ID :
30053
Thu, 11/13/2008 - 16:32
Auther :
Shortlink :
https://oananews.org//node/30053
The shortlink copeid
AIRASIA X SEES PROFITABLE YEAR AHEAD
From Salbiah Said
TOULOUSE (France), Nov 13 (Bernama) -- Long-haul budget carrier AirAsia X Sdn Bhd, which has well over RM300 million cash in hand, is set to turn in profits next year, says its chief executive officer Azran Osman-Rani.
"Probably within three to four months from operating our new planes, we
will be profitable. With new planes, more passengers will fly," Azran
said.
"Most important is cash flow and this is how we convince our financiers. We
have been cash positive since April 2008," he said on board AirAsia X's brand
new Airbus A330 aircraft on its ferry (first) flight from Toulouse to Kuala
Lumpur recently.
On Oct 31, AirAsia X took delivery of its first new A330-300 costing US$200
million (RM704 million), which is for its long-haul operation, linking Kuala
Lumpur with destinations in Australia, North Asia, the Middle East and Europe,
complementing the existing AirAsia network.
Launched in January 2007, the affiliate of low-cost AirAsia Bhd earlier
this year placed an order for 25 Airbus A330 aircraft.
Powered by Rolls Royce Trent 700 engines, the carrier's new A330 offers
accommodation for 383 passengers in a two-class layout, with 355 seats in
economy and 28 in the airline's new XL premium class. It is also equipped with
the latest in-flight entertainment systems by Thales of UK.
Azran said the airline was also looking at local and foreign funds to
finance the purchase of its 25 A330 planes, estimated at US$5 billion (RM17.6
billion). So far, financing for the first few planes had been secured.
In addition to its positive cash flow, he said AirAsia's branding helped
the long-haul airline to seek funds in markets which were already badly hit by
the credit crunch.
"When we presented to financial institutions in August, we were very
fortunate because financiers in Europe had confidence in our brand. We had
AirAsia," he said.
"End of August I was still in London. I was trying to convince the
financiers. So much details you have to work through. Normally with aircraft
financing you have to settle everything at least six weeks before delivery. We
settled everything three and a half hours before take-off," he said.
"October 2008 will always be remembered when the (stock) market crashed.
The timing couldn't have been worse. Nobody was supposed to lend. Nature of
banks is that they only make money when they lend at higher rates. If you
(banks) don't lend, you don't make money."
Despite reports of a global decline in passenger traffic, he said the
carrier was still experiencing a strong forward bookings from November to March.
Azran said the second A330 will be delivered in mid-December, followed by
three each in 2009 and 2010. The remaining planes are slotted for delivery up to
2013.
"With three planes next year, we can add five new destinations. We hope to
fly to Japan, Korea, China, India and at least one more somewhere else," he
said.
Azran said the carrier was on track to start its new flights to London in
March. For its London flights, AirAsia X is in talks with three airports --
Stansted, Manchester and East Midlands.
"We have made all applications and everything looks positive. Hope to
announce our sales launch in a month's time.
"UK will be exciting as so many people are waiting for it... students,
families, friends. To me, what's exciting is not just UK, I am interested in
getting new markets," he said.
On its marketing efforts, Azran said unlike traditional airlines which had
to wait for passengers to plan their holiday destinations, the low-cost
long-haul carrier had to go the extra mile to woo people to travel to places
where they never dreamt of going.
"It involves a lot of pull marketing. You've got to pull passengers in. For
instance we have to collaborate more with tourism bodies, concert or sports
organisers. We have to do a lot more marketing. Have to scratch our heads to
find reasons for people to travel. We cannot wait for people to come to us.
That's why we use the media, celebrities to promote our airline.
"We have to keep finding new ways. I am particularly excited about our
in-flight entertainment, a collaboration with Virgin Group of UK," he
said.
"This is completely new for AirAsia. Nobody in AirAsia has experience in
in-flight entertainment and this is the benefit for our collaboration with
Virgin Group. Virgin Group installed this interactive in-flight system in its
newly launched airline, Virgin America."
