Malaysia's AirAsia X sticks to profit plan despite currency challenge

KUALA LUMPUR: Malaysian long-haul budget airline AirAsia X Bhd said on Wednesday a weaker ringgit makes it harder to achieve its target of reporting a profit this year, but it will push to meet the goal by attracting more passengers and increasing its fares.

The carrier saw a net loss of 132 million ringgit for the April-June period from 128.8 million ringgit in the same period last year, recording its seventh consecutive loss.

But it says its performance has improved in the current quarter as effects from the crash of Flight QZ8501 into the Java Sea in December and a disruption to its Bali-Melbourne route sent passenger numbers down 20 percent in the second quarter.

Its load factor, measuring the percentage of seats filled, fell to 68 percent from 80 percent but the carrier also said the second quarter is usually the weakest. "The challenge is the currency.

I would be more confident with the ringgit at 3.6-3.8 (to the dollar). It's not impossible (to turn things around this year) but it is more challenging," Kamaruddin Meranun, group CEO of AirAsia X, said in a telephone interview. "The management is not giving up. We need to at least get an operating profit to show that the model works," he said.

AirAsia X will pursue more sales in stronger currencies such as the Australian dollar to offset the gain in the US dollar. It registered a foreign exchange loss of 115.4 million ringgit in the first half of 2015. Investors seem unconvinced of the company's efforts, with AirAsia X shares losing 73.6 percent over the past year, making it the biggest loser among 33 Asian airlines during the period, Thomson Reuters data shows.

Kamaruddin said market uncertainty has led some investors to sell their stakes.

In addition to achieving better load factors, the carrier is also putting a freeze on expanding its fleet and choosing to leverage existing routes rather than opening new ones.

"We're trying to reduce as many deliveries as we can," said Benyamin Ismail, the acting CEO.

The carrier, which operates Airbus A330s mainly on routes to Australia, China and Japan, is in negotiations to defer four planes meant for this year to 2015, and freeze deliveries altogether for the next three years, said Benyamin.

It has seen passenger numbers improve in the current quarter, and said the recent bombing in Bangkok will only have a short-term impact on travel there. "What we've seen is that the market is buoyant and it recovers very quickly," said Benyamin.