CAPITALA: Company Delivers Strong Turnaround, Strategic Initiatives Advance

The company reported a headline net profit of RM1.4 billion for the second quarter of its 2025 financial year, a significant reversal from a net loss of RM542.5 million in the same period a year prior. This substantial improvement was largely propelled by a RM0.9 billion foreign exchange gain. Excluding exceptional items, the core net profit for the quarter stood at RM86.7 million, bringing the cumulative six-month core net profit to RM218.6 million, which aligns with analysts’ full-year forecasts, representing 34.6% of their estimates.

Despite the positive core profit, group revenue saw a marginal year-on-year decrease of 2.4% to RM4.4 billion. This was primarily attributed to a decline in aviation revenue, which fell 2.4% year-on-year, stemming from softer tourism demand and safety concerns in Thailand. Passenger traffic also dipped slightly by 1%, though the load factor remained steady at 82% even with an 8% increase in capacity.

Operational Efficiency Driving Core Profitability

The significant improvement in core profitability was largely driven by the aviation segment, which saw its net operating profit (NOP) more than double to RM195.9 million. This was primarily due to robust cost efficiencies, including a 17% reduction in Cost per Available Seat Kilometer (CASK), buoyed by lower jet fuel prices and a return to normal maintenance profiles. Strong ancillary revenue growth and favorable ASEAN currency movements also contributed positively.

Beyond aviation, non-aviation segments demonstrated strong growth. Teleport, the logistics arm, turned its NOP positive to RM4.0 million, recovering from an operating loss of RM0.8 million in the previous year, thanks to robust revenue expansion and cost optimisation. Similarly, Asia Digital Engineering (ADE) experienced a twelvefold increase in NOP to RM25.0 million, benefiting from reduced depreciation and interest expenses. These non-aviation units are expected to further bolster contributions in the coming quarters.

Future Outlook and Strategic Initiatives

The company’s aviation business is anticipated to continue benefiting from a strengthening Ringgit, sustained lower jet fuel prices, and the ongoing reactivation of grounded fleet, alongside potential loan refinancing initiatives. Crucially, the company’s regularisation exercises, aimed at exiting its Practice Note 17 (PN17) classification, are reportedly in their final stages, with a target completion date set for end November 2025.

These plans encompass the disposal of the aviation business to AirAsia X and a capital reduction exercise designed to resolve negative equity. Remaining conditions precedent include a RM1 billion placement and requisite consents from the Stock Exchange of Thailand and various creditors. Analysts maintain an optimistic view on the company’s prospects, citing the ongoing operational improvements and the nearing completion of its strategic restructuring.