AirAsia X is 48 percent-owned by Aero Ventures (a venture of Tony Fernandes
and several of his business associates), followed by 16 percent Virgin Group and
16 percent owned by AirAsia.
Bahrain-based Manara Consortium and Japan-based Orix Corp have taken a
total 20 percent stake in the long-haul low-cost carrier.
"Instead of trying to figure out for ourselves and taking an existing
model, we decided to invest in the latest state-of-the-art system," Azran said.
"Yet we did a few changes as we didn't want to have the CPU (central
processing unit), but instead had the touch screen system which is easier to
maintain. You can chat with anyone on board or charge your BlackBerry or your
iPod by plugging to the USB (universal serial board) port. In future, you can
even download content with some different applications," he said.
"We let people be engaged. The system also helps cost management. Even the
simple act of service -- you just key in your order, say nasi lemak, and that
order gets sent up to the cabin. The cabin crew gets a printout of the amount
and comes back to you faster."
The new aircraft helps reduce costs from 4.0 cents per available seat
kilometre (ASK) to 3.5 cents per ASK, which, he said, is significantly lower
than the cost of 7.5 to 8.0 cents per ASK on traditional carriers.
"An all-new aircraft fleet gives us a strong differentiation against
airlines that operate aged aircraft. The new aircraft will lower our fuel
consumption and maintenance costs and enable us to raise our efficiency level by
up to 30 percent. The new aircraft is the main factor in changing the global
aviation industry," he said.
According to Azran, AirAsia X does not need the complexity of traditional
airlines.
"There are many ways to save costs. Every single thing to goes into an
airline operation, that is how much other airlines spend, all these things add.
People, crew overnight in hotels, weight. That's why you don't see us with big
trolleys of newspapers, which carry a lot of weight," he said.
"People are not going to say I am not going to fly AirAsia X as there are
no newspapers. But interesting thing is you can get them through the in-flight
system. Just key in your order."
AirAsia X has said earlier that its cost savings that it passed on to
passengers through low fares, are derived from maintaining a simple aircraft
fleet and a route network based on low-cost airports, without complex
code-sharing and other legacy overheads that weigh down traditional
airlines.
A key principle of the AirAsia X business model is high frequency,
point-to-point medium to long-haul services.
Covering destinations between four and eight hours in flight duration from
Kuala Lumpur, AirAsia X complements AirAsia's current extensive route
network.
Applying the point-to-point network, it says, also kept its operations
simple and costs low.
"Code sharing with another airline involves massive amount of capex
(capital expenditure), costs are high. Traditional legacy airlines invest
hundreds of millions on computer systems, baggage clearing systems and payment
systems. But you still lose your bags," Azran said.
"That system (code sharing) is not perfect. In today's age, people are more
price-sensitive and Internet-savvy. They can build their own itinerary. They can
buy three different tickets for example, Sydney-Gold Coast, they can fly Virgin;
Gold Coast to KL they can fly AirAsia X and KL to Macau they can take AirAsia,"
he said.
"They can check in and out. Most people think Internet penetration in Asia
is still low. But the reality is when you offer a good fare, people will find
their own connection. If you don't have Internet connection, you can still book
online. If they don't have credit cards, they can call their relatives to help.
Because they buy their own, check in and out themselves, our operating costs
are significantly lower. That's a huge advantage."
Meanwhile, the first A330 was used in AirAsia X's inaugural flight between
Kuala Lumpur and Perth on Nov 2.
Since launching its commercial services in November last year, AirAsia X
has operated its long-haul services to Hangzhou, China and Gold Coast, Australia
with one leased A330.
The airline has since experienced surging passenger demand, recording sales
of over 345,000 seats after almost a year in operation.
AirAsia X, which has flown over 200,000 people across Asia and Australia,
now serves the Kuala Lumpur-Perth route with six direct return flights per week.
It plans to upgrade this schedule to a daily service by
mid-December.
