Thank you, AC. Thank you very much for joining us this evening. We will begin the presentation now. I will take over from here, thank you.
Good evening, everybody. Good to see you again. We will go through the new not normal process, I guess. We will go through the second quarter 2024 results. We will go straight to key takeaways. Renewed revenue surged 30% year-on-year to MYR 69.1 million second Q24, on the back of very strong passenger growth and also ancillary. Despite second quarter being traditionally the weakest and also still being short of two planes being activated as we speak. I will talk a bit about that a bit later. But the key thing is EBITDA remains strong at MYR 68.4 million, despite higher operating expenses, which are really in line with our current operations. As you can see, while in the pre-COVID quarter last year, you see a one-off reversal of operating expenses that was recorded.
I think if you look at it now, this is actually the true cost of where we are currently trending at. Net profit, surprisingly at MYR 4.8 million for the quarter due to depreciation of the MYR against the USD and also a marginally higher fuel price recorded. But the key thing as well is, just to keep reminding people that this is our eighth consecutive quarter of net profit, and we expect a very upside in the coming quarters. Third looks fairly strong and fourth looks stronger. Bear in mind that now we are in a better position in terms of MYR against the USD, which is great news for us, and the reduction of fuel price as well. You will see that a lot of that will be right through to the bottom line, will be the positive upside to the airline.
The star performer for us as well is ancillary revenue. Pax sitting at about MYR 2.8 per passenger, which is really high considering the number of flights that we are doing. A lot of that is driven because of the markets that we fly to, the purchasing power is great. Of course, with Santan menu has improved quite a bit as well. With all the other products as well, then we have Fly-Thru seats, upgrades and all that, which have done quite well for us. We will go through that a bit later. The other thing as well is, as we continue to grow, the AirAsia DNA still remains fairly strong in line with growth. As it is the collaboration and also the strength of AirAsia and AirAsia X remains fairly strong, and we are doing a lot of route alignments as we speak.
Remaining and also sticking to our core AirAsia mantra, we are looking at also untouched routes or never to be flown routes before in the past where we have introduced Almaty and Taif. Also to collaborate with all our strong FlyThru markets, not just AirAsia Berhad, but also through Philippines, Indonesia, Thailand, et cetera. That as well, let's see the growth on the bottom line and a strong 22% connections coming onto the seventh flight. As it is, we are currently still 2 planes behind. One is on target to be reactivated hopefully in the next 3 weeks. This is just pure delay from MRO and Malaysia Airlines. Unfortunately, it is something that we have been lobbying like crazy, but it has been very tough for us. The fourth and the final aircraft, we are trying really hard to get that out by December as well.
This, again, without these 2 planes, the missed revenue and all that, and also the cost that we have to bear with these 2 coming in, you can see that our margin will grow effectively as well, and top line will be better. Hopefully, we will try to rush these 2 planes out. In terms of the acquisitions, you have probably read it. Currently, we have already submitted the circular to Bursa Malaysia earlier in August 2024. We are still waiting for approval. Obviously, once we get the approval, EGM notice will be sent out to shareholders, and that will take place within 21 days. We are also, as it is already, the team is really working hard on the way to get the placement of MYR 1 billion going on. That is really in the course. Our entity, 49% TAAX posted impressive net profit over MYR 11 million.
EBITDA base fare as well, again, 727. Obviously, Thailand again is the biggest market as well in terms of tourism in Southeast Asia. They are also due to grow effectively to about 9 planes in 3Q 2024 as they really induct a few planes as well into the system. Second Q24 key financial highlights. Just to give you an overview again, revenue surged 30%, scheduled flight revenue increased by 22% to MYR 403.2 million. Ancillary grew by close by 50%, while our freight services revenue went up by 35% compared to the same period in 2023. EBITDA, strong at MYR 68.4 million against MYR 100.5 million last year, despite higher operating expenses in line with ramp-up operations as 60 aircraft were operational during the quarter. Net profit recorded MYR 4.8 million for the quarter, lower than MYR 5.5 million in 2Q 2023, primarily due to depreciation year-over-year.
