Capital A delivers first yearly net profit in five years

PETALING JAYA: Capital A Bhd anticipates a “strong performance” this year after it delivered the first annual net profit in five years for the financial year 2023 (FY23), despite operating at only 74% of 2019 airline seat capacity.

The budget carrier and digital travel and lifestyle platform, however, remained in the red at the operating level and ended FY23 with a second consecutive quarter of net loss at almost RM160mil for the final quarter (4Q23).

In a filing with Bursa Malaysia yesterday, Capital A said it expects to achieve 90% of its pre-Covid-19 capacity, with a target of full aircraft reactivation by mid-year and nine additional aircraft.

“We plan to launch more than 60 new routes across the group, expanding in China and India and start AirAsia Cambodia operations in the middle of the year.

“Competition in our two largest markets, Malaysia and Thailand, appears to be easing, allowing for more equitable fare pricing.

“While cost pressures remain high, particularly from the weak Asean currencies, we have put in place control measures to ensure efficiencies, which will allow us to continue to offer the most attractive fares,” it stated in its filing.

Capital A also remains positive on the outlook for its non-aviation businesses.

It said the construction of Asia Digital Engineering’s (ADE) new base maintenance facility, undertaken by Capital A Aviation Services, in Kuala Lumpur International Airport is on track.

Six new lines will begin to operate in the third quarter onwards, with another eight new lines operational by year-end.

ADE is also exploring merger and acquisition possibilities to solidify its market presence.

Meanwhile, the inflight catering business Santan aims to diversify its revenue stream in 2024 by adding third-party clients in the airline, corporate catering and convenience retail segments.

Two new clients already on-boarded at the start of 2024.

As for Teleport, its logistics venture, is looking to build multi-modal, first-to-last mile capabilities in key markets across South-East Asia. It also looks to develop a next-day eCommerce solution between China and Asean.

“AirAsia MOVE will concentrate on refining its inventory and pricing strategies, with the aim of boosting margins and increasing spending to grow its monthly active and transacting users.

“Concurrently, airasia Ride is expanding across key airports in Malaysia, Bangkok and Bali, with the objective of bolstering driver productivity and expanding market outreach.

“Meantime, BigPay has been proactively streamlining its operational expenses and enhancing performance. These efforts have resulted in a 44% reduction in losses for the full year compared to the previous year.

“Building on this momentum, BigPay aims to achieve its first earnings before interest, tax, depreciation and amortisation (Ebitda)-positive month by end-2024,” it said.

Capital A reported a net loss of RM159.57mil for 4Q23 (ended Dec 31), translating to a loss per share of 3.8 sen.

In the corresponding 4Q22, the group had recorded a net profit of RM109.95mil.

Revenue for the quarter more than doubled year-on-year (y-o-y) to RM4.86bil with 93% attributed to the aviation segment, while the logistics, digital and other businesses contributed the remaining 7% to the group.

Capital A achieved a strong 4Q23 turnover, mainly due to the strong recovery in demand from both domestic and international travel. The group also benefited from a foreign-exchange gain of RM389.5mil due to the depreciation of the US dollar against the local currencies of the group during the quarter.

Nevertheless, the gains were offset by higher operating expenses such as staff costs, fuel expenses and maintenance costs; increased depreciation and higher finance costs.

Capital A did not announce a dividend for the quarter under review.

Cumulatively, for FY23, Capital A reported a net profit of RM836.99mil as compared to a net loss of RM2.63bil a year earlier.

However, the group registered an operating loss of RM919mil for the 12-month period. Full year revenue more than doubled to RM14.77bil from RM6.44bil in FY22.“The improvement in net profit is arising from the recognition of a gain of RM1.37bil from remeasurement of an associate to subsidiary, Asia Aviation Public Company Ltd Group, overall improvement of the aviation business and foreign exchange losses of RM644.9mil in last year contributed by the depreciation of local currencies against US dollar.

“The foreign currency translation difference for FY23 of RM1.56bil recognised in the foreign exchange reserve is mainly arising from translation of lease liabilities and receivables denominated in US dollar,” it said.