AirAsia X starts to show improvements following capacity cuts. Full recovery could hinge on MAS

Malaysia's AirAsia X turned a small operating profit for 1Q2015 and is optimistic it is on track for completing a turnaround in 2H2015. But market conditions in Malaysia remain challenging and not all competitors may follow AirAsia X in adopting a more rational approach to capacity and pricing.

The Malaysian-based long-haul low-cost carrier cut capacity in 1Q2015, driven by a 21% reduction to Australia. But its load factor dropped by an alarming 12ppt and yields improved less than expected.

This is Part 2 in a series of analysis reports on Malaysian airlines. The first report examined the outlook for Malaysia Airlines (MAS), which is starting to reduce capacity and head count as part of its own restructuring initiative.