As I said, significant progress in acquisitions. We submitted that to Bursa Malaysia, and hopefully, the EGM will be within 21 days. Passengers carried are up 42%, close to about 880,000 people. Passengers load factor, which is really hard work by the commercial team, where we pushed it up to 83% despite a very lean season. Average fare MYR 458, down significantly as well, but that is it. Second quarter is really lean for us, as only April was a strong quarter for us as that was Raya. After that, every market that we operate through was fairly lean. I think that on a year-to-year basis as well, we are quite okay. Sector flown, up 31% as we grew year-over-year. Next, RASK against CASK. RASK improved by 4% higher year-on-year to 50.9, which is important.
With a 25% growth in ASK due to a 36% surge in revenue and also a 42% higher take-up in number of passengers carried during the quarter under review. CASK recorded 13.9 in second quarter compared to 11.75 in second due to total operational expenses up by 40% year-on-year, driven by higher operating expenses in line with the ramp-up of operations. Ex-fuel unit is still healthy at 5.85 against the preceding quarter operating expenses. Just to highlight, despite cost increasing, we are still the lowest unit cost airline in the market. As you can see, again, all the other airlines, Delta Air Lines, Scoot, Cebu Pacific, Norwegian Air Shuttle and Southwest Airlines. That is driven really by really stretching our aircraft out, high utilization efficiency up to 15 hours, prudent management of operating expenses, of ramp-up operations.
I think the team been working really hard in reducing cost at stations, bringing down, getting in incentives, getting in lower operational costs and landing charges and parking costs with all the new markets that we operate and also rebates from tourism, et cetera. Also the positive side of things that we have a natural hedge as a lot of the currency receive in revenue are in foreign currencies. It is a natural hedge for us. Ancillary, as you can see, baggage remains also as a big percentage in terms of 30%, and given a lot of the ancillary growth, close to 32% up, is driven really by number of passengers that has grown by 42%. Seat was up by 37% per year when people had signed to choose their seats. In-flight meal also went up 22% as the new selection of menus has come through.
Also baggage, the purchase of baggage with also different kinds of weight varieties that we offered, has also been up 21%. Just to have a touch a bit on TAAX. Their revenue was up 8% year-on-year to MYR 37.9 million in second Q24. Net operating mortgage stood at about 7.6 against 33.6 in second Q23. Ramp-up operations are also similar to us, driving up maintenance of all expenses and increasing staff costs in line with operational growth. The net profit of 11.1 in second Q24 against a net loss position in 23 against higher total expenses this year. Passengers carried up 16%, load factor 84%, which is very good. ASK capacity up 4%, while sectors flown up 7%. Network plan, as you can see, as we remain fairly bullish and also very aggressive in our growth as we are growing aggressively.
We have ramped up frequencies in China and Saudi, and we launched Taif in July and Madinah in August. China routes continue to deliver with 39 flights per week in August 2024. Just to highlight as well, China being a big growth story for AirAsia Group, we currently fly to close to about 22 cities across the group into China as we take advantage of the inbound traffic and also the outbound traffic and also the visa-free advantages that we get as well from the China market. India as well has been quite a positive story as that had been a strong story for us.
New markets, that we started with Almaty, which has been a surprise for us, where it is now clocking close to about 90% in the preceding quarter. Coming closely to third, we are already clicking around 95% load factor, which is doing very well for us. This just shows we are back to our true DNA and trying to introduce new routes. The next thing coming up is Nairobi in Kenya, where the forward looks remains quite commendable. A lot of the markets, surprisingly, have been coming from Malaysia, China, and Australia going into Kenya, which is great. As we work together with collaboration with AirAsia, we have also looked at certain routes where we felt that we wanted to terminate. Gold Coast has been removed. Busan has been stopped.
There are a few other routes that we will be announcing, but I think the key things as well is also working with AirAsia, where we feel that for some markets it will be better for them to be serving those routes and making more money. For example, Amritsar, which is pretty strong for us, but I think it looks better on an A320 or A321 operation where we have moved that now to AK AirAsia. We also have been doing Bali as well to add more capacity into that big market, and vice versa. It has been doing very well. Also, of course, Kota Kinabalu, we have been doing that during peak season to supplement the high demand of AK and has been doing very well as well. Current prospects, focusing on enhancing networks across more regions.
