Maintenance, Fuel Delay AirAsia’s Profitability Despite Rebound

AirAsia A320s
Credit: Rob Finlayson

SINGAPORE—Despite a five-fold increase in revenue, weakness in regional currencies, surging fuel prices and additional MRO costs to reactivate stored aircraft prevented the AirAsia Group, now known as Capital A, from returning to net profit in the second quarter (Q2). 

Flying with 102 aircraft now, the airline is planning to put an additional 52 aircraft back into the skies by year-end, and resume full operations by Q2 2023. 

The second quarter saw the reopening of AirAsia’s core markets for international tourists, including Thailand, Singapore and Malaysia. Revenue from its Malaysia, Indonesia and Philippines subsidiaries increased 520% year-on-year to (YOY) MYR1.3 billion ($290 million). 

MYR701 million worth of fuel took up the lion’s share of total costs, which was offset by implementation of a fuel surcharge, increased fares and improved ancillary revenue. 

Maintenance costs more than tripled to MYR177 million as the group reactivated 50 more aircraft compared to the same period a year earlier. 

The company’s digital services continue to be a bright spot, improving 192% YOY in revenue, but contributed only 5% of the group’s total revenue. 

“The combination of weaker Association of Southeast Asian Nations (ASEAN) currencies against the U.S. dollar and higher maintenance costs incurred by bringing aircraft back into service after two years of hibernation have slightly prolonged the progress of turning the aviation business back to net profit,” President and CEO of AirAsia Aviation Group Bo Lingam said. “The same cost effects have also led to losses of our associate airline, AirAsia Thailand, in the second quarter.” 

Factoring one-off depreciation and interest expenses for non-operating aircraft of MYR256 million, foreign exchange losses of MYR345 million and share of losses from associates of MYR291 million, the company reported a net loss of MYR1.1 billion. 

Over the first six months, AirAsia Group’s net loss widened from MYR1.7 billion to MYR2.2 billion.

Chen Chuanren

Chen Chuanren is the Southeast Asia and China Editor for the Aviation Week Network’s (AWN) Air Transport World (ATW) and the Asia-Pacific Defense Correspondent for AWN, joining the team in 2017.