5.Airasia-27Feb2014-Massive Hit From Yield Pressure-77503.1.0

AirlinesMalaysia

February 27, 2014

IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Massive hit from yield pressure AirAsias 4Q13 core net profit of RM96.8m was 60% below our forecast due to an unexpectedly large 19% yoy drop in quarterly yield, causing its full-year core earnings to fall 24% short of our forecast. Also contributing to the shortfall were the lower-than-expected profit of Thai AirAsia and higher-than-forecast losses of Indonesia AirAsia. Thus, we more than halve our FY14-15 EPS and cut our target price to liquidation value (from 11x CY15 P/E), the bare minimum AirAsia should trade at, in our view. We keep our Hold call although the share price could come under pressure as long-term downside is limited.

Highlights of 4Q13 For the first time in memory, Malaysia AirAsias (MAA) 4Q profit was essentially flat qoq, despite the seasonal peak. 4Q13 core net profit was down 42% yoy despite an 11% rise in ASK capacity, as RASK fell 17% yoy to 14.36 sen on the back of weak pricing. The last time 4Q RASK was lower than this was in 4Q09, when jet fuel was 40% cheaper.

Airline industry suffering from self-inflicted injuries AirAsias poor results were not out of line with the shockingly weak results just announced by MAS and AirAsia X. The consolation is that the group is still profitable compared to the many other airlines hat are swimming in red ink. For this reason, we think that the possible share price downside will not be severe, as AirAsia is already trading below its liquidation value.

Is there hope? MAS and AirAsia have guided that domestic and intra-ASEAN fares are unlikely to decline further from the already-low levels, but we think that fares are unlikely to rise either, as capacity deployment over the next six months will be kept at present levels and there is no evidence of capacity rationalisation. As the weak 4Q13 fares carry over into 2014, we still expect MAA to experience an average 5% underlying yield compression in 2014, leading to a 26% core net profit decline. To make things worse, Thai AirAsias profit is likely to shrink and Indonesia AirAsias losses expand further this year. Thus, we expect AirAsias group core net profit to fall a massive 43% yoy in 2014. The outlook may improve in 2015-16 as the losses are unsustainable for MAS and Malindo.

CIMB Analyst(s)

Raymond YAP, CFA T (60) 3 2261 9072 E [email protected]

GAN Jian Bo T (60) 3 2261 9082 E [email protected]

Share price info

Share price perf. (%) 1M 3M 12M

Relative 0.6 -2.2 -22.1

Absolute 1.7 -0.8 -9.9

Major shareholders % held

Tune Air 23.1

EPF 10.9

AirAsia Bhd 4QFY13 RESULTS NOTE AIRA MK / AIRA.KL Current RM2.38

Market Cap Avg Daily Turnover Free Float Target RM2.40

US$2,024m US$5.58m 66.0% Prev. Target RM2.55 RM6,619m RM18.33m 2,778 m shares Up/Downside 0.8%

Conviction| |

Sources: CIMB. COMPANY REPORTS

Results comparison - note that core net profit includes share of airline associate profits/losses

FYE Dec (RM m) 4QFY13 4QFY12 yoy % qoq % 4QFY13 4QFY12 yoy % Prev.

chg chg Cum Cum chg FY13F Comments

Revenue 1,354.0 1,408.4 (3.9) 5.8 5,181.3 4,995.9 3.7 5,349.6 4Q13 revenue dipped 3.9% yoy as a sharp deterioration in passenger

Operating costs (954.8) (853.5) 11.9 7.1 (3,645.1) (3,333.1) 9.4 3,648.2 yields more than offset higher capacity and loads.

EBITDA 399.2 554.9 (28.1) 2.7 1,536.3 1,662.7 (7.6) 1,701.5 Opex grew in tandem with capacity growth, led by increases in fuel and

EBITDA margin (%) 29.5 39.4 29.7 33.3 (10.9) 31.8 asset-related costs. As a result, EBITDA fell by 28% yoy.

Depn & amort. (160.5) (149.0) 7.7 (2.7) (634.5) (562.2) 12.9 (667.4) Higher depreciation and interest expense due to additional aircraft. MAA

EBIT 238.7 405.9 (41.2) 6.7 901.8 1,100.5 (18.1) 1,034.1 currently operates 72 A320s.

Interest expense (110.3) (97.2) 13.5 3.7 (432.4) (378.8) 14.1 (459.8)

Interest & invt inc 13.7 20.9 (34.5) (16.4) 68.8 79.4 (13.4) 74.5

Associates' contrib 28.7 19.5 47.2 20.1 61.7 (3.8) 1,724.6 79.8 Below due to weaker-than-expected profits from Thai AirAsia.

Exceptionals 2.7 13.6 (80.1) 102.0 (156.8) 1,254.0 (112.5) (44.9) RM40m unrealised forex losses due to the weaker ringgit, offset by a

Pretax profit 173.5 362.8 (52.2) 591.0 443.1 2,051.3 (78.4) 683.8 RM27m derivative gain and a RM9m asset disposal gain.

Tax 71.8 (12.1) 693.0 592.7 0.9 (175.5) 100.5 (13.7) AirAsia enjoyed deferred tax benefits of RM77m in 4Q13. Cash taxes,

Tax rate (%) (41.4) 3.3 (0.2) 8.6 2.0 meanwhile, amounted to RM5.2m.

