DALLAS — AirAsia X (D7), the long-haul arm of the AirAsia Group, has soared to a profitable start in 2024, with strong financial performance in the first quarter (Q1). This positive momentum is fueled by a combination of timely network expansion, continuous cost efficiency, and a strong rebound in demand for air travel.

The Malaysian low-cost carrier (LCC) reported a net profit of RM80.1 million for Q1 2024, exceeding an 8% profit margin. This profitability is underpinned by a significant 66% year-on-year (YoY) increase in revenue, reaching RM908.9 million.

The surge in revenue is directly linked to a remarkable 90% YoY growth in passengers carried, with the LCC handling 959,623 passengers during the quarter.

Moreover, AirAsia X achieved the lowest Cost per Available Seat Kilometre (CASK) among its peers at 13.93 sen (US¢2.95). This represents an 11% reduction compared to the previous quarter and is primarily attributed to lower operating expenses and a rising ASK capacity, which saw a 74% YoY increase.

Strong Passenger Demand, Network Expansion

Passenger demand on D7's route has rebounded significantly, driven by peak travel seasons and school holidays. Its Passenger Load Factor (PLF) reached a solid 83% during Q1 2024.

Key routes in China, including Chengdu (CTU), Beijing (PEK), and Shanghai (PVG), performed well with PLF exceeding 90%. This strong regional demand is further evidenced by the 85% YoY increase in the number of stages flown, reaching 3,184 flights, with an average of 135 weekly flights during Q1.

The Kuala Lumpur-based carrier strategically increased flight frequencies to popular destinations in China and ramped up services to Bali (DPS), a renowned leisure destination in Indonesia.

Looking Ahead: A321XLR Entry, Potential Acquisition

AirAsia X anticipates the return of its two remaining A330 aircraft to operational service by July and November 2024. Beyond this, the airline is actively securing additional aircraft to support its ambitious future growth plans.

The airline also highlighted the transformative potential of the A321XLR aircraft. Offering a range of up to nine hours and a lower cost base compared to the current fleet, the A321XLR will enable D7 to explore a wider range of destinations, particularly second-tier locations. This increased flexibility is expected to not only enhance network planning but also lower break-even points, ultimately boosting profitability.

Discussions regarding the potential acquisition of Capital A Berhad's (AIRA) aviation business remain a key focus area for AirAsia X. This merger is aimed at creating a larger AirAsia brand low-cost carrier group, fostering significant synergies through centralized decision-making and a coordinated network plan.

"At present, we welcome the recent announcement of the extension of the visa-exemption policy to China until 2025; since the relaunch of routes to China, PLF in the country has been strong at about mid-90%, while all-new Almaty proved successful in Central Asia with over 90% PLF routinely trending since its launch. Looking to the future, we are excited about the A321XLR aircraft on our orderbook, which will bring our growth ambitions to fruition, as it unlocks a range of up to nine hours with a reduced cost base compared to our current fleet," said AirAsia X CEO Benyamin Ismail.