AirAsia X’s 3Q15 dragged by sustained weakness in ringgit

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As such, sustained weakness in MYR will result in heavier debt burden for AirAsia X, as well as significant impairment in equity levels from foreign exchange (forex) translation losses on US dollar borrowings.

As such, sustained weakness in MYR will result in heavier debt burden for AirAsia X, as well as significant impairment in equity levels from foreign exchange (forex) translation losses on US dollar borrowings.

KUCHING: AirAsia X Bhd (AirAsia X) continues to register a core net loss in the third quarter of financial year 2015 (3Q15), dragged by a flailing ringgit.

The ringgit continues to depreciate against the US dollar, said analysts, which will be a drag on AirAsia X’s bottom line as 75 per cent of its operating expenditure is in US dollar. Additionally, AirAsia X has significant US dollar borrowings, making up circa 177 per cent of its equity.

As such, sustained weakness in ringgit will result in heavier debt burden for AirAsia X, as well as significant impairment in equity levels from foreign exchange (forex) translation losses on US dollar borrowings.

Excluding forex losses and deferred tax, AirAsia X booked a core net loss of RM50.1 million in 3Q15, taking 9M15 core net loss to RM217.8 million which narrowed 48 per cent year on year.

Researchers with AllianceDBS Research Sdn Bhd (AllianceDBS Research) deemed this in line with 77 per cent of its full-year loss estimate, but below consensus at 85 per cent ofstreet’s full-year loss estimates.

“The 4Q is typically AirAsia X’s strongest quarter, but we believe it will not be sufficient to return AirAsia X to the black.

“The better 9M15 results were largely driven by the lucrative charter flights/wet leases, but these activities will decline in 4Q, as the capacity is put back into the scheduled flight network.”

To note, AirAsia X’s 3Q revenue grew 14 per cent y-o-y to RM793 million, due to higher charter flight revenue and operating lease income.

Passenger revenue fell 11 per cent y-o-y in 3Q15, dragged by a 16 per cent decline in revenue passenger per kilometre. This was in turn driven by capacity cuts, and weaker load factor.

Yields continue to improve, growing by 9 per cent y-o-y in the quarter.