Minority interests - - nm nm - - nm -

Net profit 245.4 350.6 (30.0) 591.5 444.0 1,875.8 (76.3) 670.0 Below. Core net profit in 2013 represented only 76% of our FY13 forecast

Core net profit 96.8 349.2 (72.3) (33.5) 473.2 797.5 (40.7) 625.1 due to significantly poorer yields and weaker than expected showing for

EPS (sen) 8.8 12.6 (30.1) 591.2 16.0 67.5 (76.3) 24.1 its associates in Thailand and Indonesia.

Core EPS (sen) 3.5 12.6 (72.3) (33.5) 17.0 28.7 (40.7) 22.5

SOURCE: CIMB, COMPANY REPORTS

AirlinesAirAsia Bhd

February 27, 2014

2

Results and conference call highlights

AirAsias FY13 results conference call was hosted by Tan Sri Tony Fernandes (Group CEO). Apart from the surprisingly poor 4Q13 results, the key highlight from the call was the capacity management that AirAsia intends to put in place to mitigate the excess capacity in ASEAN right now.

Figure 1: Core net profit - AirAsia group

2011 2012 2013 2014F 2015F 2016F

Attributable profit 564.1 1,875.8 444.0 756.2 514.4 651.5

Remove: Associates -6.3 3.8 -61.7 -50.8 16.6 -20.8

Remove: Exceptionals -50.0 -1,254.0 156.8 -175.3 -108.4 -108.4

+/- Tax effect on excep 0.0 0.0 0.0 0.0 0.0 0.0

+ Deferred tax provisions 211.6 156.7 -19.8 -145.7 53.1 86.7

Malaysia core net profit 719.4 782.2 519.3 384.4 475.7 609.0

+ Share of Thai AA (45%) 102.1 85.1 85.8 59.8 91.4 117.8

+ Share of Indo AA (49%) 19.9 22.8 -49.5 -112.5 -111.4 -109.1

+ Share of AA Phiippines (40%) -5.7 -34.2 -36.0 -50.0 -40.0 -40.0

+ Share of AA Japan (49%) 0.0 -50.2 -59.5 0.0 -60.0 -70.0

+ Share of AA India (49%) 0.0 0.0 0.0 -30.0 -70.0 -50.0

+ Share of AACOE (50%) 7.2 9.0 8.9 11.0 12.0 13.0

+ Share of Expedia (50%) 4.8 -11.8 8.1 10.0 10.0 10.0

+ Share of BIG (50%) -4.5 -5.4 -3.8 -5.0 -5.0 -5.0

Group core net profit 843.3 797.5 473.2 267.6 302.7 475.7 SOURCES: CIMB, COMPANY REPORTS

Capacity management tools. AirAsia will achieve this goal by: (1) renegotiating the timing of Airbus deliveries, (2) selling older aircraft to third-party buyers, and/or (3) set up a leasing company to place out the excess aircraft in the AirAsia group fleet to third-party lessees.

More details as follows:

1. AirAsia has agreed with Airbus to defer seven A320 deliveries in 2014 and 12 deliveries in 2015. These 19 A320 classic orders will be replaced by A320neos that will be delivered from 2018 onwards.

Figure 2: Aircraft delivery schedule and deferrals

2014 2015 2016

New A320 deliveries from Airbus - original schedule 31 29 18

Less: Deferred deliveries -7 -12

Net deliveries 24 17

Of which is allocated to:

- Malaysia 14

- Thailand 8

- Indonesia nil

- Philippines nil

- India 2 SOURCES: CIMB, COMPANY REPORTS

Financial Summary

Dec-12A Dec-13A Dec-14F Dec-15F Dec-16F

Revenue (RMm) 4,996 5,181 5,608 6,047 6,574

Operating EBITDA (RMm) 1,663 1,536 1,587 1,788 2,019

Net Profit (RMm) 1,876 444 756 514 652

Core EPS (RM) 0.29 0.17 0.10 0.11 0.17

Core EPS Growth (5.4%) (40.7%) (43.5%) 13.1% 57.2%

FD Core P/E (x) 8.29 13.98 24.73 21.87 13.91

DPS (RM) 0.24 0.06 0.06 0.05 0.05

Dividend Yield 10.1% 2.5% 2.3% 2.2% 2.1%

EV/EBITDA (x) 7.72 9.79 9.70 8.68 7.69

P/FCFE (x) 280.7 NA 9.0 8.3 6.7

Net Gearing 116% 168% 157% 149% 138%

P/BV (x) 1.24 1.32 1.18 1.11 1.02

ROE 17.0% 9.1% 5.0% 5.2% 7.7%

% Change In Core EPS Estimates (55.3%) (53.1%)

CIMB/consensus EPS (x) 0.93 0.55

56.0

74.8

93.5

112.3

2.00

2.50

3.00

3.50

Price Close Relative to FBMKLCI (RHS)

Source: Bloomberg

10

20

30

40

50

Feb-13 May-13 Aug-13 Dec-13

Vo

l m

2.38

2.40

2.20 3.48

Target

52-week share price range

Current

SOURCE: CIMB, COMPANY REPORTS

AirlinesAirAsia Bhd

February 27, 2014

3

2. These deferrals are required because of the closure of AirAsia Japan (AAJ) in mid-2013 and because Indonesia AirAsia (IAA) and AirAsia Philippines (AAP) are doing poorly and cannot accommodate any additional capacity.

