AirAsia X (D7, Kuala Lumpur International) stated in its third quarter report that it is “rationalizing” its fleet and routes, as it envisages a gradual resumption of operations from “early 2021” and an eventual return to profitability.
The report, which covers the period ending September 30th and was released November 19, states that the company and AirAsia group overall “plan to focus on core markets to improve returns”.
Some of the initiatives include adapting optimal frequencies to passenger demand, focusing on mature routes in core markets with historically proven demand, and ending unprofitable routes.
In addition, there are plans to operate a leaner fleet, “which means that the Group and the company will have to return excess aircraft to lessors”. The company has “successfully returned an aircraft” and is in talks with other lessors to reduce future lease rates. It also claimed to be in talks with MRO providers “to reduce future maintenance costs”.
The validity of the going concern assumption of the company is “highly dependent” on its ability to gradually resume scheduled operations from the first quarter of next year and return to profitability. This will require executing management’s plans to get continued support from lessors, maintenance providers and financial institutions, the report said.
AirAsia X is also in discussion “with a financial institution” to apply for a government guaranteed loan of up to MYR 500 million ringgit (US $ 122 million) under Malaysia’s Danajamin PRIHATIN Guarantee Program, a fund of MYR 50 billion ($ 12.2 billion), which provides working capital to companies affected by the Covid-19 pandemic to keep business operations going and secure jobs.
The long-haul carrier posted a net loss of MYR 308.5 million (US $ 75.4 million) for the third quarter, up from a net loss of MYR 229.9 million (US $ 56 million) a year earlier. Revenue decreased 94% to MYR 59.9 million ($ 14.6 million).