Should you invest in AirAsia X IPO? Don’t get trapped people and read this important info!


I think I’ll say “X” to AirAsia X’s IPO

The draft to SC just published. I had a quick view to see how this low-cost long haul airline is doing and for the IPO, would it be attractive. Let me provide some of the numbers which I have captured.

Still loss making despite profits in FY2010. Seems like FY2012 will not be a good year either. Note the deferred taxation in earlier years of FY2009 and FY2010

Notice the tapering off in revenue especially for FY2012. This could be perhaps due to the moving of routes from London, Paris, Christchurch to other shorter lower priced destinations like Sydney, Osaka and Beijing. It seems that competition is different for Airasia X. Airasia, the parent had a good headstart of competing against a poorer and weaker MAS. However, probably for the long haul, competition is different. It could be against many other airlines which uses Malaysia as hub. They could also be of much stronger competitors as compared to MAS. AirAsia X additionally could be selling more discounted price seats as compared to short haul flights.

One example, anyone who flies to Sydney, may opt for connecting via Singapore and uses SIA. In a short haul flight, if I am to fly to Bangkok, my options are lesser. No stopover for sure, hence the short haul Airasia is a very good point to point airline. In a short haul flight, a 30% lower in air-ticket price is an important decision making factor for someone to choose.

For a longer haul flight, it will be harder for AirAsia X to reduce costs as the major cost, it seems is fuel costs – up to 60%, which is a major problem for a low costs airline as it is much harder to reduce that part of the costs. Ancillary revenue does not seem to be a major factor than I thought it would. As much as Airasia X is trying to sell the extras, I think it does not translate to enough income yet for it to turn into good profits.

On its major costs, See below.

Balance Sheet

For Airasia X’s balance sheet, it will be looking for immediate cash (similar to the IHH’s IPO symptom) to beef up its balance sheet. In fact, more than 55% of the funds to be raised will be for debt repayment. Also look at the cash level. Remember, a huge sum of Airasia’s model is based on early cash collection. Hence, it is collecting upfront ahead of its flights which would be scheduled later on. Look at the accounts payable as well as sales in advance figure (a whopping RM271.5 million against cash of just RM24.8 million as at 30 June 2012). Those upfront collected cash are parked under the sales in advance until the flights take off. The more it is in this situation, the more dire it needs to sell early and at very cheap price.

AirAsia X’s Balance Sheet is obviously not strong which is why it needs funds quick. Look at the cash level while long term debt is almost RM1 billion.

Shares on offer

AirAsia X is offering 790,123,500 shares out of which 197,530,900 are offer shares from current shareholders. According to reports fromBernama via MalaysianInsider.com, it is trying to raise RM760 million. An updated report says that Airasia X is trying to price the shares at between RM1.20 to RM1.40. Assuming it is priced at the low end of RM1.20, hence could potentially be valuing AirAsia X a whopping RM2.844 billion. That’s very expensive for an airlines which is still small although riding on Airasia’s branding.

Enlarged share capital upon listing

As in other IPOs of recent, the shares are being offered to again mostly institutions. There are only 3% on offer to retail investors. After Astro’s IPO which I think most of them are still underwater, I wonder how many will pick up – especially the MITI’s portion. Hence, people will learn that there are no free lunches in IPOs.

With the limited routes and just 11 planes in the balance sheet, I think I’ll give this a pass especially with the assumingly high price for still a loss making company.

Purchased aircraft

For any potential investors, it is a high price for purchasing hope. From here, I can say that a low costs long haul may be a different ball game. I like Airasia, but not this one although I myself like the cheap flights.

Malaysiaairlinesfamilies say the article above is well-presented and well-validated with facts after a heedful deliberation from the public. While we are providing facts-finding and conclusive reports assisting the public from being blindly and gullibly trapped in those scamming projects, please stay tune to us in malaysiaairlinesfamilies and airasiafamilies for more inputs on AirAsia’s IPO and other scams. 

8 thoughts on “Should you invest in AirAsia X IPO? Don’t get trapped people and read this important info!

    • Dearest Krong,

      This blog is for the continuity in fighting against Tony Fernandez for corrupting Malaysia Airlines. Our accurate analysis was posted earlier in this post – Game is Over for Ahmad Jauhari. As well-analyzed by malaysiaairlinesfamilies; the profits for Q3 2013 is only temporarily for the showtime for the Prime Minister of Malaysia or else his ass will be burning on the hot plate. Our purpose is to force him to make profits before another dominating group from the top management wresting the preview for bankruptcy. Our work for Malaysia Airlines is to control the bleeding by forcing the changes within the top management who sleep with their blanket during office hours. This blog is also frequented by the MEN-IN-BLACK so to speak. Cheers!

  1. I don’t care if airasia x is rising funds, or airasia’s fare is more expensive than others. I have no interest in them but im funding malaysia airlines thru my tax money.

    Today mas shares drop 20% to lowest ever. Whats happening?

    • Hang on there Heskey,

      We’ll whack MAS clueless CEO on this one. He’s been stalling too long and not doing anything positive for MAS sharesholder. Let’s whack MAS CEO Ahmad Jauhari for faking out the account in the name of manipulator. Cheers!

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