As we are now coming into the tail end of 2024, the team is working hard already on the 2025 as we grow AirAsia to the next level. We are already identifying some routes that we want to look at and also some routes that we believe that we can add a bit more capacity. So we are retuning that for the 2025 network. Also obviously, as I mentioned, Kenya is coming up. Also, we are focusing as well, working hard on fleet activation to maximize our revenue. So we are working hard to make sure that the aircrafts are out. As you know, as you are hearing from everyone in the market, supply chain is an issue, but we are trying really hard to make sure that we get that ready. Ancillary still remains a big factor for us to ensure that people spend.
As you can see now, just an external ancillary that we are working with, and we are making sure Santan, duty-free, are all trying to make sure that not people just buy on board, but also at the airports and all that to make sure that it makes life easier for people. I think now we are giving the opportunity to people to order food and also order duty-free one hour close to departure and all that. So that is great news, which will drive ancillary up for us as well. Also we are looking, trying to build a FlyThru market. We have FlyThru basically is the connecting market from all the other markets, whether it is AirAsia next to AirAsia direct or whether it is short haul to long haul. We are working to ensure that both parties collaborate to make sure that the connecting is seamless.
Some of the big markets, for example, into Bali, Thailand, India and all that, we make sure that the connecting is within pretty quick, within 3 hours. That is something that we are working really hard to grow that 22% higher as it is. As you can see, we, Emirates or Qatar or the Southeast Asia to ensure that the network and the frequency is massive. Again, we continue to be working with Capital A in progress of the company growth ambitions to make sure that the whole ecosystem works together, whether it is the aviation, whether it is the digital, the move or the credit cards and all that kind of stuff, or the hotels. We are working really hard to ensure that it all comes in together into one to make us grow to the next year of positive numbers.
Well, I think the key thing as well is we are having a full spectrum of fleets across the group as it is. They have an A320, A321, A321LR and of course the A330s. Hopefully in the foreseeable future, the NEOs and also the XLR. Fleet plan for us is to ensure that we grow our fleet. Currently as we speak, in Malaysia, we have currently 18 planes. As I said, 16 is operational, 2 more to go. While Thailand is currently sitting at about 8, and they will grow to about 10 by year-end. I think the key thing as well is trying to grow next year. We are growing close to about 1 aircraft next year, hopefully coming in in February. That will be new markets that we will be introducing in as well.
While TAAX as well will be looking at about a fleet of 3 as well, come throughout the whole 2020, 2025. That will be positive news for both entities. Again, just to talk about, again, we have a very, very, as I said, not many airlines have a very strong, healthy order books while we work with the whole AirAsia Group. AirAsia itself has a huge order book as well. While for us, we have the A330neo protected as well with 16 A330neos and also the 20 A331XLR. As you can see now on airlines with combined order books, the first probably delivery that we expecting is probably around 2030. But we have aligned in terms of delivery every year together with the A320s, which is great. That is something that people don't realize that the value of that moving forward.
Also, yeah, I should explain that already. Finally, I think beginning of a new LCC dream, we are winning as one. We are still formally recognized as the largest low-cost carrier in ASEAN. Also to highlight, we are also the best low-cost carrier 15 years in a row, as a group. We have a combined order book, which has value to it, and we will grow this market effectively throughout the region, Asia-Pac and also new markets for the A330s and also the AirAsia.
AirAsia as well is focused not just from Kuala Lumpur, from other hubs. Improve also our fleet network scheduling and revenue management as well. As it is as well, the other non-revenue in terms of passengers that is growing is also our streamline on engineering, where we are working really close with ADE, which is our engineering arm, ground handling Ground Team Red, doing very well for us.
Working to ensure that as a group, we are negotiating with airports, ground handlers to ensure that we get the best rates in the market in terms of reducing costs. Some of the markets that we speak, like for example, Taipei, Osaka, Bali, there's probably close to about four entities within the AirAsia Group that's flying in. We have just one team managing all these flights. That really saves costs for the entity as we speak. Of course, obviously, with all these entities coming in, it will give us also a better credit strength and fundraising capacity as well. That's pretty much it, guys. I think, just to sum up, second quarter, surprisingly, we did okay despite the challenges.
I think the good thing is as well, looking at the trends and the forecast that we see, third and fourth looks very, very good. I think we will be in line for a good year this year and barring any circumstances. I think with the acquisition, with the exercise, with replacement, and with a good set of results, this is the key story for AirAsia. Thank you, everybody. We'll open for Q&As.
Sam. Thanks, Sam. I think you can-
Yes.
