Capital A Financial Results Third Quarter 2024

Capital A Berhad reported a solid net profit of RM2.01 billion for the third quarter ended 30 September 2024, recognizing a significant foreign exchange gain of over RM2 billion. The Aviation Group posted a net profit of RM2.07 billion, partly due to lower fuel prices. Ancillary income contributed 18% to total revenue. Capital A Companies posted RM771 million in pre-elimination revenue with a healthy EBITDA margin of 12% and RM61 million in net operating profit. Shareholders’ approval for the aviation business disposal was secured with a 99.97% approval rate.

Despite being a seasonally slow quarter, the airline business delivered strong results as revenue increased by 15% YoY to RM4.5 billion, while EBITDA surged 50% YoY to RM577 million, achieving a healthy 13% EBITDA margin. This positive performance was driven by strong travel demand, favorable fuel prices, and the strengthening of the Malaysian Ringgit” (“YR”) against the US Dolla” (“SD”). This was achieved despite still having non-active aircraft. Including these non-active aircraft, the Aviation Group would record an additional EBITDA of RM195 million. The business recorded a net operating loss of RM42 million at the operating level.

• The total fleet grew to 221 aircraft during the quarter, with 181 aircraft available for operations, including spares. Once all aircraft are reactivated, the total active fleet will be 205 by the end of 2024. Capacity growth and passengers carried have already increased by 8% YoY, and the full reactivation of the fleet will further enable the Aviation Group to capitalize on surging travel demand, expand high-yield routes, and improve network efficiency.

• The performance continued on a solid trajectory, bolstered by a robust load factor of approximately 90% throughout the year. Average fares increased by 7% YoY to reach RM231 even when there was a marginal dip of 4% Quarter-on-Quarte” (“o”) due to seasonal factors.

• Ancillary revenue grew to RM52 per passenger, ma4% YoY increase. This exceeded the target of RM50 per passenger and contributed to a total ancillary revenue of over RM824 million.

• RASK increased by 10% YoY to USc4.79, driven by the 8% and 7% YoY increase in passengers carried and average fares coupled with the appreciation of MYR against USD.

• CASK sex-fuel rose slightly by 3% to USc3.16, primarily driven by user charges and other operating expenses associated with increased flight activities. While 10% lower fuel price per barrel and reduced maintenance costs contributed to cost savings, overall CASK declined by 1% YoY to USc4.98. Excluding non-flying aircraft costs, operational CASK and CASK sex-fuel would be lower by 4% and 2%, respectively.

CEO of Aviation Group, Bo Lingam, comments on the business’s outlook: “We are optimistic about the upcoming fourth quarter, traditionally a strong period for the aviation industry. We expect to maintain high load factors exceeding 85% and robust average fars, driven by year-end festivities. To accelerate this momentum, we will expand our fleet by adding five new A321neo aircraft to our Malaysian and Thai operations, bringing our total active fleet to 205 aircraft. We will also launch 18 new domestic and international routes to cater to the growing demand from key markets like China and India. In 2025, while returning two aircraft to our lessors, we also anticipate adding eleven new aircraft into our fleet, bringing the total fleet count to 233 aircon” ft.”

Overall, non-aviation companies delivered promising growth, generating over RM771 million in pre-elimination revenue for the quarter, up 19% YoY. Teleport and ADE were the key revenue contributors, accounting for 35% and 25%, respectively. The recorded EBITDA was RM90 million, or 12% margin, which resulted in a quarterly net operating profit of over RM61 million’s revenue increased by 12% YoY to RM184 million, with an EBITDA of RM29.6 million, or a 16% margin. This growth was driven by a 14% YoY increase in revenue from engineering maintenance services, fueled by expanded capacity and geographic coverage. The increase in maintenance activities also led to higher revenue from component sales. However, ADE incurred higher operating expenses due to increased headcount to support the expanded hangar capacity. AEROTRADE, the digital marketplace, saw a 128% YoY and 53% QoQ increase in the number of parts sold to third parties during the quarter.

