Annual Report 2019

AIRASIA X It was a tough year for our long-haul sister airline as the global slowdown impacted demand for long-haul travel. This was exacerbated by a strengthening of the THB, which further dampened tourism into Thailand; and a depreciation of the Ringgit, increasing costs for the Malaysian operations. Despite constraints faced, AirAsia X continued to focus on building country dominance, ie building its presence in core markets. This saw the termination of Kuala Lumpur—Auckland, the last single-country route (barring Hawaii), and the redeployment of capacity to North Asia, Australia and India. AirAsia X Thailand welcomed four aircraft during the year, two of which were the new, more energy-efficient Airbus A330neo. With these aircraft, it launched charter flights to Tbilisi, Georgia, which proved so successful that the airline has plans to add the East European capital to its scheduled network. Other new routes launched were to Fukuoka, in Japan; and Brisbane, marking its maiden foray into Australia. AirAsia X Thailand saw its capacity increase about 41% while, squeezed by competition, the number of guests carried grew by 29%. Following the addition of two aircraft towards end 2018, AirAsia X Malaysia did not welcome any more aircraft during the year. Instead, it focused on realigning its network and introduced two new destinations in North Asia — Fukuoka and Lanzhou, in China. Creating synergies with the AirAsia Group, AirAsia X Malaysia also launched short-haul flights from Kuala Lumpur to Singapore to satisfy high demand which we were not able to meet due to slot constraints at Changi Airport and seat constraints of the narrow-body Airbus A320 aircraft. At the same time, this helped to increase AirAsia X Malaysia’s aircraft utilisation. As part of efforts to create market dominance, and further enhance its aircraft utilisation, it opened a virtual hub in Taipei and launched another short-haul route from Taiwan’s capital city to Osaka. Along with focus on network optimisation, AirAsia X invested significantly in brand building activities which increased brand recognition and contributed to improved performance in general, as previously loss-making routes to Sydney, Perth and Amritsar pared their losses. At the same time, AirAsia X further intensified ongoing cost saving efforts. During the year, it successfully renegotiated its aircraft lease packages and other contracts while trimming flight, ground-handling and engineering costs, further entrenching AirAsia X’s position as the lowest unit cost airline in the world. While the airline’s CASK reduced by 5% to 12.60 sen, its RASK also decreased 4% to 12.14 sen as a result of dampened demand and irrational behaviour leading to fare dumping by flag carriers in Malaysia and Thailand. Revenue for the year therefore came in at RM4,233 million, 7% lower year-on-year, while loss before tax stood at RM306 million. GUESTS CARRIED 8,670,666 RASK 12.14 sen AIRASIA X Note : AirAsia X financial figures are based on unaudited FY2019 financial statement. AIRASIA GROUP BERHAD ANNUAL REPORT 2019 101 BUSINESS REVIEW