Malaysia's AirAsia X to cut costs, may defer plane deliveries: Acting CEO

Wed Feb 25, 2015 2:41am EST
 
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By Praveen Menon

KUALA LUMPUR (Reuters) - Malaysia's AirAsia X Bhd (AIRX.KL: Quote) will cut flights on unprofitable routes, reorganize staff and defer some aircraft deliveries to turn around the loss-making long-haul budget carrier, the airline's acting chief executive said on Wednesday.

"Capacity reduction and cost-cutting within the organization would be two strategies this year," Benyamin Ismail, the acting Chief Executive Officer of AirAsia X said in a telephone interview. Squeezed by intense competition in Southeast Asia's crowded aviation business, the airline has lost money for the last five quarters.

Ismail was speaking after the long-haul arm of Asia's largest budget carrier, AirAsia (AIRA.KL: Quote), reported its fourth-quarter net loss widened, hit by a weaker ringgit and charges from fuel contracts that sent shares sliding to an all-time low. Benyamin was named acting CEO for an indefinite period after former chief Azran Osman Rani resigned following a management reshuffle last month.

At 0230 ET, the shares had bounced back to be down 3.2 percent on the day, while the benchmark index was down 0.5 percent.

Hit with three disasters last year - the disappearance of Malaysian Airlines flight MH370, the same carrier's MH17 shot down over Ukraine, and the crash of the QZ8501 jet operated by an AirAsia X affiliate in Indonesia - demand for air travel in the region has dampened, Ismail said.

But he expects business to pick up again in 2015, as the airline rolls out new promotions and fares to attract passengers. Ismail said the company is focused on returning to net profit in 2015, without disclosing a numerical target.

"In low-cost airlines, as long as you offer good fares, people will travel," he said. "For AirAsia X there was slowness in January because we did not go out with marketing promotions or aggressive advertising out of respect for the families of those involved in the QZ8501 crash."

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An AirAsia X  Airbus A340 passenger jet arrives on its inaugural flight from Kuala Lumpur to Paris Orly Airport  in this February 14, 2011 file photo. REUTERS/Charles Platiau/Files