AirAsia X on RM1.5bil expansion route
It’s buying three new A330-200 aircraft, targeting RM2bil revenue
AirAsia X (AAX) has signed a contract to buy three new A330-200 aircraft for RM1.5bil as part of its expansion strategy and it hoped to earn RM2bil in revenue this year.
This latest aircraft order that comes with an option to add two more aircraft will be deployed for long haul destinations into Europe and possibly Africa from next year onwards.
AAX is still pinning its hopes to ply the KL-Sydney route but it has yet to receive the approval from the Government.
AAX CEO Azran Osman-Rani said the airline would use the new aircraft to increase frequencies to Paris and London and ply new routes in Europe.
He did not identify the new routes but earlier reports suggested that AAX was considering the viability of flying to Nice, Cologne, Berlin and Moscow.
“The purchase of the new A330-200s will make the economies of long haul flying more viable as the aircraft is 15% more fuel efficient,'' Azran said after the signing ceremony held between AAX and Airbus which was witnessed by National Economic Council member and MCA president Datuk Seri Dr Chua Soi Lek.
AAX will take delivery of two aircraft beginning the middle of next year and the third in 2014.
On funding for the new planes, Azran said it would be via a variety of debt financing solutions.
AAX now has 28 orders for A330 and 10 A350. The airline has taken delivery of eight A330-300 and the A350 will only be delivered from 2015.
“Instead of waiting for the A350 aircraft we can continue our long haul expansion with the A330-200. We are also adding more seats for our XL class from 18 to 24 and we believe we offer significant value for a fraction of the cost of a business class seat,'' he said.
Azran said the airline carried 1.92 million passengers last year and this year he expected AAX to fly 2.7 million passengers.
In terms of revenue, he expected the airline to earn RM2bil this year from RM1.3bil last year. AAX recorded RM81mil net profit and saw a 14% return on equity in 2010.
“We are looking at a 50% to 60% growth in revenue this year and as at end of last year we have a cash balance of RM358mil,'' he adds.
The KL-Sydney remained a contentious route as it had been more than a year since the airline had asked for landing rights. The city is listed in the Economic Transformation Programme (ETP) as one of the 10 cities which the Government has plans to increase flight frequencies.
At last week's ETP meeting on tourism it was said the matter was brought up again as to what was holding up the opening of the route to competition.
“We were led to believe that there may be a paper presented to the National Economic Council on the matter soon. We, as a group are committed, but we also know things like this takes time. It is up to the Transport Ministry to look into it, we cannot give an update on when we will get (the nod for KL-Sydney),'' AAX funder Datuk Seri Tony Fernandes said when asked on the status of AAX's request to fly the KL-Sydney route.
Dr Chua said the paper had not been submitted but “I am sure the Government will make a decision based on national interest and not the interest of Malaysia Airlines or AirAsia.''
On the initial public offering (IPO) of AAX, Fernandes said it was on schedule this year although AAX must first get approval for its route expansion from the Government.
“One of the factors that we have to look at before going for an IPO is the route allocation policy, we have to determine what this is going to be, there must be clarity,” Azran said.
“One of the most important things for us is (also) the issue of equity as the expansion of AAX is inevitable, but we need to (raise) money to support the 20 planes that we want to buy.''
The airline is considering a dual listing, on Bursa Malaysia and possibly the other on a US stock exchange.
Azran expects AAX to fly some new destinations this year. However, the inaugural flight to Christchurch in April will go on as planned despite the recent earthquake in New Zealand.
Over the weekend, AAX announced that former International Trade and Industry Minister Tan Sri Rafidah Aziz would take over from Datuk Kamarudin Meranun as the airline's new non-executive independent chairman. Kamarudin said that the airline could tap into Rafidah's vast expertise in dealing with government and international trade matters.
First published in The Star on March 1, 2011
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