Capital A Berhad announced its unaudited financial results for the third quarter ended 30 September 2023. The Group showcased robust figures with revenue of RM4.2 billion and EBITDA of RM448 million, marking an impressive Year-On-Year (“YoY”) increase of 116% and 520%, respectively.
Despite operating at 70% of its FY2019 fleet, Capital A achieved 84% of FY2019 revenue within the first nine months of 2023, indicating a steady path towards operational recovery. The group also reported generating over RM1 billion in cash flow from its operations, reinforcing its financial position.
The recent lifting of AirAsia X from Practice Note 17 (“PN17”) proved to be a significant boost for Capital A. With a renewed focus on exiting PN17 and delivering substantial value to its shareholders, the Group looks forward to making major announcements regarding asset disposals and public listings in the coming months.
Capital A aims to restructure all lease liabilities by December 2023, showcasing significant progress with creditors. Partners such as GE and Airbus have already restructured, reflecting a vote of confidence in the company.
“As we approach the final quarter, we are expecting a revenue upswing, exceeding pre-pandemic levels. This optimistic outlook is based on robust travel demand during the peak season, which enables us to command premium fares and boost ancillary income. We are amplifying our domestic capacity in all markets especially in Malaysia and Thailand, fortifying our market share and taking advantage of lessening competition. Internationally, aligning with the forecast market’s recovery pace, we are rapidly increasing our growth in China, also encouraged by the much-anticipated announcement of a visa-free journey between China and Malaysia, starting December 1, 2023. Another notable strategic move is our accelerated expansion in India, introducing new destinations to deepen market penetration and enhance regional connectivity, whose traffic will also boost following the visa-free travel between India and Malaysia. In parallel, we expect high average fares as the market is still experiencing a shortage of operational aircraft. Combining this with the decreasing fuel price, we expect a profitable end to 2023,” according to Bo Lingam, AirAsia Aviation Group CEO.
Ongoing funding efforts, once a challenge during the COVID period, are now strengthening, with the Group securing its first regional debt financing of US$179M (RM834 million) from Bangkok Bank and Citibank. An impending revenue bond of US$200M (RM930 million) from the international credit market will be the initial capital raise for airline expansion. Subsequent equity raising, including a potential IPO issuance for AirAsia Philippines and further equity raising from AirAsia Indonesia, is on the horizon.
Despite the challenges of the Covid pandemic and the strenuous efforts to restart operations, Capital A has successfully established five valuable businesses, including Aviation, Capital A Aviation Services, Logistics (Teleport), Digital ventures (airasia MOVE and BigPay), and Capital A International.
After 22 years, the aviation group has made significant progress in consolidating and simplifying its operations. This includes achieving 100% ownership of AirAsia Philippines, exercising greater cost control over AirAsia Indonesia, and planning a majority ownership stake in AirAsia Cambodia.
Driven by robust domestic and international travel demand, the aviation business posted segmental revenue of RM3.9 billion and an EBITDA of RM385 million. In 3Q2023, the Group recovered 80% and 75% of 3Q2019 passengers carried and capacity, with load factors above 2019 levels by 6ppt, indicating strong travel demand.
Despite market seat capacity normalization and a seasonally slower quarter, the average fare increased to RM216, up 5% vs the prior quarter and 23% higher than pre-COVID levels, suggesting substantial room for growth.
Ancillary revenue per passenger reached RM50 per pax, a 22% YoY improvement, totaling RM735 million in 3Q2023 or 18% of the third-quarter aviation revenue. Growth in Ancillary revenue has been driven by pricing optimization through big data, dynamic bundling, personalized offers, and the launch of innovative products.
Revenue per Available Seat Kilometer (RASK) reported a 17% YoY decline to USc 4.35, attributed to the consolidation of AirAsia’s Thailand financials. Adjusting for consolidation, RASK on a group basis only incurred a 1% YoY decline despite the steep increase in capacity.
Cost per Available Seat Kilometer (CASK) and CASK ex-Fuel stood at USc 5.04 and USc 3.07, marking a 25% and 27% reduction YoY. The Group maintained its downward CASK trajectory, partly attributed to the increase in ASK and appreciation of the US Dollar, while the quarter saw a more stable increase in absolute costs with fewer reactivated aircraft, reducing associated high reactivation costs.