AirAsia X records 2Q2014 loss as Australia underperforms. But long-term prospects are still bright

AirAsia X incurred a large loss in 2Q2014 driven by a weak performance on Australian routes, where large capacity gains from 2H2013 continue to impact yields. The MYR129 million (USD40 million) loss for 2Q2014 marks the third consecutive quarter of losses for AirAsia X, which has seen its stock price slip by over 30% since its Jul-2013 initial public offering.

But the long-haul low-cost carrier group expects significant improvements in 2H2014 as the rate of capacity growth slows in its core Malaysian market, allowing for the capacity added over the past year to be absorbed. AirAsia X is also reducing capacity slightly on two of its weakest routes, Sydney and Perth, a sensible move given the market conditions in Australia.

While the losses have been disappointing, strategically AirAsia X has improved its position significantly over the last year. The group has established two new joint ventures and is gaining market share in key medium-haul markets from Malaysia, putting it in an enviable position as rival Malaysia Airlines (MAS) struggles and restructures.