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Wednesday, November 19, 2014

AirAsia X 3Q net loss at RM211m, revenue higher at RM699m (Edge)

AirAsia X Bhd posted a net loss of RM210.85 million for the third quarter ended September 30, 2014 (3QFY14), from a net profit of RM26.44 million a year earlier.

The 3QFY14 loss came on higher operating and finance expenses, besides foreign exchange losses, long-haul budget airline AirAsia X said in its filling with Bursa Malaysia today.

AirAsia X said revenue however, increased to RM698.76 million, from RM601.49 million.

For 9MFY14, AirAsia X posted a net loss of RM350.92 million, versus a net profit of RM44.34 million a year earlier. Revenue grew to RM2.12 billion, from RM1.63 billion.

During 3QFY14, AirAsia X said revenue from passenger seat sales decreased to RM352 million, from RM353.4 million a year earlier.

Revenue per available seat-kilometer decreased to 9.5 sen, from 11.25 sen.

"This decrease was due to reduction in passenger load factor to 80.6% in 3QFY14, as compared to 82.3% for 3QFY13, as well as reduction in average passenger fare to RM420.09 in the 3QFY14, as compared to RM501.07 in 3QFY13," it said

In 3QFY14, AirAsiaX said operating expenses increased to RM842.5 million, primarily due to staff, fuel and maintenance expenses.

Despite reporting net losses, the firm said it remained positive on its outlook.

"The company expects its prospects to remain positive — barring any unforeseen external circumstances, including but not limited to terrorists attacks, natural disasters, epidemics, economic downturns, fuel price hikes, and fluctuations in foreign currencies against the ringgit".

At 2.33pm, AirAsia X shares fell 2.5 sen or 3.6% to 67.5 sen, for a market capitalisation of RM1.6 billion.

PDZ swings into the red in Q1(Star)

Shipping company PDZ Holdings, which was in the spotlight recently, reported net losses of RM1.67mil in the first quarter ended Sept 30, 2014, a contrast from the net profit of RM778,000 a year ago but it expects an improvement in the current financial year.

It said on Tuesday the severe over-tonnage continued to plague the container shipping industry causing freight rates to be stagnant. 

“However, we expect to see some improvements in business volume in the coming quarters.  On an ongoing basis, the group continues to look for new businesses,” it said. 

PDZ recorded pre-tax loss of RM1.12mil compared with a pre-tax profit of RM1.40mil. Revenue fell 13.1% to RM37.87mil from RM43.60mil. Loss per share was 0.19 sen compared with earnings per share of 0.09 sen.

“The group incurred non-deployment costs of RM460,000 for the quarter under review compared with RM980,000. Administrative expense increased by 14% from RM3.62mil a year ago to RM4.14mil,” it said.

On the liner business, PDZ said revenue fell by 11% to RM35.76mil from RM40.06mil a year ago due to lower business volume. 

PDZ’s ship operating profit before non-deployment costs and administrative expense fell 41% to RM3.50mil from RM5.89mil due to the lower revenue whilst fixed operating costs remain high.

Its non-vessel operating carrier segment also saw a 40% drop in revenue to RM2.12mil from RM3.55mil on lower business volume. It recorded an operating loss of RM50,000 versus an operating profit of RM58,000 a year ago.

When compared with the fourth quarter ended June 30, 2014, it posted loss before tax of RM1.12mil compared with a pre-tax profit of RM2.89mil.

Revenue fell 14% to RM37.88mil from RM43.82mil due to the lower revenue whilst fixed operating costs remain high.

Tuesday, November 18, 2014

AirAsia X flies into greater turbulence (Edge)

AirAsia X Bhd, the long-haul, low-cost affiliate of AirAsia Bhd, appears to be encountering greater turbulence. It is said to be facing payment problems relating to staff salaries and their fixed and variable allowances, sources close to the company said.

In view of the financial problems, according to the sources, AirAsia co-founder and group chief executive officer (CEO) Tan Sri Tony Fernandes will take on a “more prominent role” in the management of AirAsia X to revive the airline.

In a circular seen by The Edge Financial Daily, AirAsia X staff were informed that payment of their wages and allowances would be on a staggered basis for the month of October.
The circular stated that basic salary, fixed allowance, productivity allowance and overtime would be paid on Oct 24, while variable allowances such as flying allowance, sector allowance, night stop allowance and commission would be paid on Oct 31.

Posting allowances for charter flights will be paid on Nov 5.

Describing the unprecedented payment issue as a “temporary setback”, the management of AirAsia X blamed the payment delay to the “late arrival of incoming funds”.

A source told The Edge Financial Daily that apart from the staff payment issue, AirAsia X is also having difficulty seeking aircraft loans from financial institutions due to its current financial position.