CEO of ADE, Mahesh Kumar, comments on the business outlook”: “ADE is set to operationalize its remaining eight hangar lines at KLIA, bringing the total to 16 active lines by the year-end. Increasing base maintenance capacity gives ADE more opportunity to serve third-party customers while prioritizing AirAsia’sa’sfleet. We are proud to announce that in December, ADE will begin to perform base maintenance checks for widebody aircraft (“A “30”), which is expected to boost the fourth quarter revenue significantly. Besides the hangar, ADE will launch a new workshop in Nilai in early 2025, with capabilities including site and component repair capabilities. We are also working on launching our aircraft engineering training center to develop a skilled workforce that will support future growth. Even more exciting is the strategic investment with Garuda Maintenance Facility (GMF) to expand the landing gear overhaul facility. The partnership aims to tap into Southeast Asia’s robust landing gear market and expects to start generating revenue by 4Q20 “5.”

CAPAS delivered a solid performance, generating revenue of RM105 million. The segment achieved an EBITDA of RM25.7 million, a 24% margin, and a profit of RM11 million, representing a 10% marginSantan’sn’s revenue surged 20% YoY to RM50 million, with an EBITDA of RM4.8 million. This growth was driven by inflight sales, with a take-up rate of 28%, and inflight revenue per pax reaching USD0.9. The introduction of combo meal options has been exceptionally well-received by passengers. In the ready-to-eat segment, Santan sold over 230,000 units in the third quarter, from just 700 units in the same period last year, fueled by expanded partnerships with leading retailers.

CEO of CAPAS, Subashini Silvadas, comments on the business’s outlook: “CAPAS has many exciting projects in the pipeline. One significant development is Santan pursuit of an inflight catering license to expand its inflight customer base beyond AirAsia. By obtaining this license, Santan can scale up its volume and utilize its supply chain assets better, which optimizes operations optimally. Driving her initiative is the planned acquisition of the Ground Team Re” (“R”), our joint venture company that handles aviation ground handling, from the Aviation Group. GTR currently plays a vital role in ground handling operations, and expanding these services will enable us to offer a more comprehensive suite of aviation services. This move is part of our vision of becoming a fully integrated aviation service provider. Besides this, we are also looking to expand the scope of CAPAS, potentially looking to invest and operate an airport management company, which will complement our aviation services portfolio. TTeleport’s Q32024 revenue increased 52% YoY to RM287 million (~USD61.4 million), driven mainly by a 31% YoY increase in tonnage and 113% growth YoY on delivery parcels moved. Over 15.7 million parcels were delivered this quarter, bringing YTD total to over 47 million (FY2023 total was 30 million). Teleport delivered a positive EBITDA of RM21.9 million (~USD 4.8 million) in the quarter (post-IFRS16), up from RM3.4 million in the third quarter of 2023 (post-IFRS16).

CEO of Teleport, Pete Chareonwongsak, comments on the business outlook”: “Our 3Q2024 results are evidenced by the acceleration in cargo and eCommerce parcel volumes that we have moved through The Teleport Network, delivering higher operating profit through increasing returns to scale. This growth was delivered on the back of four key strategies: First, we continue to deepen relationships with existing customers by delivering greater market reach and improved service reliability from China to regions like Asia, Oceania, and the Middle East while at the same time continuing to pursue more direct volumes frChina’sa’s top eCommerce marketplaces through value-added end-to-end services. Third, we continue to strengthen our operational capability and available capacity – with our freighter operations stabilized in early 3Q2024, combined with continuous efforts in growing The Teleport Network with more belly and freighter capacity on top of the 40 partner airlines, welcoming Terra Avia, a Boeing 747F operator, as one of our latest Air Partner to join The Teleport Network; and lastly, consistently optimizing our end-to-end costs, including our last mile operations, to maintain our asset-light, low-cost structure model. We are confident we will close 2024 on a high note, with an expected 50% YoY growth at approximately RM1 billion in total revenues — our strongest performance since inception seven years ago.”

AirAsia MOVE reported revenue of RM128 million, a 25% YoY decline, mainly due to reduced sales of AirAsia flight tickets. As the Aviation Group is recovering from the financial impact of the pandemic, they resorted to doing preferential deals, including selling inventories to other online travel agents, which will end by this December. Despite this, other critical segments of AirAsia Move are demonstrating robust growth. Hotels revenue increased by 6% YoY, driven by a 35% booking surge supported by improved deals and personalized offers relevant to our user demographics. Additionally, Rewards achieved a 29% YoY revenue growth fueled by higher gross billing, more excellent points issuance, and improved redemption rates. On a positive note, AirAsMOVE’sE’s EBITDA strengthened significantly, rising by 65% YoY to RM19 million, underpinned by effective cost optimization initiatives, alongside other core businesses demonstrating improved returns.