The long-haul budget carrier will also commence services between Kuala
Lumpur and Melbourne on Nov 12 this year.
TOULOUSE (France), Nov 13 (Bernama) -- Long-haul budget carrier AirAsia X Sdn Bhd, which has well over RM300 million cash in hand, is set to turn in profits next year, says its chief executive officer Azran Osman-Rani.
"Probably within three to four months from operating our new planes, we
will be profitable. With new planes, more passengers will fly," Azran
said.
"Most important is cash flow and this is how we convince our financiers. We
have been cash positive since April 2008," he said on board AirAsia X's brand
new Airbus A330 aircraft on its ferry (first) flight from Toulouse to Kuala
Lumpur recently.
On Oct 31, AirAsia X took delivery of its first new A330-300 costing US$200
million (RM704 million), which is for its long-haul operation, linking Kuala
Lumpur with destinations in Australia, North Asia, the Middle East and Europe,
complementing the existing AirAsia network.
Launched in January 2007, the affiliate of low-cost AirAsia Bhd earlier
this year placed an order for 25 Airbus A330 aircraft.
Powered by Rolls Royce Trent 700 engines, the carrier's new A330 offers
accommodation for 383 passengers in a two-class layout, with 355 seats in
economy and 28 in the airline's new XL premium class. It is also equipped with
the latest in-flight entertainment systems by Thales of UK.
Azran said the airline was also looking at local and foreign funds to
finance the purchase of its 25 A330 planes, estimated at US$5 billion (RM17.6
billion). So far, financing for the first few planes had been secured.
In addition to its positive cash flow, he said AirAsia's branding helped
the long-haul airline to seek funds in markets which were already badly hit by
the credit crunch.
"When we presented to financial institutions in August, we were very
fortunate because financiers in Europe had confidence in our brand. We had
AirAsia," he said.
"End of August I was still in London. I was trying to convince the
financiers. So much details you have to work through. Normally with aircraft
financing you have to settle everything at least six weeks before delivery. We
settled everything three and a half hours before take-off," he said.
"October 2008 will always be remembered when the (stock) market crashed.
The timing couldn't have been worse. Nobody was supposed to lend. Nature of
banks is that they only make money when they lend at higher rates. If you
(banks) don't lend, you don't make money."
Despite reports of a global decline in passenger traffic, he said the
carrier was still experiencing a strong forward bookings from November to March.
Azran said the second A330 will be delivered in mid-December, followed by
three each in 2009 and 2010. The remaining planes are slotted for delivery up to
2013.
"With three planes next year, we can add five new destinations. We hope to
fly to Japan, Korea, China, India and at least one more somewhere else," he
said.
Azran said the carrier was on track to start its new flights to London in
March. For its London flights, AirAsia X is in talks with three airports --
Stansted, Manchester and East Midlands.
"We have made all applications and everything looks positive. Hope to
announce our sales launch in a month's time.
"UK will be exciting as so many people are waiting for it... students,
families, friends. To me, what's exciting is not just UK, I am interested in
getting new markets," he said.
On its marketing efforts, Azran said unlike traditional airlines which had
to wait for passengers to plan their holiday destinations, the low-cost
long-haul carrier had to go the extra mile to woo people to travel to places
where they never dreamt of going.
"It involves a lot of pull marketing. You've got to pull passengers in. For
instance we have to collaborate more with tourism bodies, concert or sports
organisers. We have to do a lot more marketing. Have to scratch our heads to
find reasons for people to travel. We cannot wait for people to come to us.
That's why we use the media, celebrities to promote our airline.
"We have to keep finding new ways. I am particularly excited about our
in-flight entertainment, a collaboration with Virgin Group of UK," he
said.
"This is completely new for AirAsia. Nobody in AirAsia has experience in
in-flight entertainment and this is the benefit for our collaboration with
Virgin Group. Virgin Group installed this interactive in-flight system in its
newly launched airline, Virgin America."
