AAX: Net losses declined q-o-q

Background

AirAsia X Berhad ('AAX') is a long-haul, low-cost airline that is part of the AirAsia Group. AAX offers flights on routes beyond 4 hours flight duration across Asia Pacific and the Middle East.

Results Update

For QE31/3/2014, AAX continued to incur losses due to weak yields and high operational cost after it doubled its capacity in Australia. Its LBT dropped by RM122 million from RM170 million to RM48 million due to the strengthening of MYR. In QE31/3/2014, AAX recognized unrealized forex gain of RM10 million while in QE31/12/2013, it recognized unrealized forex loss of RM112 million. Excluding the impact of forex gain/loss, AAX's LBT would be unchanged at RM58 million.


Table: AAX's last 8 quarterly results


Chart 1: AAX's last 8 quarterly results
 
Technical Outlook

AAX has been in a downtrend line since its listing in July 2013. Today, it broke above its horizontal line at RM0.80. Its next resistance will be the downtrend line at RM0.87. An upside breakout of that downtrend line would be bullish for AAX.


Chart 3: AAX's daily chart as at May 19, 2014 (Source: Interachart)

Conclusion

Despite the strong rally today, AAX is still in a downtrend line and incurring losses due to the overcapacity in the Australian sector. Based on poor result and bearish technical outlook, AAX remains a stock to AVOID for now.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, AAX.