AirAsia X's Outlook Resilient On Sustained Travel Demand, Cost-Cutting Measures -- Public Investment Bank
KUALA LUMPUR, April 10 (Bernama) -- AirAsia X Bhd’s (AAX) near-term outlook remains supported by sustained travel demand, despite new fuel surcharges introduced to manage the jet fuel price surge triggered by the West Asia regional conflict, which has led to higher airfares.
Public Investment Bank Bhd (PIVB) said AAX has also implemented various cost-cutting measures, such as capacity reduction, optimising fleet maintenance, and strategic network planning, to mitigate the impact of today’s historically high jet fuel prices.
“Depending on route economics and destination, fuel surcharges have increased by approximately 20 per cent, while overall airfares have climbed 30-40 per cent.
“With fuel representing 20-40 per cent of its operating expenses, these steps are essential to safeguard profit margins,” it said in a note today.
Since the West Asia conflict began on Feb 28, crude oil prices have skyrocketed to as high as US$118 per barrel, which in turn led to a significant increase in jet fuel prices, from US$90 per barrel pre-conflict to the current US$200.
PIVB said AAX had cut approximately 10 per cent of its flight capacity, mainly by reducing frequency for lesser-performing routes and combining flights without affecting connectivity, a move driven by the conclusion of the Raya festive season and partly by cost management considerations.
“On network optimisation, AAX is reallocating capacity to stronger-performing routes. The airline is also using this opportunity to optimise fleet utilisation and accelerate the replacement of older aircraft with more fuel-efficient models,” it said.
Additionally, PIVB said AAX leverages its “fly-thru” connectivity via Kuala Lumpur and Bangkok to maximise passenger loads and efficiency.
“Finally, the company is banking on strengthening ASEAN currencies to act as a natural buffer against USD-denominated fuel expenses,” it added.
PIVB maintained an ‘outperform’ call on AAX but lowered the target price to RM1.85 from RM2.80.
-- BERNAMA