You're on mute. You can just unmute and speak.
Okay. Hi, everyone. Thanks for the call. Just want to understand about the fare environment in the second quarter. I know that in the second quarter last year, it was already quite weak, but now, it seems like the fare environment in the second quarter was a bit weaker. Could you provide a bit more color as to why that was happening? Was that due to Almaty, Kazakhstan? For the whole year, where do you all think that the fares will land on an average basis, given that Malaysia Airlines yesterday announced that they are going to cut some routes, which I think a couple that involve you guys. Some color on that would be nice. Thank you.
Yeah. I think the second quarter, I think you cannot compare it to last year because I think last year, a lot of the carriers have not really come back with terms of fleet revival. You can see that the market was driven a lot by demand exceeded capacity. That is one. Secondly as well, this year, a lot of the fleet has come back, and you can see AirAsia, we had 13 aircraft operating last year and now we are at about 16. That is a lot of capacity coming in. But generally, I think as Kazakhstan started in March as well, we did a lot of promotional fares to try to drive this traffic. We have already invested quite a bit in marketing that route. I think that done quite well for us.
I think after 2 and a half months of hard work, that route is now profitable, effective June. That is doing really well for us actually. As I go into 95% load factor, fares are up for that route, it is actually quite good. But also there were also routes that were not performing as well, that we have decided to cut. Gold Coast being one. We saw low loads, and we would also try and rescue that flight, it did not work. And Busan. These are the 2 routes. But generally, if you are looking at the entire season, I think we are okay. But I think there are some pockets of competitive pressures that we see as well, but nothing to worry about. Batik Air still remains very aggressive in the market. But generally, I think second quarter is just generally weak. It depends on where Ryanair moves.
As I said earlier, and just want to reiterate, third and fourth, the fare environment, the load environment looks so much better than what we expected. That is going to be a good story for us.
Right. Is it fair to assume that for the whole year, you may still do like low 600s, high 500s kind of numbers for the fares?
I don't think so. I think we're going to be higher than that.
All right. Okay.
That's good to know. Just to confirm, it's Gold Coast, Busan and Amritsar, right, you were saying? Is Amritsar in the picture as well?
Amritsar is in that picture as well. We are ceasing that flight end of the month, so that will move to AK.
Right. Okay. All right. Nikki, if you remember me, one last question. Any thoughts on the MAS restructuring on the routes? Restructuring the capacity, how does that affect you?
Obviously, they are not really downsizing by half of the fleet or anything. I think the key thing, there are some routes that potentially we see positive upside. Some of the markets, for example, Australia, India, in China, they have cut some of their frequencies. What we can do potentially is on the timings that they operate, in conjunction with us, we can use that quite effectively as well to make sure we take advantage of that. Also on the positive side, with this, it is coming into the strongest quarters, which is third and fourth. It is just all I can say is we can see it is a positive upside.
Right. Okay. That is it for me. Thanks, Ben.
Thanks.
Next up, I think we have a question from Gerald to quantify the operating expenses incurred by ramped-up operations and whether this is recurring.
Well, the trend will be similar.
Increase, obviously.
Yeah, we fly more as we can see, and we add more flights. That cost will increase slightly. But yeah, you will be sitting slightly around that range or slightly higher. That is it, really. Any questions, guys?
Hi, Tasha.
Hi, can you hear me?
Yeah. Can.
Yes. Looking into your report, I think this quarter, the MRO cost is probably around MYR 100 over million, right? This quarter also, we didn't see any fleet reactivations. I'm just wondering whether third quarter, fourth quarter as you bring in another two or three aircraft into air, whether this MRO cost will also increase in tandem.
In terms of the one aircraft, just to be specific, it is only 2 planes coming into the system. One aircraft is already being worked on. That cost has already been reflected in here because the cost has been paid. We are just waiting to now finalize a lot of that work already. Anything above and that, if there is any over and above cost that we need to pay on that plane, you will see that in the third quarter. On the fourth plane, that has not been reflected yet. You will see more probably in the fourth quarter. Generally, no. It will not be a big bump or a jump or anything. You can see that it is normalized. Third looks okay. I think you will see the last aircraft cost will be in December.
Okay. Because I always been trying to wonder what is the normalized MRO cost for your 34 aircraft?