3. Malaysia AirAsia (MAA) will sell six older planes from its fleet in 2014, which could realise up to US$120m in proceeds. These are 9 to 10-year-old planes, which are worth about US$20m each right now. No further sales are planned at the moment.

4. AirAsia is planning to set up a leasing company that could potentially buy used aircraft from MAA, and lease it out to third-party lessees. This is one way that AirAsia can manage its overall capacity deployment. The idea is still preliminary but could take shape at a later date.

In our view, these capacity management measures will help the AirAsia group in the medium-to-long term but they will not be powerful enough to offset the impact of weak yields in the immediate future.

Dividends and share buybacks. AirAsia reiterated that its dividend policy is still 20% of core operating profit and an announcement on the final dividend for FY13 will be made at a later date. The Board of Directors has approved a share buyback of up to 10% of the outstanding shares.

Associates

AirAsia Japan. AAJ is expected to be relaunched in February 2015 with new partners. If AAJ and AirAsia India (AAI), which could start operations in 2014, do well, AirAsia may negotiate with Airbus to accelerate deliveries in 2015. However, there is no such plan at the moment, as AirAsia prefers to remain conservative on the prospects for AAJ and AAI. We have pencilled in RM60m-70m in share of annual losses from AAJ in FY15-16.

AirAsia India. AAI will be allocated two new deliveries in 2014 and four older planes will be transferred from MAA. It is expected to end 2014 with a fleet of six A320s. We have included RM30m-70m in share of annual losses from AAI in our FY14-16 forecasts.

Thai AirAsia. TAA has seen pressure on its load factors and yields during 4Q13 as a result of the political protests. However, it is still sticking to its plan to take eight new A320 deliveries in 2014 and six more planes in 2015. TAAs 4Q13 RASK fell 9.6% yoy, leading to a 43% yoy decline in baht net profit and a 46% yoy contraction in quarterly contribution to AirAsia.

Indonesia AirAsia. IAA is doing poorly and posted a significant loss in 4Q13 of Rp429bn, compared with a profit of Rp124bn in 4Q12, due to the upward cost pressures from the 23% yoy appreciation of the US$ and 7% drop in RASK from the weak consumer sentiment. IAA will not expand its fleet in 2014. The listing of IAA will be shelved indefinitely.

AirAsia Philippines. AAP will also not take any new aircraft in 2014 as it is still struggling to absorb the capacity of Zest Air (now renamed AirAsia Zest) and navigate the low fares in the Philippines. AAP and AAZ do not appear to have pricing power, with fares typically at a discount to market leader Cebu Air. AAP contributed a loss of RM10m to AirAsia in 4Q13, attributable to the latters 40% stake.

AirlinesAirAsia Bhd

February 27, 2014

4

Malaysia AirAsia

Poor earnings performance. MAAs full-year core net profit fell 34% yoy to RM519m in 2013 due to yield pressures arising from Malindos entry into the Malaysian market in late-March 2013 and MASs aggressive capacity and price response to that competition.

MAAs core net profit for each of 2013s four quarters fell below that of 2012 but the pace of decline worsened substantially as the year progressed; from -2% in 1Q13 to -22%/-25% yoy in 2Q/3Q13, and finally to -58% yoy in 4Q13. This corresponds to the yield environment as it worsened throughout 2013.

Figure 3: Malaysia AirAsia

1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13

MAA's core net profit (RM m) 157.3 130.3 168.2 326.5 154.2 97.6 130.6 136.9

Yoy change (%) -1.9% -25.1% -22.3% -58.1%

MAA's yield (sen/RPK) 18.82 18.67 20.00 20.91 19.20 17.22 18.05 16.97

- Underlying fare 15.38 15.47 16.55 17.34 15.58 13.83 14.53 13.57

- Ancillary income 3.45 3.20 3.44 3.57 3.62 3.40 3.52 3.41

Change in yield (%) 2.0% -7.8% -9.7% -18.8%

- Underlying fare 1.3% -10.6% -12.2% -21.7%

- Ancillary income 5.1% 6.1% 2.3% -4.6% SOURCES: CIMB, COMPANY REPORTS

Fleet expansion to be reduced in 2014. MAA will reduce its fleet expansion in 2014 to a net of four planes, down from the 8-plane addition in 2013.

Figure 4: Aircraft movement for Malaysia AirAsia

2013 2014

Number of A320s as at 1 January 64 72 a

Add: New A320s delivered from Airbus 10 14

Add: Transfer from AA Japan (2013) 1 nil

Less: Transfer to AA Philippines (2013) -3 nil

Less: Sold to third-parties (2014) -6

Less: Transfer to AA India (2014) -4

Number of A320s as at 31 December 72 76 b

Net aircraft addition 8 4 c = b - a SOURCES: CIMB, COMPANY REPORTS

Cost-saving initiatives. AirAsia is embarking on a cost-reduction exercise that will involve the regional consolidation of back office functions such as accounting, human resources, IT and procurement. It will also seek to merge the AirAsia and AirAsia X counter check-in staff and baggage handling staff at the LCCT, as well as encourage automation such as self-service kiosks at the airport.