AirAsia X is 48 percent-owned by Aero Ventures (a venture of Tony Fernandes
and several of his business associates), followed by 16 percent Virgin Group and
16 percent owned by AirAsia.
Bahrain-based Manara Consortium and Japan-based Orix Corp have taken a
total 20 percent stake in the long-haul low-cost carrier.
"Instead of trying to figure out for ourselves and taking an existing
model, we decided to invest in the latest state-of-the-art system," Azran said.
"Yet we did a few changes as we didn't want to have the CPU (central
processing unit), but instead had the touch screen system which is easier to
maintain. You can chat with anyone on board or charge your BlackBerry or your
iPod by plugging to the USB (universal serial board) port. In future, you can
even download content with some different applications," he said.
"We let people be engaged. The system also helps cost management. Even the
simple act of service -- you just key in your order, say nasi lemak, and that
order gets sent up to the cabin. The cabin crew gets a printout of the amount
and comes back to you faster."
The new aircraft helps reduce costs from 4.0 cents per available seat
kilometre (ASK) to 3.5 cents per ASK, which, he said, is significantly lower
than the cost of 7.5 to 8.0 cents per ASK on traditional carriers.
"An all-new aircraft fleet gives us a strong differentiation against
airlines that operate aged aircraft. The new aircraft will lower our fuel
consumption and maintenance costs and enable us to raise our efficiency level by
up to 30 percent. The new aircraft is the main factor in changing the global
aviation industry," he said.
According to Azran, AirAsia X does not need the complexity of traditional
airlines.
"There are many ways to save costs. Every single thing to goes into an
airline operation, that is how much other airlines spend, all these things add.
People, crew overnight in hotels, weight. That's why you don't see us with big
trolleys of newspapers, which carry a lot of weight," he said.
"People are not going to say I am not going to fly AirAsia X as there are
no newspapers. But interesting thing is you can get them through the in-flight
system. Just key in your order."
AirAsia X has said earlier that its cost savings that it passed on to
passengers through low fares, are derived from maintaining a simple aircraft
fleet and a route network based on low-cost airports, without complex
code-sharing and other legacy overheads that weigh down traditional
airlines.
A key principle of the AirAsia X business model is high frequency,
point-to-point medium to long-haul services.
Covering destinations between four and eight hours in flight duration from
Kuala Lumpur, AirAsia X complements AirAsia's current extensive route
network.
Applying the point-to-point network, it says, also kept its operations
simple and costs low.
"Code sharing with another airline involves massive amount of capex
(capital expenditure), costs are high. Traditional legacy airlines invest
hundreds of millions on computer systems, baggage clearing systems and payment
systems. But you still lose your bags," Azran said.
"That system (code sharing) is not perfect. In today's age, people are more
price-sensitive and Internet-savvy. They can build their own itinerary. They can
buy three different tickets for example, Sydney-Gold Coast, they can fly Virgin;
Gold Coast to KL they can fly AirAsia X and KL to Macau they can take AirAsia,"
he said.
"They can check in and out. Most people think Internet penetration in Asia
is still low. But the reality is when you offer a good fare, people will find
their own connection. If you don't have Internet connection, you can still book
online. If they don't have credit cards, they can call their relatives to help.
Because they buy their own, check in and out themselves, our operating costs
are significantly lower. That's a huge advantage."
Meanwhile, the first A330 was used in AirAsia X's inaugural flight between
Kuala Lumpur and Perth on Nov 2.
Since launching its commercial services in November last year, AirAsia X
has operated its long-haul services to Hangzhou, China and Gold Coast, Australia
with one leased A330.
The airline has since experienced surging passenger demand, recording sales
of over 345,000 seats after almost a year in operation.
AirAsia X, which has flown over 200,000 people across Asia and Australia,
now serves the Kuala Lumpur-Perth route with six direct return flights per week.
It plans to upgrade this schedule to a daily service by
mid-December.
The long-haul budget carrier will also commence services between Kuala
Lumpur and Melbourne on Nov 12 this year.