Yeah, normalized MRO cost just means that it is basically your normal checks, your A checks, your C checks, your maintenance cost that you have to pay to lessors and all that kind of stuff. That is just being normalized as previously we were under restructuring. Therefore, there were some waivers that we can see. We started paying that only since March. Therefore, if you compare to last year, it may not be apple to apple. This year, coming from, I would say actually second quarter will be at a good benchmark that-
our numbers are actually very normalized.
Okay. Thanks. Thank you very much.
Thanks.
Next up, we have Daniel. Hi, Daniel. If you are speaking, we cannot hear you. You are on mute.
Daniel.
Hi, Daniel. Daniel, if you can speak, please go on ahead.
Can you hear me?
Yeah.
There is always your standard open line. Can you hear me? Yeah. Yeah, can hear you.
Just some bookkeeping purpose. I noticed that other expenses actually increased from MYR 7 million to MYR 20 million. Any good explanation for this?
Yeah.
First quarter versus second quarter I am referring to.
Correct. Basically, I would say it would be due to the professional fees that we have incurred from all the corporate exercises that have been taking place that has cost a bump in our quarter 2 Opex, and increase in marketing costs due to new route campaigns. These have contributed to our increase in Opex in addition to the commissions that we paid our travel agents and for the sales.
I see. Okay. Would your so-called professional fees for these corporate exercises increase further in third quarter, fourth quarter, given that you are progressing-
The bills have already been accrued for.
Everything has really been approved. We are not expecting sudden income in these other expenses again.
That is correct.
I noticed that your financial stability for operating aircraft was reduced to MYR 10 million this quarter versus MYR 36 million in the previous quarter.
Correct. That is a result of our lease remeasurement done in Q1 2024. Because now we are on a back to fixed lease rates versus previously or just pay by the hour.
Currently it is a stable rate, MYR 10 million per quarter? Or we are looking at more like-
Yes. That should be the rate going forward.
MYR 10 million per quarter. Am I correct? MYR 10 million per quarter for your 16 aircraft.
Just a second. For 10 plus the non-operating?
The lease liabilities.
Between 12 MYR to 13 MYR million per quarter.
12 MYR to 13 MYR million per quarter. Okay. What else can I look? Okay, just want to check on this restructuring thingy with AirAsia Group. Seems like you guys resubmit again to further extension until year end for this restructuring. I need-
The word resubmit is wrong. Resubmitted.
Resubmitted. Yeah. So what's the status actually? Because it seems like it has been a continued delay, and then you guys asking for further postponement, I think.
I do not know. Let us talk about AirAsia X itself. We are out of PN17, so we are not under restructuring.
Yeah, I mean the whole thing is with you guys and AirAsia Group.
Yes, correct. Basically what we did is we submitted the acquisition to Bursa Malaysia. The acquisition to buy over AAB and also all the other AAGL, which is all the foreign entities in that. That has been submitted to Bursa Malaysia. Capital A also has submitted the same to dispose the items. We are just waiting for Bursa Malaysia for approval. Then once that is done, it is very straightforward. Then it goes to EGM for approval for 21 days. After that, we will go to get the court sanction to reduce the shares.
Okay, so all this have to be done only after AirAsia X done the private placement or before?
Yeah, after, yeah.
AirAsia X have to complete the private placement 1 billion MYR first.
Yes.
1 billion MYR. That means between this month or between September?
Yeah. It's EGM on the 2nd. Yeah.
Okay. By September, between September.
No September. Basically, we do all the exercises, I think, but we are targeting all by December now.
All by December.
All by December.
The approval, the EGM does not require me to get the placement before EGM. EGM is just to make sure the shareholders approve the whole exercise.
The whole exercise. So the EGM is done prior to this placement?
Yes. How can I do? I have to do everything EGM first. EGM is conditional of me doing placement and also the whole exercise.
When is your EGM?
Like I said, after I get Bursa approval, it is 21 days after that.
Okay. 21 days after. Okay. That is all from me. Thank you.
Thanks. Any more questions, guys? Okay. Oh, sorry. Carry on.
Yep. Hello, can you hear me?
Yeah, I can hear.
Yep. Hi. Hi, everyone. Just a few questions. First one being on the jet fuel prices, right? Is there any possibility that you would hedge jet fuel prices in the near future?