AirAsia also briefly mentioned that it targets to: (1) improve flight operations to save on fuel and non-fuel costs, (2) renegotiate engineering contracts, and (3) reduce marketing spend. It also plans to rationalise certain non-performing routes and reallocate capacity to better-performing routes, as well as close the AirAsia ASEAN office in Jakarta.

AirAsia claimed to have achieved 2% non-fuel cost savings in 4Q13 and targets to cut another 4% in 2014.

Some of the savings will also come from the ongoing fleet renewal at MAA, which has transferred three older aircraft to AAP in 2013. Although MAA will only expand its fleet by a net of four A320s in 2014, it will actually be taking delivery of 14 new planes, which will be partially offset by the sale/transfer of 10

AirlinesAirAsia Bhd

February 27, 2014

5

older aircraft. In this way, MAA will be able to benefit from the better fuel economies of the newer planes and reduced maintenance costs.

Revenue enhancement initiatives. AirAsia is pushing to increase the take-up rate of Fly-Thru connectivity with AAX from 25% in 2013 to 35% in 2014. AirAsia hopes to achieve this by working with its online travel agents (OTA) and global distribution system (GDS) partners to make all possible route pairs visible on the OTA/GDS systems. At the moment, only point-to-point services are visible.

Expedia currently contributes 2.5% of all seats sold and AirAsia will need to renegotiate Expedias right to exclusive online distribution of AirAsia tickets if it hopes to work with other OTAs. Placing AirAsias seat inventory on GDS is not cheap, at a cost of US$9.50/passenger/sector. However, AirAsia is looking to GDS and OTA distribution to fill up the 15-20% of seats that are on average left empty.

AirAsia is also hoping to push its High-Flyer product more aggressively to corporates in order to lift average yields.

AirAsia targets to lift its ancillary income per passenger to RM47/pax by end-2014 from RM40/pax in 4Q13 by increasing the take-up rates of existing ancillary products and services, introducing on-board WiFi that will be rolled-out gradually in 2014, and commencing the retail of duty free products sometime this year.

Our view is that RM47/pax is a tall target for AirAsia to achieve this year in light of the excess capacity and low fares in the system, which tend to attract the marginal, cost-conscious traveller who will not spend much on ancillary products and services. Furthermore, the take-up and penetration rates for existing ancillaries appear to have maxed out already, as indicated by the ancillary income per passenger remaining flat at around RM40-44/pax for the past four consecutive years. To break through the ceiling, AirAsia will have to introduce online and onboard retail of duty free products in a big way. However, we think that AirAsia is not ready yet and it will not be until 2015 or 2016, when the duty-free business could make a big splash, if at all.

AirlinesAirAsia Bhd

February 27, 2014

6

Assumption changes

We have cut our ASK and RPK assumptions for FY14-15 slightly, as MAA is expanding at a slower-than-expected pace, but keep our PLF assumption at 80%. Although we cut our effective jet fuel price, we are now factoring in an average exchange rate of RM3.30:US$1 from RM3.15. Finally, the key assumption change is the reduction in yield, which is the single largest contributor to our lower earnings forecasts.

We have also lowered our yield forecasts and used weaker exchange rates for TAA and IAA. As a result, we expect lower earnings contribution from TAA and losses from IAA.

Figure 5: Assumption changes - Malaysia AirAsia

ASK (m km) Current Previous Chg (%)

2014F 35,144 36,071 -2.6%

2015F 37,044 38,492 -3.8%

RPK (m km) Current Previous Chg (%)

2014F 28,115 28,857 -2.6%

2015F 29,635 30,794 -3.8%

PLF (%) Current Previous Chg (% pts)

2014F 80.0% 80.0% 0.0%

2015F 80.0% 80.0% 0.0%

Yield (sen/RPK) Current Previous Chg (%)

2014F 17.18 18.36 -6.5%

2015F 17.52 18.14 -3.4%

Effective jet price (US$/bbl) Current Previous Chg (%)

2014F 127.0 130.0 -2.3%

2015F 127.0 130.0 -2.3% SOURCES: CIMB, COMPANY REPORTS

AirlinesAirAsia Bhd

February 27, 2014

7

Figure 6: Key assumptions - Malaysia AirAsia

2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F 2016F

ASK (m km) 10,457 14,536 18,716 22,039 24,362 26,075 28,379 31,582 35,144 37,044 39,893

Change in ASK (%) 39.1% 39.0% 28.8% 17.8% 10.5% 7.0% 8.8% 11.3% 11.3% 5.4% 7.7%

RPK (m km) 8,427 11,421 14,144 16,522 19,019 21,037 22,731 25,333 28,115 29,635 31,914

Change in RPK (%) 52.6% 35.5% 23.8% 16.8% 15.1% 10.6% 8.1% 11.4% 11.0% 5.4% 7.7%

Pax Load Factor 80.6% 78.6% 75.6% 75.0% 78.1% 80.7% 80.1% 80.2% 80.0% 80.0% 80.0%

