Capital A Berhad Reports Strong Third Quarter 2024 Results

Capital A Berhad (“Capital A” or the “Group”) has released its unaudited financial results for the third quarter ended 30 September 2024 (“3Q2024”). The Group, which includes Aviation Group and Capital A Companies such as Asia Digital Engineering (“ADE”), Capital A Aviation Services (“CAPAS”), Teleport, MOVE Digital, and Capital A International, reported a solid net profit of RM2.01 billion for the quarter. This figure reflects a significant foreign exchange gain exceeding RM2 billion. On a core basis, the Group posted a net operating profit of RM9.9 million, supported by revenue of RM4.9 billion and EBITDA of RM640 million. This represents a Year-on-Year (“YoY”) increase of 17% in net operating profit and a 43% increase in EBITDA.

Highlights of 3Q2024: Aviation Group Performance

Despite 3Q being seasonally slow, the Aviation Group achieved strong results, with revenue growing 15% YoY to RM4.5 billion. EBITDA surged by 50% YoY, reaching RM577 million, resulting in a healthy 13% EBITDA margin. These strong numbers were driven by robust travel demand, favorable fuel prices, and the strengthening of the Malaysian Ringgit (“MYR”) against the US Dollar (“USD”), even though some aircraft remain inactive. When including the inactive aircraft, the Aviation Group would have added RM195 million to its EBITDA.

The fleet grew to 221 aircraft, with 181 available for operations, including spares. By the end of 2024, the total active fleet is expected to reach 205 aircraft. Capacity and passengers carried have grown by 8% YoY, and the full fleet reactivation will allow the Aviation Group to capitalize on increasing travel demand, expand high-yield routes, and enhance network efficiency.

With an average load factor of approximately 90%, the business is on a strong trajectory. Average fares rose 7% YoY to RM231, although there was a slight dip of 4% QoQ due to seasonal factors. Ancillary revenue per passenger grew to RM52, marking a 4% YoY increase, contributing to a total of RM824 million in ancillary revenue.

The Group’s Revenue per Available Seat Kilometer (RASK) increased 10% YoY to USc4.79, driven by increases in passengers carried and average fares, along with the appreciation of the MYR against USD. Cost per Available Seat Kilometer (CASK) ex-fuel increased slightly by 3% to USc3.16 due to higher user charges and other operating expenses related to increased flight activities. Overall, CASK declined by 1% YoY to USc4.98, with operational CASK and CASK ex-fuel showing further improvements when excluding costs related to non-flying aircraft.

CEO of Aviation Group Bo Lingam’s Outlook:

“We are optimistic about the upcoming fourth quarter, a traditionally strong period for the aviation industry. We expect high load factors exceeding 85% and robust average fares driven by year-end festivities. To support this, we will add five new A321neo aircraft to our Malaysian and Thai operations, increasing the active fleet to 205 aircraft. We will also launch 18 new routes to key markets such as China and India. By 2025, we will return two aircraft to our lessors and add eleven new aircraft, growing the fleet to 233 aircraft.”

3Q2024: Performance of Capital A Companies

The non-aviation companies of Capital A demonstrated promising growth, generating over RM771 million in revenue, a 19% YoY increase. Teleport and ADE were the major revenue contributors, accounting for 35% and 25% of the total, respectively. The companies reported EBITDA of RM90 million, yielding a 12% margin and a quarterly net operating profit of RM61 million.

ADE:

ADE’s revenue grew by 12% YoY to RM184 million, with an EBITDA of RM29.6 million, reflecting a 16% margin. The increase was driven by a 14% YoY growth in revenue from engineering maintenance services, boosted by expanded capacity and geographic coverage. Additionally, ADE’s digital marketplace, AEROTRADE, saw a 128% YoY and 53% QoQ increase in parts sold to third parties.

CEO of ADE Mahesh Kumar commented: “ADE is set to operationalize its remaining eight hangar lines at KLIA by year-end, expanding to 16 active lines. This will help us capture more third-party customers while continuing to prioritize AirAsia’s fleet. In December, we begin performing base maintenance checks for A330 aircraft, significantly boosting revenue. We are also launching a new composite and component repair workshop in Nilai in early 2025.”

CAPAS (Santan and DARTS):

CAPAS posted a revenue of RM105 million, with EBITDA of RM25.7 million and a net profit of RM11 million. Santan, which contributes significantly to this segment, saw a 20% YoY increase in revenue to RM50 million. Santan’s strong performance in inflight sales, especially with the introduction of combo meal options, contributed to a take-up rate of 28% and inflight revenue per passenger reaching USD0.9.

CEO of CAPAS Subashini Silvadas highlighted: “CAPAS is expanding by seeking an inflight catering license to grow its customer base beyond AirAsia. We also plan to acquire Ground Team Red (GTR) from the Aviation Group, enhancing our ground handling services. Santan’s inflight catering expansion and GTR acquisition align with our vision to become a fully integrated aviation service provider.”

Teleport:

Teleport saw a 52% YoY revenue increase to RM287 million (~USD61.4 million), primarily driven by a 31% YoY increase in tonnage and a 113% YoY growth in delivery parcels. The company successfully moved over 15.7 million parcels during 3Q, surpassing 47 million parcels delivered YTD, up from 30 million in 2023. EBITDA was RM21.9 million (~USD4.8 million), a significant improvement from RM3.4 million in 3Q2023.

CEO of Teleport Pete Chareonwongsak commented: “We’re seeing accelerated growth in cargo and eCommerce volumes, which boosted our operating profit. This growth was driven by strategic partnerships and an expanding operational network. We expect continued growth in 2024 with an anticipated 50% YoY revenue increase, targeting approximately RM1 billion.”

MOVE:

AirAsia MOVE recorded a revenue of RM128 million, though this marked a 25% YoY decline, primarily due to a reduction in ticket sales. However, other segments showed robust growth, particularly in hotels (up 6% YoY) and rewards (up 29% YoY). The company’s EBITDA strengthened significantly, rising 65% YoY to RM19 million due to cost optimization and improving business performance.

CEO of AirAsia MOVE Nadia Omer stated: “We are focused on driving demand through regional campaigns. Our goal is to increase our share of AirAsia bookings from 40% to 60% by mid-2025, supported by strategic initiatives and better conversion rates.”

BigPay and Other Subsidiaries

BigPay reported revenue of RM8.7 million, narrowing its EBITDA loss by 2% YoY to RM21.7 million. This was attributed to cost-saving initiatives and a 26% YoY reduction in staff costs. BigPay is progressing toward sustained profitability through deeper integration with AirAsia MOVE and expanding its user base.

AirAsia’s brand company, Abc., recorded a 11x YoY increase in revenue to RM57.4 million, with an EBITDA of RM15.2 million. Abc. has expanded its brand visibility through strategic partnerships with SEGA and regional sports sponsorships.

CEO of Capital A Tan Sri Tony Fernandes concluded: “We are thrilled about reaching a significant milestone in emerging from PN17 status and anticipate a strong fourth quarter. Our aviation business is positioned for growth, and ADE, Santan, Teleport, and MOVE continue to show promising results. As we head into 2025, we remain committed to driving sustainable growth and delivering value for shareholders.”