Capital A Berhad (formerly known as AirAsia Group Berhad) has reported fourth quarter 2021 revenue of RM717 million, up 118% year-on-year and 142% quarter-on-quarter. Aviation revenue increased significantly by 108% over the year and 292% compared to the year-ago quarter to RM463 million as domestic travel demand was strong on the back of easing travel restrictions and by the introduction of quarantine free travel bubbles in 4Q2021.
The aviation business contributed 64% of the total revenue while 36% was derived from digital business in 4Q2021.
The EBITDA loss was RM366 million for the quarter, which trimmed by 84% YoY. Aviation fixed costs increased by 29% compared to the year-ago quarter, lower than the rate of revenue growth. Aviation fixed cost increase for the quarter was due to the larger operating fleet size, resulting in higher maintenance costs, other operating expenses and staff costs. The annual aviation fixed cost increase was 32% for the quarter, mainly from the increase in maintenance costs as the company incurred more flight resumption expenses.
The Group posted a 4Q2021 net loss before tax of RM964 million, which was significantly lower by 57% over the year, against the corresponding quarter of the preceding year when it recorded a one-off impairment write off and losses from fuel hedging. Lower losses for 4Q2021 were achieved from the robust recovery in air travel demand, improved revenue growth from the digital businesses and strict cost control measures. There were no impairments nor fuel swap losses recorded for the quarter.
For the full financial year 2021, Capital A posted a revenue of RM1.7 billion, down 47% from the preceding year. Airline revenue declined 65% as the Consolidated Group operated only 36% of capacity compared to 2020. Nonetheless, load factor remained at 74% with strategic management implemented to manage the reimposition of multiple lockdowns in the operating countries. The aviation segment contributed 58% of revenue while the 42% balance came from the digital segment.
EBITDA loss was reported at RM1.1 billion, contracted by 68% compared to the EBITDA loss of RM3.4 billion in 2020. The Consolidated Group continued to enforce strict cost control measures and this prudent effort resulted in a reduction of operating costs of 49% YoY.
Net Loss After Tax was RM3.8 billion in FY2021, a 36% decline from the RM5.9 billion loss in the previous year. The revival of the airline industry, particularly with governments in Asean countries gradually easing travel restrictions has contributed to the Group’s reported growth in passengers carried and commendable load factor at 80% in the last quarter of 2021. This has helped improve the financial position of the Group.
The Group ended the quarter with RM1.25 billion in cash balance. This was achieved with the issuance of Redeemable Convertible Unsecured Islamic Debt Securities (RCUIDS) raising RM974.5 million, the drawdown of a USD100 million term loan and increasing cash inflow from the recovery of the airline business. The Group managed to also report its first positive net operating cash flow in 4Q21 since the pandemic, averaging RM106 million operating cash flow gain per month.
Revenue per ASK (RASK) for the Consolidated Group improved by 19% YoY to 16.91 sen during the quarter and up by 11% to 16.67 sen in FY2021 driven by pent up demand in air travel.
On the airline performance results and outlook, President (Airlines) and Group CEO of AirAsia Aviation Group, Bo Lingam said:
“Load factor for the Group was strong at 80% in 4Q2021and 74% for FY2021, attributed to launch of travel bubbles, quarantine-free programmes introduced by Asean countries and strategic capacity management. In the last quarter of the year, passengers carried for the Consolidated Group increased by 103% while the operating fleet size increased to 49 by the end of the year 2021.
“AirAsia Aviation Group's performance in the last quarter was encouraging, backed by the festive holiday season and easing travel restrictions. The performance indicated a V-shape resumption of air travel demand in domestic markets in 2021 as compared to the preceding quarter when AirAsia Malaysia, AirAsia Indonesia and AirAsia Thailand experienced a slight setback due to a surge in cases and the reimposition of movement control restrictions. The airlines posted a commendable load factor in 4Q21, with AirAsia Malaysia at 79%, up by 7 ppts YoY, AirAsia Indonesia at 81%, up by 22 ppts YoY, AirAsia Philippines at 85%, up by 21 ppts YoY and AirAsia Thailand at 76%, up by 2 ppts YoY.
“The Group observed an overwhelming demand for air travel since the launch of the Langkawi travel bubble and Phuket Sandbox. It also benefited from the introduction of the Malaysia-Singapore Vaccinated Travel Lane (“VTL”) effective 29 November 2021 and the route continues to experience heavy bookings. The Group believes the overwhelming demand will continue with further reopening of international borders and less stringent travel requirements imposed on travellers.
“With the recent positive developments in Asean countries, the Group expects to see international travel to rebound after two years of travel restrictions caused by the covid-19 pandemic. The Philippines government has further relaxed travel protocols for fully vaccinated foreign visitors, Thailand government announced the removal of the second PCR test on day 5 and reduced insurance requirement to encourage travelling, Indonesia eyes lifting all the quarantine requirements in April 2022 and Malaysia is soon expected to announce the finalised Standard Operating Procedure (“SOP”) to reopen international borders. Singapore has also eased travel rules by adding more countries into its VTL list.
“AirAsia Aviation Group announced the name change of the airline holding company in February 2022 to reflect the aviation group's recovery and new growth strategy by focusing on business expansion within the larger ecosystem. The structural changes are aimed at providing a separate, robust and lean platform for the airline operations supporting Capital A’s continued focus to become a digital and travel lifestyle group.
“Another exciting development was the signing of a non-binding memorandum of understanding for AirAsia Aviation Group to lease a minimum of 100 VX4 eVTOL aircraft from Avolon, an international aircraft leasing company. These eVTOL aircraft will allow AirAsia to further revolutionise air travel by providing advanced air mobility to a whole new range of passengers, transforming how we all connect more efficiently in our everyday lives. In addition to that, AirAsia will partner with Avolon’s affiliate Avolon-e, to commercialise zero-emissions eVTOL aircraft and develop an industry leading urban air mobility (‘UAM’) platform in Southeast Asia.
“The aviation group is moving in a positive direction as we anticipate a stronger rebound, enabling us to grow further with a lean operating structure. It is our hope that governments especially in Asean will continue to ease travel restrictions and reduce or remove onerous entry requirements, for the benefit of the recoverability of the tourism industry.”
On the group’s outlook, CEO of Capital A, Tan Sri Tony Fernandes said: “Despite numerous challenges and uncertainties, the Group recorded so many commendable achievements in 2021. We closed the year with the successful raising of RM974.5 million through the listing exercise of RCUIDS and warrants, signalling strong investor confidence in our airlines recovery and Group strategy to become a digital travel and lifestyle services group. The digital transformation which commenced well before the pandemic, has already received overwhelming support to-date through various fundraising initiatives, raising over RM 2.5 billion through debt and equity financing.