Pax Yield (sen/RPK) 15.72 16.84 18.67 17.02 18.64 18.68 19.63 17.82 17.18 17.52 17.73

- Seats and surcharges 14.67 15.65 17.01 14.51 14.93 15.10 16.21 14.34 13.62 13.90 14.03

- Ancillary 1.05 1.19 1.66 2.51 3.71 3.59 3.42 3.48 3.55 3.62 3.70

Change in yield (%) 1.1% 7.1% 10.9% -8.8% 9.5% 0.2% 5.0% -9.2% -3.6% 2.0% 1.2%

- Seats and surcharges 0.2% 6.7% 8.7% -14.7% 2.9% 1.1% 7.3% -11.5% -5.0% 2.0% 1.0%

- Ancillary 15.6% 12.9% 39.8% 51.4% 47.6% -3.3% -4.7% 1.9% 2.0% 2.0% 2.0%

Pax RASK (sen/ASK) 12.67 13.23 14.11 12.76 14.55 15.07 15.72 14.30 13.74 14.02 14.18

- Seats and surcharges 11.82 12.29 12.85 10.88 11.66 12.18 12.98 11.50 10.90 11.12 11.23

- Ancillary 0.85 0.93 1.25 1.88 2.90 2.89 2.74 2.79 2.84 2.90 2.96

Change in RASK (%) 10.8% 4.4% 6.7% -9.5% 14.1% 3.6% 4.3% -9.1% -3.9% 2.0% 1.2%

- Seats and surcharges 9.8% 4.0% 4.5% -15.4% 7.2% 4.5% 6.6% -11.4% -5.3% 2.0% 1.0%

- Ancillary 26.7% 10.1% 34.4% 50.2% 53.8% -0.1% -5.4% 2.1% 1.7% 2.0% 2.0%

Fuel price (US$/barrel)

Spot jet fuel price 80.5 86.8 125.3 67.8 88.3 123.8 126.8 122.8 125.0 125.0 125.0

Effective jet fuel price 77.6 86.8 129.4 70.3 91.9 131.0 134.0 130.3 127.0 127.0 127.0

Barrels consumed (m) 2.06 2.64 3.25 3.78 4.11 4.29 4.65 5.16 5.75 6.06 6.54

Unit cost (sen/ASK) 11.71 12.39 14.10 11.02 11.40 12.65 13.18 12.81 12.79 12.87 12.79

- Fuel 5.53 5.43 7.43 4.23 4.98 6.58 6.86 6.75 6.85 6.85 6.87

- Non-fuel 3.90 4.15 4.51 4.32 4.30 4.03 4.32 4.19 4.06 4.14 4.08

- Asset cost 2.27 2.81 2.16 2.47 2.12 2.04 1.99 1.87 1.88 1.87 1.84

Change in unit cost (%) 15.7% 5.8% 13.8% -21.8% 3.4% 11.0% 4.1% -2.8% -0.2% 0.6% -0.6%

- Fuel 15.8% -1.8% 36.8% -43.1% 17.8% 31.9% 4.4% -1.6% 1.5% 0.0% 0.2%

- Non-fuel -1.2% 6.3% 8.7% -4.1% -0.6% -6.1% 7.1% -3.0% -3.1% 2.1% -1.4%

- Asset cost 63.1% 23.7% -23.3% 14.4% -14.1% -3.7% -2.5% -6.3% 0.5% -0.1% -1.8%

Group No of Aircraft 49 65 72 84 90 98 118 154 167 178 196

- Malaysia 31 39 44 48 53 57 64 72 76 80 88

* A320 15 31 44 48 53 57 64 72 76 80 84

* B737 16 8 0 0 0 0 0 0 0 0 0

- Thailand 12 15 16 20 19 22 27 35 43 49 55

* A320 0 2 7 12 19 22 27 35 43 49 55

* B737 12 13 9 8 0 0 0 0 0 0 0

- Indonesia 6 11 12 16 18 17 22 30 30 32 34

* A320 0 0 5 10 14 17 22 30 30 32 34

* B737 6 11 7 6 4 0 0 0 0 0 0

- Philippines A320 0 0 0 0 0 1 2 17 12 6 6

- Japan A320 0 0 0 0 0 1 3 0 0 2 2

- India A320 0 0 0 0 0 0 0 0 6 9 11 SOURCES: CIMB, COMPANY REPORTS

AirlinesAirAsia Bhd

February 27, 2014

8

Domestic capacity industry-wide analysis

The capacity in the top six domestic routes in Malaysia jumped 18% in 1H13 because of the entry of Malindo, which caused the incumbents to react to the competitive threat by adding more capacity themselves. Over the past year (January 2014 vs. January 2013), capacity for the top six domestic routes has increased 22.3% and this capacity is expected to remain flat over the next six months to July 2014.

Capacity on the key trunk routes of KL-Kota Kinabalu/Kuching will remain flat over the next six months and only single-digit capacity reductions will be seen for the KL-Penang/Langkawi (due to the lower AirAsia capacity and the withdrawal of Berjaya Air). KL-Kota Bahru, on the other hand, will see capacity rise 6.6% over the next six months as AirAsia increases its frequencies.

