AirAsia X has announced the measures it plans to undertake to return to growth, following the most difficult period in the airline’s short history.
The long-haul low-cost carrier’s group CEO, Kamaruddin Meranun, called 2014 a “challenging and extraordinary year”, during which its pre-tax earnings (EBITDA) fell 10%.
“The profitability in 2014 was affected mainly by the three tragic aviation incidents, irrational price war and overcapacity posted by the national carrier (Malaysia Airlines),” said Meranun. “Since taking the helm as group CEO of AirAsia X, the management team and I have also been reviewing all aspects of the business to consolidate the initiatives needed to address the company’s internal inefficiencies. The key initiatives will be iron out stages by stages, especially in the first half of 2015.
“We are optimistic that we will see improvements starting from second half of the year and it will lead to a better financial footing in full-year 2015.”
These initiatives include boosting its ancillary sales through an enhanced range of onboard duty free products, and the promotion of ‘Fly-Thru’ services, which connect AirAsia X flights with AirAsia‘s short-haul network. It is also planning to drive more business through its loyalty programme, BIG.
In terms of operations, AirAsia X has already reduced capacity by leasing out aircraft and reducing flight crews. It will also introduce electronic flight bags to reduce the weight of its aircraft and save fuel.
“Potentially, we are also looking at refinancing of remaining finance lease aircraft and outright sales of two latest deliveries aircraft in the coming second half,” revealed Benyamin Ismail, acting CEO of AirAsia X. “There is no major investment on aircraft this year as all 2015 deliveries are on operating lease and this will minimise the… outflow for the year. We are also planning to defer two aircraft deliveries for 2016.”
Marketing efforts will be strengthened in Australia and China, where the airline admitted demand “has softened”. “We are working towards exploring more exciting collaboration projects with travel agents and tourism bodies to bring back positive travel demands and loyalty,” Ismail added.
AirAsia X posted a net loss of MYR126m in the first quarter of 2015.