AirAsia X foresees improvement this year

SEPANG: AirAsia X Bhd, whose shareholders approved its RM395 million rights issue last Friday, is confident of achieving improvements this year despite the widened net loss last year and the QZ8501 incident early this year.
"We are quite optimistic to turn this around by this year," group CEO Datuk Kamarudin Meranun told reporters after its EGM last Friday.
He noted that the airline could not do much in the first quarter of the year but have since rationalised internally by plugging up all operational inefficiencies and looking at unprofitable routes.
"Essentially, it is capacity management," he remarked.
Kamarudin said the group could not embark on major promotions out of respect for those involved in the QZ8501 tragedy however, since things have been "somewhat resolved", it has started marketing initiatives in Australia with similar plans for other markets.
"We believe with all the plans we have in place, we should be able to see some positive feedback on this. We have seen the trend. January we are slightly affected, but February and March we're seeing a positive trend in terms of the base fare and offtake," he added.
During the EGM, which lasted about two hours, shareholders questioned the company's 2014 performance to which Kamarudin said was due to the challenging environment caused by the three aviation disasters that dampened consumer sentiment.
"Turning around means I can see the trend moving in a positive direction. Right now, we are looking at profitability at operating level. I'm trying to push profitability at the net level. It is ambitious and challenging but as I said, we've been through this route before when we first started AirAsia. We virtually had no money as well.
"Right now we are in a much better position to jump start this thing. At least we have a brand, similar environment, shareholders who understand and support us by supporting the rights issue, so we are in a much better position than what we used to be. We have the headwind in oil prices but we also have challenges in forex. So it is how we manage all these parameters. The initial indication looks positive so we're quite happy with it. Then again, the proof is in the pudding. So let's wait for the numbers," he said.
Last Friday, shareholders approved the rights issue with free detachable warrants that would raise RM395 million, of which RM119 million will be used to pare down short-term borrowings and RM270 million for working capital and growth.
"We do not foresee asking for anymore money...to me, the critical part is the first six months. Clean up internally, do a lot more integration, cost saving integration with AirAsia and AirAsia X, then building back route capacity management, looking at whichever routes we can add on. Since we took out some, there is capacity balance so we do some charter flights as an interim measure until we are able to develop the more commercially viable routes.
"We are trying to avoid wet leases, just doing a little bit to manage capacity. That's not the long term interest of the company. The management of capacity is not to scale down. It is looking at how to realign back the company and then start getting it on the right projection," said Kamarudin.
Meanwhile, the first preliminary meeting on the setting up of an aviation council was held two weeks ago to gather feedback and suggestions from industry players, including AirAsia X.
Kamarudin said the group highlighted several issues to the government including competition, pricing and importance of independent committee members to ensure objective decision-making.
"The committee members they were looking at 10 to 15, we asked for not more than six or seven because we want it to be nimble and able to decide fast. These are initial discussions on the formation of the council."