Due to the absence of significant capacity rationalisation in the Malaysian domestic market, the present low domestic fares will, at best, recover gradually. AirAsia did note that there were slight improvements in domestic fares in early-2014 but MAS has indicated that fares will remain low this year.

Unless the airlines domestic capacity is reduced in 2H14, we are not optimistic that there will be any sustainable or material improvement in average domestic ticket prices this year.

Figure 7: Domestic capacity ex-KUL/SZB (top six domestic routes)

Jan-12 Jan-13 Jul-13 Jan-14 Jul-14

Flights from KUL/SZB to

Total seat

capacity/week

Total seat

capacity/week

Total seat

capacity/week

Total seat

capacity/week

Total seat

capacity/week

Past 1 year Next 6

months

Kota Kinabalu 26,220 30,139 35,310 34,264 34,448 13.7% 0.5%

Kuching 22,830 24,896 33,708 31,320 31,500 25.8% 0.6%

Penang 26,642 27,648 30,798 33,840 31,704 22.4% -6.3%

Langkawi 19,059 19,888 21,978 26,720 24,840 34.4% -7.0%

Kota Bahru 17,092 17,600 19,353 20,212 21,536 14.8% 6.6%

Miri 8,295 8,240 10,689 10,648 10,748 29.2% 0.9%

Total 120,138 128,411 151,836 157,004 154,776 22.3% -1.4%

BREAKDOWN BY AIRLINE


Total seat

capacity/week

Total seat

capacity/week

Total seat

capacity/week

Total seat

capacity/week

Total seat

capacity/week

Past 1 year Next 6

months

MAS 40,710 45,827 50,556 50,624 53,508 10.5% 5.7%

AirAsia 68,940 68,760 76,860 76,860 74,340 11.8% -3.3%

Firefly 10,296 10,296 10,728 10,872 11,016 5.6% 1.3%

Malindo 0 0 10,836 15,912 15,912 0.0%

Berjaya Air 192 3,528 2,856 2,736 - -22.4% -100.0%

Total 120,138 128,411 151,836 157,004 154,776 22.3% -1.4%

Growth in industry seats

Growth in seat capacity

SOURCES: CIMB, OAG, CAPA

AirlinesAirAsia Bhd

February 27, 2014

9

Figure 8: Capacity analysis Domestic (top six routes)

No of seats Market share No of seats Market share No of seats Market share No of seats Market share Past 1 year Next 6 months