CEO of AirAsia MOVE, Nadia Omer, comments on the business outlook: “As the cornerstone of AAirAsia’s sales channel, we are doubling down on our popular regional campaigns to drive demand. Right now, we only contribute 40% of the total share Of irAsia’sa’s bookings, and we aim to improve this to 60% by mid-2025 through multiple strategic initiatives already underway. Meanwhile, we will continue to boost non-AirAsia booking volume through strategic partnerships and destination marketing with airline partners and tourism board partnerships. We will also improve our conversion rate of 0.75% further by refining pricing strategies and leveraging AI-driven personalization to enhance the user experience and streamline the booking process. Our Hotels and SNAP segments have seen good conversion traction at 4.2%, on the back of ssolidcontent, pricing and personalisation. From here on, we plan to grow bookings by increasing investments in awareness and driving more traffic. For Rides, we focus on strengthening our position as the go-to airport ride provider, aiming to reach an 80% completion rate by Q4. Finally, our Rewards program will continue to expand its partner network, offering our loyal customers a more comprehensive range of exclusive benefits and incentives. “sBigPay’sy’s revenue reached RM8.7 million, with an EBITDA loss narrowed by 2% YoY to RM21.7 million. This improvement was primarily driven by cost-cutting initiatives, including a 26% YoY decline in staff cost. A fraud incident was identified this quarter, but provisions were made to manage the impact. We have engaged legal counsel and are confident that a substantial portion of the funds will be recovered through the legal process. In addition, annualized ARPU (Average Revenue Per User) continues to grow 8% YoY, and revenue per headcount in 3Q2024 has also increased 5% YoY. To fuel growth, BigPay will continue to deepen integration with AirAsia MOVE and drive spending within the AirAsia ecosystem. The recent launch of BigPay Lite saw 44% of new users in 3Q2024 onboarded via this channel. BigPay will target foreign workers for remittance, beginning with Indonesians working in Malaysia. BigPay is also finalizing a credit line from a bank, which will bolster its lending services and accelerate its journey toward sustained profitability.

AirAsia brand cCo (Abc.) and other subsidiaries, Abc. and other subsidiaries, recorded quarterly revenue of RM57.4 million, reflecting a nearly 11x YoY increase. The company maintained a strong EBITDA of RM15.2 million, a robust 27% margin. Abc. Continues to promote the master brand AirAsia through strategic partnerships, including collaboration with SEGA to boost inflight experiences and Asian sports sponsorship for regional brand promotions and visibility. The company has also developed the AirAsBuds’ds’ character IP, which presents exciting opportunities for future merchandise and licensing revenue.

CEO of Capital A, Tan Sri ToFernandes’es’ comments on the business outlook: “We are thrilled to announce a significant milestone in our journey to emerge from PN17 status. Having secured the shareholder approval for the disposal of our aviation business, we are on track to complete this transaction by January 2025. Concurrently, we are actively working on submitting and securing approval for our regularisation plan, which has been simplified.

Looking ahead, we anticipate a solid fourth quarter. Our aviation business will be driven by peak travel season and increased capacity. ADE will capture growing MRO demand through the expanded hangar capacity, while Santan’sentry into the third-party airline catering market will further boost our revenue. SeparatelTeleport’st’s robust performance, driven by increased volume and operational efficiencies, is expected to continue. Successfully resolving freighter capacity issues and expanding our network will further strengthen our position in the logistics market.

AirAsia MOVE will remain our primary platform for flight sales while expanding its offerings to include non-AirAsia flights through strategic partnerships and leveraging cross-selling opportunities. Our brand company is gearing up for a strong 2025, focusing on strategic partnerships and innovative initiatives to elevate the brand’s global presence.

The strong performance of our businesses in 3Q2024 is promising. As we navigate this new chapter, we are committed to driving sustainable growth and creating value for our shareholders.”