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 CAPITALA 5099 pn17 CAPITAL A BERHAD’s net loss widens in 1Q despite higher revenue

KUALA LUMPUR (May 26): Capital A Bhd, formerly AirAsia Group Bhd, reported a net loss of RM1.08 billion in the quarter ended March 31, 2022, which was a 10.35% larger loss compared with the corresponding quarter, despite its group-wide revenue more than doubling on a year-on-year basis.

The larger loss was attributed to higher operation costs on fuel and maintenance, as well as a share of loss of RM143.1 million from an associate, following the completion of the restructuring and recapitalisation plan of the associate, the group said in a filing with Bursa Malaysia on Thursday (May 26).

Revenue for the quarter was RM812 million, which was 153% higher y-o-y, as aviation revenue grew 226% y-o-y to RM601 million on the back of improved demand during the festive season, together with the further easing of travel restrictions during the quarter.

Capital A saw improvements in all of its businesses during the quarter under review on a y-o-y basis. Its logistics arm, Teleport, reported a 58% increase in revenue y-o-y to RM147 million, while its digital businesses consisting of airasia Super App and BigPay reported a 46% increase in revenue y-o-y to a combined RM63.7 million.

“After two long years of the pandemic, the worst is now over, and we are returning stronger and better,” said Capital A chief executive officer (CEO) Tan Sri Tony Fernandes in a statement accompanying the result announcement.

“The world is reopening and travel restrictions are subsiding in all of our core markets. These will significantly benefit both our airlines and non-airline businesses. We are preparing to recall remaining furloughed staff amid an expected earnings recovery,” he said.

Fernandes added that Capital A had received a clean audit opinion by its auditors Ernst & Young on April 29, denoting its ability to continue business for the foreseeable future. The auditors’ previous opinion of “material uncertainty related to going concern” on Capital A is now removed.

“We are confident of exiting Practice Note 17 following today’s (May 26) board meeting, and the plans will be submitted to Bursa Malaysia in the not-too-distant future,” said Fernandes.

On the airline performance, the group’s president (airlines) and group CEO of AirAsia Aviation Group, Bo Lingam, said it continued to improve across key metrics throughout the quarter supported by strong pent-up demand and with the easing of travel restrictions in all of its core domestic markets.

“This is evidenced from the sharp increase in the number of flights, which are up by 235% y-o-y and 47% q-o-q to 26,916 flights in 1Q2022, alongside more robust passenger traffic compared with the same period last year,” said Lingam in the statement.

In 1Q2022, demand spiked during the festive season and boosted the overall group capacity to 4.9 million available passenger seats with 3.7 million passengers flown, for a healthy load factor of 76% system-wide, he said.

AirAsia Malaysia’s load factor was up by 1 percentage point y-o-y to 74% in 1Q2022, while AirAsia Indonesia saw its load factor jump 20 ppts y-o-y to 76%. AirAsia Philippines enjoyed 86% load factor during the quarter, up by 12 ppts y-o-y, while AirAsia Thailand’s load factor was at 73%, up by 7 ppts y-o-y.

Meanwhile, airasia Super App CEO Amanda Woo said the improved revenue performance of the business was primarily attributed to a surge in domestic demand from air travel bookings on the platform, as well as recognition of breakage income from the rewards vertical.

The strong travel rebound and multiple campaigns rolled out during the quarter has contributed to the higher airasia Super App average monthly active users to reach 10.7 million, which was 137% higher y-o-y.

The group’s ride hailing platform airasia ride has also achieved significant growth during the quarter on a y-o-y basis, said Woo. The group will be launching the platform in Thailand in the second quarter, and targets to launch in Indonesia and the Philippines by the third quarter of the year.

Pete Chareonwongsak, CEO of Teleport, said the higher segmental revenue during the quarter was mainly attributed to the business operating a more extensive cargo network based on a commitment to deliver best value at lowest cost.

In 1Q2022, Teleport benefited from the return of passenger flights whereby 40% of increased revenue was derived from higher passenger belly capacity, said Chareonwongsak. Delivery volume grew 451% y-o-y to 945,000 e-commerce orders in 1Q2022, which was already 65% of its 2021 full-year volume of 1.45 million e-commerce orders.

“Total tonnage has increased by 31% compared with last year’s first quarter, and the yield per kg improved by 16.6% to RM5.21 from RM4.46 despite negative impact from China's lockdowns.

“We expect the margin will continue to grow in coming quarters with more new additional international lanes and a broader range of delivery hubs introduced, both on the group and in the air through new logistics and e-commerce partnerships,” said Chareonwongsak in the statement.

On the performance of BigPay, its CEO Salim Dhanani said that the business posted an encouraging total user base in 1Q2022, up by 64% y-o-y. Its revenue improved by 28% y-o-y, which was led by the group of BigPay’s payment and remittance business.

“The margins and volume for our remittance business are improving coupled with the margin optimization efforts implemented by the company. On March 3, BigPay announced its first personal fully digital loan product as part of the wider suite of financial services offerings.

“We have seen the revenue contribution from this new loan product and through improvements in operating and marketing efficiencies, there was reduction in operating costs compared with the previous quarter,” says Salim in the statement.

Capital A shares ended at 66.5 sen on Thursday (May 26) for a market capitalisation of RM2.77 billion.

http://www.theedgemarkets.com/article/capital-net-losses-widen-1qfy22-despite-higher-revenue

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