Kota Kinabalu

MAS 12,499 41.5% 12,630 35.8% 11,584 33.8% 11,768 34.2% -7.3% 1.6%

AirAsia 17,640 58.5% 18,900 53.5% 17,640 51.5% 17,640 51.2% 0.0% 0.0%

Malindo - 0.0% 3,780 10.7% 5,040 14.7% 5,040 14.6% 0.0%

Total 30,139 100.0% 35,310 100.0% 34,264 100.0% 34,448 100.0% 13.7% 0.5%


Kuching

MAS 9,056 36.4% 11,028 32.7% 11,160 35.6% 11,340 36.0% 23.2% 1.6%

AirAsia 15,840 63.6% 18,900 56.1% 17,640 56.3% 17,640 56.0% 11.4% 0.0%

Malindo - 0.0% 3,780 11.2% 2,520 8.0% 2,520 8.0% 0.0%

Total 24,896 100.0% 33,708 100.0% 31,320 100.0% 31,500 100.0% 25.8% 0.6%


Penang

MAS 10,224 37.0% 10,170 33.0% 10,512 31.1% 10,932 34.5% 2.8% 4.0%

AirAsia 10,080 36.5% 11,340 36.8% 12,600 37.2% 11,340 35.8% 25.0% -10.0%

Firefly 5,184 18.8% 5,760 18.7% 5,256 15.5% 5,400 17.0% 1.4% 2.7%

Malindo - 0.0% 1,008 3.3% 4,032 11.9% 4,032 12.7% 0.0%

Berjaya Air 2,160 7.8% 2,520 8.2% 1,440 4.3% - 0.0% -33.3% -100.0%

Total 27,648 100.0% 30,798 100.0% 33,840 100.0% 31,704 100.0% 22.4% -6.3%


Langkawi

MAS 6,208 31.2% 7,602 34.6% 7,496 28.1% 8,964 36.1% 20.7% 19.6%

AirAsia 11,880 59.7% 12,600 57.3% 15,660 58.6% 12,600 50.7% 31.8% -19.5%

Firefly 1,440 7.2% 1,440 6.6% 1,512 5.7% 1,512 6.1% 5.0% 0.0%

Malindo - 0.0% - 0.0% 1,764 6.6% 1,764 7.1% 0.0%

Berjaya Air 360 1.8% 336 1.5% 288 1.1% - 0.0% -20.0% -100.0%

Total 19,888 100.0% 21,978 100.0% 26,720 100.0% 24,840 100.0% 34.4% -7.0%


Kota Bahru

MAS 4,640 26.4% 4,737 24.5% 4,804 23.8% 5,336 24.8% 3.5% 11.1%

AirAsia 8,280 47.0% 10,080 52.1% 8,280 41.0% 10,080 46.8% 0.0% 21.7%

Firefly 3,672 20.9% 3,528 18.2% 4,104 20.3% 4,104 19.1% 11.8% 0.0%

Malindo - 0.0% 1,008 5.2% 2,016 10.0% 2,016 9.4% 0.0%

Berjaya Air 1,008 5.7% - 0.0% 1,008 5.0% - 0.0% 0.0% -100.0%

Total 17,600 100.0% 19,353 100.0% 20,212 100.0% 21,536 100.0% 14.8% 6.6%


Miri

MAS 3,200 38.8% 4,389 41.1% 5,068 47.6% 5,168 48.1% 58.4% 2.0%

AirAsia 5,040 61.2% 5,040 47.2% 5,040 47.3% 5,040 46.9% 0.0% 0.0%

Malindo - 0.0% 1,260 11.8% 540 5.1% 540 5.0% 0.0%

Total 8,240 100.0% 10,689 100.0% 10,648 100.0% 10,748 100.0% 29.2% 0.9%

31 Dec 2012 - 6 Jan 2013 1-7 Jul 2013 30 Dec 2013 - 5 Jan 2014 21-27 Jul 2014 Increase (%)







AirlinesAirAsia Bhd

February 27, 2014

10

Figure 9: Kuala Lumpur (KUL) to Kota Kinabalu capacity

SOURCE: OAG, CAPA

Figure 10: Kuala Lumpur (KUL) to Kuching capacity

SOURCE: OAG, CAPA

AirlinesAirAsia Bhd

February 27, 2014

11

Figure 11: Kuala Lumpur (KUL/SZB) to Penang capacity

SOURCE: OAG, CAPA

Figure 12: Kuala Lumpur (KUL/SZB) to Langkawi capacity

SOURCE: OAG, CAPA

AirlinesAirAsia Bhd

February 27, 2014

12

Figure 13: Kuala Lumpur (KUL/SZB) to Kota Bahru capacity

SOURCE: OAG, CAPA

Figure 14: Kuala Lumpur (KUL) to Miri capacity

SOURCE: OAG, CAPA

AirlinesAirAsia Bhd

February 27, 2014

13

ASEAN capacity industry-wide analysis

In the ASEAN space, we have seen fairly large capacity increases from KL to Indonesia (+32.6%) and Thailand (+15.7%) over the past year and this capacity is expected to rise by another 3% over the next six months. In the light of the reduced travel demand to Thailand because of the political protests and the reduction in travel demand from Indonesia because of the impact of the currency depreciation, we think that the carriers operating to Thailand and Indonesia from KL are feeling the heat of yield declines. Since the capacity to these two countries will be maintained over the next six months, yields are likely to remain low, in our view.

Singapore is the only country to see a reduction (-7.9%) in deployed seat capacity over the past six months, with all airlines cutting back on capacity except for MAS that increased its frequencies. Singapore is largely saturated with too many flights and the reduction in capacity is a step in the right direction. However, the capacity cutbacks are likely a reaction to poor yields and any subsequent yield improvement in Singapore is unlikely to offset the yield decline in Thailand and Indonesia, which combined, is almost 3x the size of the Singapore market.

Given that the KL to ASEAN capacity will remain largely unchanged over the next six months, we are not optimistic that there will be substantial opportunities for yield improvement in the ASEAN markets in 2014.