“Operating costs of AirAsia X are high and yet, it hasn’t done anything to review its operations and look for ways to cut its costs. It is still taking delivery of new aircraft and maintaining its route network,” said the source.

The airline currently serves 21 destinations in Asia (Nagoya, Haneda, Narita, Osaka, Seoul, Busan, Taipei, Xian, Beijing, Hangzhou, Chengdu, Shanghai, Chongqing, Colombo and Kathmandu), Australia (Sydney, Melbourne, Perth, Adelaide and Gold Coast) and the Middle East (Jeddah). ..

Since its listing in July last year, AirAsia X has been registering losses from the fourth quarter of 2013 and is currently in a net debt position. Its cash balance shrank to RM144.7 million as at June 30 from RM262.9 million as at end-2013.

For the second quarter ended June 30, 2014 (2QFY14), AirAsia X’s net loss widened to RM128.79 million from a net loss of RM32.3 million a year ago.

At the same time, operating expenditure in 2QFY14 jumped 59.1% to RM897.3 million due to higher aircraft fuel expenses, maintenance costs, aircraft operating lease expenses and other operating expenses.
AirAsia X is due to release its 3QFY14 results this week, but analysts have cautioned investors about a likely earnings disappointment and its precarious financial position.

In a note dated Nov 12, Maybank IB Research said it expects AirAsia X to continue its loss-making streak in 3QFY14 with a net loss of RM73 million due to declining yields, impact of new route launches and higher cost from lower aircraft utilisation.

Maybank IB also said it is concerned about the airline’s “depleting capital base and soaring debt”.

“We gather from market sources that the current financing term for the A330-300s is 75% to 80% debt and the balance is topped up from equity. This suggests that by the end of 2014, AirAsia X will no longer have much room to borrow due to its low equity base.

“Therefore, the only route in our view is for AirAsia X to raise new equity. Otherwise, it will have to delay its aircraft acquisitions or cancel some or all of them altogether,” said the research house.

Shares in AirAsia X closed unchanged at 74.5 sen yesterday, 68% below its initial public offering price of RM1.25. Its market capitalisation stood at RM1.77 billion.

This article first appeared in The Edge Financial Daily, on November 18, 2014.

Monday, November 17, 2014

TH Heavy unit bags Bukit Tua job (Edge)

Engineering Bhd’s (TH Heavy) 30%-owned unit Berlian McDermott Sdn Bhd has bagged a contract from PC Kelapang II Ltd, a unit of state-controlled Petroliam Nasional Bhd (Petronas), for transportation, installation and pre-commissioning works at the Bukit Tua Development in East Java, Indonesia.

Berlain McDermott’s main asset is a 128-metre derrick lay barge known as the DB 30. The DB 30’s main selling points are its crane capacity of about 3,000 tonnes, and its ability to install pipes of up to 60 inches (1.5m) in diameter.

While details of the job, such as the value of the contract, are not clear, TH Heavy officials confirmed the awarding of the contract. United States-based McDermott International Inc, which owns the remainder 70% of Berlian McDermott, announced the award of the job last month.

McDermott said the contract is expected to be completed by the end of the first quarter next year. There is no mention of an option for an extension.

Industry players said that the Petronas contract at Bukit Tua could be worth as much as RM600,000 a day (at the lower end of the scale). Assuming a five-month charter period, the contract works out to about RM90 million.

Judging by 20% margin on earnings before interest and tax of TH Heavy’s competitors, Berlian McDermott could make about RM18 million. This, in turn, would mean that TH Heavy’s 30% equity stake in it would rake in about RM5.4 million.

This could be significant for TH Heavy, which is facing challenges to replenish its order book.

For the six months ended June 2014, TH Heavy suffered a net loss of RM4.5 million, or 0.9 sen per share, on revenue of RM206.8 million.

The bleeding is the result of RM9 million in provisions for the company’s fabrication arm amounting to RM6 million, and 92-day dry-docking for DB 30 valued at RM3 million.

TH Heavy’s order book stands at about RM1.5 billion, out of which some 78% comes from its floating, production, storage and offloading (FPSO) vessel, Deep Producer 1.

Deep Producer 1 bagged a RM1.2 billion FPSO contract from JX Nippon for Block SK10, offshore Sarawak, for a tenure that can stretch for as long as 10 years.

Recently, TH Heavy sought to raise RM450 million via a rights issue for a conversion of Deep Producer 1, which is likely to cost some US$150 million (RM502.5 million). However, with the selldown in oil and gas stocks, its shares have fallen considerably. Year to date, the stock price has shed 47% to a 19-month low of 46.5 sen.

As at end June this year, TH Heavy had cash balances of RM101.8 million, while it had long-term debt commitments of RM274.5 million and short-term borrowings amounting to RM39.1 million.

This article first appeared in The Edge Financial Daily, on November 17, 2014.