to our passengers through the removal of fuel

surcharge earlier last year proved to be rewarding with demand increasing double digit in 4Q15.”

On the associates’ operations, Tony highlighted, “Our Thai operation continues to deliver results within

expectations and is expected to sustain this strong growth as political stability has brought about the

return of international travellers and reinvigorated the tourism industry. We will continue to see strong

growth and numbers coming from TAA which is performing ahead of the industry and will sustain its

leadership in the market.”

Whereas in Indonesia, he stressed, “IAA will continue to right-size its fleet and network to minimise

operational losses and stabilise the business, including the closure of underperforming hubs. Load factor

is on target for January and has surpassed expectations in February. We are on track to reach load factor

of 77% in the first quarter of the year and forecasting to sustain above 80% for the second quarter.”

Meanwhile, in the Philippines, we are proud to have turnaround our operations in this quarter and

achieved figures close to breakeven. Looking forward, we anticipate a similar trend with revenue

improvement of 25%-30% projected for 1Q16 versus 1Q15. In addition, our forecast shows high load

factor in the current quarter, which coupled with low oil prices, is expected to allow us to continue

achieving breakeven or even profitability in our Philippines’ operations in the coming months. We will be

disciplined and continue with our planned retirement of two remaining inefficient aircraft in 1Q16 as well

as matching capacity growth with demand while pushing forward with our plans to market the Philippines

as an untapped tourist destination with great potential as part of the governments campaign to ‘Visit the

Philippines Again 2016’.”

Commenting on India and Japan, Tony added “AAI on the other hand will witness a new phase of growth.

The associate will work towards keeping its cost under check, with increased focus on ancillary revenue.

On top of these, we look forward to the re-launch of AirAsia Japan (“AAJ”) that has obtained its AOC and

will officially re-commence operation in the market by first half of 2016. Japan will contribute significantly

to our existing extensive network across Asia and will further cement AirAsia as the biggest low cost

carrier in Asia.”

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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

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