AirAsia X Berhad has announced its intention to enter into a proposed placement of shares with two institutional investors, one of them being a local institutional investor, potentially raising up to RM50 million of new capital.
This funding boost will be primarily used for the reactivation and maintenance of the airline’s fleet.
The Air Asia X journey post-pandemic
AirAsia X, the long-haul arm of AirAsia, has been struggling financially since the onset of the COVID-19 pandemic.
In 2020, the airline reported a loss of $1.3 billion, and in 2021, the loss widened to $1.7 billion. The airline has been forced to ground many of its aircraft and reduce its routes, and it has also been struggling to raise new capital.
AirAsia X’s financial problems are due to a number of factors, including the sharp decline in air travel demand during the pandemic, the high cost of jet fuel, and the airline’s high debt load.
The airline’s long-haul flights are also more expensive to operate than its short-haul flights, which makes it more difficult for AirAsia X to compete with other airlines.
In an effort to turn things around, AirAsia X has implemented a number of cost-cutting measures, including reducing its workforce and fleet.
The airline has also been trying to attract new passengers by offering lower fares and more flexible travel policies. However, it remains to be seen whether these measures will be enough to save AirAsia X.
The airline’s financial problems are a major concern for the broader aviation industry. AirAsia X is one of the largest long-haul low-cost carriers in the world, and its problems could have a ripple effect on other airlines.
The airline’s struggles also highlight the challenges that the aviation industry is facing in the wake of the COVID-19 pandemic.
AirAsia X 2020 – 2022 actions
Between 2020 – 2022, AirAsia X had implemented a number of measures to address the Company’s financial concerns in the wake of the pandemic including its debt restructuring scheme and an array of corporate restructuring and cost containment exercises.
Over this period, the Company had turned around its financial performance from loss-making to registering two consecutive quarters of profit for the financial periods ended 30 September 2022 and 31 December 2022.
This was achieved through the continued efforts taken by the Company to regularise and improve its financial condition, coupled with the scaling up of its operations after the reopening of regional borders across the world since early 2022.
Reactivating the fleet
On the back of this momentum, the Proposed Placement would be a timely and strategic means for the Company to raise funds which will primarily be used for the reactivation and maintenance of the Company’s fleet.
Benyamin Ismail, CEO of AirAsia X said: “Since the reopening of the regional borders last year, AirAsia X continues to grow and we have been ramping up our operations to cater to the demand for international air travel across the regions.”
“As of May 2023, AirAsia X has 17 aircraft within its fleet, with 11 activated and operational and we aim to activate more aircraft by the end of the year.”
“So far, we have reported a turnaround of the Company’s financial performance from lossmaking to registering two consecutive quarters of profit for the financial periods ended 30 September 2022 and 31 December 2022.
AirAsia X is currently flying 16 medium-haul destinations including the recently launched Chengdu (Tianfu) and three short-haul routes from Kuala Lumpur to Kota Kinabalu, Bali – Denpasar and Bangkok, with a total of 83 flights weekly.