AAX-Not Out of the Woods But Hoping

Seeing the End of the Tunnel?

With MAS shares tumbling like tumbling weeds down to a low 16 sen and now hovering at 17 sen, what is in store for the nearest competitor, AAX?

Since its listing on the Bursar, AAX has gone down almost 44% from its RM 1.25 IPO price.

To date, there has been no traction as the price gravitate downwards and there is possibly no treasury buy-in from the company itself.

According to the CEO of AAX, Azran Osman, shareholders can expect a better second half of the year performance for the long haul low cost carrier.

What are his hopes buttress upon?

For one, the added capacity is expected to yield result. Barring unforeseen circumstances and development, he expects a good positive 3rd and 4th Quarters for 2014.

He has this to say: "Every time you grow, you need time for capacity to mature, so forward sales looks positive in the third and fourth quarters because the new capacity we added last year is showing signs of bearing fruit,"

For the financial year ended Dec 31, 2013, AAX posted a pre-tax loss of RM212.98 million on the back of RM2.3 billion in revenue.

Azran said the expansion was necessary for the long-term.

"AAX wants to have a commanding lead like what happened to AirAsia back in 2007/2008 when they expanded and profits accrued to AirAsia in 2009, 2010, 2011, 2012, 2013.

"You need to get the scale of advantage and that is why we need to accelerate growth in 2013 and 2014," he added.

On new markets, he said Indonesia offered tremendous opportunities for the company.

AAX has applied for the final air operator's certificate (AOC) licence to operate and hopes to obtain it by year-end.

We do hope AAX is not on autopilot like MAS.