AirAsia Aviation Group expects to report a profitable 2023, as travel demand continues to hold strong through the year-end, and as it reaps the benefits of “lessening competition”.
The low-cost airline group, which is owned by Malaysia-based Capital A, also recorded its third consecutive quarterly profit this year, in what it calls a “seasonally slower” period.
It posted a positive EBITDA of MYR385 million ($82.4 million) for the three months to 30 September, a three-fold improvement year on year.
Revenue for the period more than doubled, to MYR3.9 billion - the group’s highest revenue recorded so far this year. AirAsia Aviation notes that the figure is about 38% higher quarter on quarter, and is 33% more than the same quarter in pre-pandemic 2019.
Much of the revenue growth was attributed to what the group calls “the aviation supermarket”, where ancillary revenue rose sharply to make up 18% of total revenue.
Still, the sharp rise in revenues was offset by a rise in operating expenses, with fuel costs seeing a 57% increase. The group also incurred higher costs to reactivate its stored fleet.
AirAsia Aviation chief Bo Lingam says the group expects 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,” Lingam adds.
AirAsia’s Malaysia unit has been quick to move to reclaim market share following the abrupt collapse of rival MYAirline in early October. It is in the process of adding domestic capacity “leveraging on weakening competition and seasonality”.
The group adds that it will now focus on matching network demand with corresponding supply. China and India will feature largely in its near-term network strategy: AirAsia expects to “accelerate” its expansion into India and China, following the Malaysian government’s announcement to waive visa requirements for travel from the two countries.
“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,” says Lingam.
Capital A – which has other units such as logistics and aviation services – posted a positive EBITDA of MYR448 million, up about six-fold year on year. It is the company’s sixth consecutive quarter of profitability.
Revenue for the quarter more than doubled year on year to MYR4.2 billion.