No, at the moment, I think the fuel environment is still very unsteady. On the positive side, it's coming down. We'll just basically just ride the spot and see how we go.
I see. The rationale for not doing so is mainly because of the volatility of prices, right?
Yeah. If tomorrow or Sunday a war starts, that's it. So that's something that we have to be very wary about. Mm-hmm.
Yeah, I see. Okay. On the other operating expenditures, right, I think it's MYR 20 million. So what would be the normalized other operating expenditure per quarter? Because, I think
Is it
Last quarter it's MYR 7 million, and now it's MYR 20 million. I think the fourth quarter is MYR 47 million. Yeah, just wondering what would be the normalized other operating expenditure per quarter or perhaps every year
Yeah, as I said, I think the normalized one is what you see now. It will grow in line with capacity that we are adding to the business. Other than that, this is pretty much normalized. You can see in comparison to last year why it is a big jump is because there were a lot of reversals in the last year. Now with all the reversals out, everything is done, the balance sheet is actually, the P&L is quite clean, so this is pretty much normalized.
Right. I see. Okay. I think last quarter, there is a reversal of provision, but how much was it by?
In which one?
Sorry, which reversal are you referring to?
Hold on. Let me check. I think it is on page 1, 2.
I think it is.
Financial highlights.
2023. 2Q.
Yeah. Q 23. Yes.
Yes. What's-
How much was it?
It was-
How much?
MYR 130 million.
MYR 113 million?
130.
130. Okay. This is relating to travel vouchers or?
There were travel vouchers, there were activation fee accruals that were no longer required.
I see. Okay. You would not be expecting any provision or reversal of provision in Q1?
No. Not in this.
Right. Okay. My last question is on your fleet size. I think you expect 2 more aircraft to be reactivated by end of this year. Any addition of aircraft, perhaps not new aircraft, but rather, leasing of second-hand aircraft.
As I said as well, there will be another one coming in 2025, hopefully February or March. That is an addition into the fleet. So that is from what I saw.
I see. So that will be 18 by end of this year plus another one.
Yeah, correct.
early next year, right? Yep. Are we expecting 19 aircraft by end of next year?
Yes.
Yes.
Okay. All right. Yep. I think that's all from me for now. Thank you.
Thank you, Sharon. Okay, Sam, you've got one question?
Yeah. Sorry, maybe we need you to keep repeating the answers. On the oil price, the jet fuel, how long does it take for the reduction in the fuel prices to reflect in the profitability?
It's immediate. I mean, basically, yeah, it's immediate. Because at the end of the day, we price our fare based on the older, maybe put it on the higher fares. So some of those are pre-sold quite early in the day. So as you can see in our balance sheet, there's also sales in advance. So once you recognize that potentially in the P&L once they fly, there is actually a gain there effectively, because you would then do a benefit in terms of your Forex and your realized. Secondly as well is, currently as we maintain also our operations, our P&L in terms of each individual routes will improve as our cost of our margins will go up as now the fuel has come down effectively. That's a positive side from us.
If we maintain the current fare and also bring it up higher, then the spread will be much higher for us. Those are the key things that it's driving for us. Hopefully it will be beneficial for us, but we will still continue to push fares higher and make sure that we have a larger spread.
Okay. So you don't do back-to-back when you sell your ticket, then you go and book with the supplier in term of the jet fuel, right. You only realize-
No. Yeah. It's based on spot.
Okay.
Basically, what happens is we deal with Petronas or Shell. We will prepay based on our capacity on a weekly basis, and then basically based on the forecasted load. If, for example, I do not fly those forecasted loads, they will refund me the balance. That is what happens with Petronas, and it is on spot.
Okay. On weekly, basically?
Yes. Correct.
Okay. Thank you.
Daniel, seems like MAS is having issues with staffs resigning as mentioned by the ministry. Does AirAsia X have the similar issue with its No, I think so far we've been okay. In terms of pilots, crew, we're fairly stable. Obviously, with support of also the engineers, Asia Digital Engineering and all that seems to be in line. So we don't foresee any issues at the moment. Okay. All good, guys? All right. I think if there are any more questions, you can call Jane, 24 hours. She'll be contactable. Other than that, I think that's it. Everybody for joining our second Q results. Hopefully to see you guys soon, on the road. So take care and have a good week. Thank you, everybody. Take care.