Figure 15: ASEAN capacity ex-KUL


Flights from KUL to

Total seat

capacity/week

Total seat

capacity/week

Total seat

capacity/week

Total seat

capacity/week

Total seat

capacity/week

Past 1 year Next 6

months

Thailand 37,067 41,287 47,000 47,785 49,155 15.7% 2.9%

Singapore 42,412 48,995 48,467 45,136 45,467 -7.9% 0.7%

Indonesia 61,343 63,993 78,377 84,873 87,342 32.6% 2.9%

Philippines 5,480 10,529 11,469 11,405 9,798 8.3% -14.1%

Myanmar 3,150 4,767 4,653 5,626 5,626 18.0% 0.0%

Vietnam 13,877 15,844 15,999 16,508 14,756 4.2% -10.6%

Cambodia 5,595 6,500 7,873 6,732 6,732 3.6% 0.0%

Total 168,924 191,915 213,838 218,065 218,876 13.6% 0.4%

BREAKDOWN BY AIRLINE


Total seat

capacity/week

Total seat

capacity/week

Total seat

capacity/week

Total seat

capacity/week

Total seat

capacity/week

Past 1 year Next 6

months

MAS 35,124 39,670 46,656 50,690 53,128 27.8% 4.8%

AirAsia 67,500 71,460 77,940 77,400 75,960 8.3% -1.9%

Thai AirAsia 3,780 3,600 3,780 5,040 5,040 40.0% 0.0%

Thai Airways 5,534 5,644 5,640 5,461 5,436 -3.2% -0.5%

Indonesia AirAsia 16,380 16,920 22,680 22,500 24,660 33.0% 9.6%

Lion Air 2,982 4,389 5,964 6,222 5,796 41.8% -6.8%

Garuda Indonesia 2,296 2,184 2,184 2,184 2,184 0.0% 0.0%

Singapore Airlines 4,845 4,845 4,845 3,420 4,845 -29.4% 41.7%

SilkAir 4,892 5,670 6,494 5,140 6,974 -9.3% 35.7%

Tiger Airways 4,500 5,400 5,040 5,040 5,040 -6.7% 0.0%

Jetstar Asia 4,500 9,180 8,100 8,820 6,300 -3.9% -28.6%

Zest Air 0 672 1,176 3,240 1,980 382.1% -38.9%

Cebu Pacific Air 1,980 2,806 2,806 2,506 2,506 -10.7% 0.0%

Myanmar International Airways 785 1,127 483 810 810 -28.1% 0.0%

Vietnam Airlines 3,612 3,864 3,864 3,864 3,864 0.0% 0.0%

Cambodia Angkor Air - - 1,288 - - nm nm

Others 10,214 14,484 14,898 15,728 14,353 8.6% -8.7%

Total 168,924 191,915 213,838 218,065 218,876 13.6% 0.4%

Growth in industry seats

Growth in seat capacity


AirlinesAirAsia Bhd

February 27, 2014

14

Figure 16: Capacity analysis - ASEAN


Thailand

MAS 7,776 18.8% 9,960 21.2% 9,184 19.2% 12,136 24.7% 18.1% 32.1%

AirAsia 17,280 41.9% 19,260 41.0% 20,700 43.3% 20,700 42.1% 19.8% 0.0%

Thai AirAsia 3,600 8.7% 3,780 8.0% 5,040 10.5% 5,040 10.3% 40.0% 0.0%

Thai Airways 5,644 13.7% 5,640 12.0% 5,461 11.4% 5,436 11.1% -3.2% -0.5%

Others 6,987 16.9% 8,360 17.8% 7,400 15.5% 5,843 11.9% 5.9% -21.0%

Total 41,287 100.0% 47,000 100.0% 47,785 100.0% 49,155 100.0% 15.7% 2.9%


Singapore

MAS 7,520 15.3% 7,608 15.7% 8,856 19.6% 9,348 20.6% 17.8% 5.6%

AirAsia 16,380 33.4% 16,380 33.8% 13,860 30.7% 12,960 28.5% -15.4% -6.5%

Singapore Airlines 4,845 9.9% 4,845 10.0% 3,420 7.6% 4,845 10.7% -29.4% 41.7%

SilkAir 5,670 11.6% 6,494 13.4% 5,140 11.4% 6,974 15.3% -9.3% 35.7%

Tiger Airways 5,400 11.0% 5,040 10.4% 5,040 11.2% 5,040 11.1% -6.7% 0.0%

Jetstar Asia 9,180 18.7% 8,100 16.7% 8,820 19.5% 6,300 13.9% -3.9% -28.6%

Total 48,995 100.0% 48,467 100.0% 45,136 100.0% 45,467 100.0% -7.9% 0.7%


Indonesia

MAS 11,574 18.1% 14,898 19.0% 17,726 20.9% 17,212 19.7% 53.2% -2.9%

AirAsia 21,960 34.3% 27,180 34.7% 28,980 34.1% 28,980 33.2% 32.0% 0.0%

Indonesia AirAsia 16,920 26.4% 22,680 28.9% 22,500 26.5% 24,660 28.2% 33.0% 9.6%

Lion Air 4,389 6.9% 5,964 7.6% 6,222 7.3% 5,796 6.6% 41.8% -6.8%

Garuda Indonesia 2,184 3.4% 2,184 2.8% 2,184 2.6% 2,184 2.5% 0.0% 0.0%

Others 6,966 10.9% 5,471 7.0% 7,261 8.6% 8,510 9.7% 4.2% 17.2%

Total 63,993 100.0% 78,377 100.0% 84,873 100.0% 87,342 100.0% 32.6% 2.9%


Philippines

MAS 4,000 38.0% 4,620 40.3% 4,592 40.3% 4,592 46.9% 14.8% 0.0%

AirAsia 2,520 23.9% 1,800 15.7% - 0.0% 720 7.3% -100.0% nm

Zest Air 672 6.4% 1,176 10.3% 3,240 28.4% 1,980 20.2% 382.1% -38.9%

Cebu Pacific Air 2,806 26.7% 2,806 24.5% 2,506 22.0% 2,506 25.6% -10.7% 0.0%

Others 531 5.0% 1,067 9.3% 1,067 9.4% - 0.0% 100.9% -100.0%

Total 10,529 100.0% 11,469 100.0% 11,405 100.0% 9,798 100.0% 8.3% -14.1%


Myanmar

MAS 1,120 23.5% 1,650 35.5% 2,296 40.8% 2,296 40.8% 105.0% 0.0%

AirAsia 2,520 52.9% 2,520 54.2% 2,520 44.8% 2,520 44.8% 0.0% 0.0%

Myanmar International 1,127 23.6% 483 10.4% 810 14.4% 810 14.4% -28.1% 0.0%

Total 4,767 100.0% 4,653 100.0% 5,626 100.0% 5,626 100.0% 18.0% 0.0%


Vietnam

MAS 4,960 31.3% 5,115 32.0% 5,084 30.8% 4,592 31.1% 2.5% -9.7%

AirAsia 7,020 44.3% 7,020 43.9% 7,560 45.8% 6,300 42.7% 7.7% -16.7%

Vietnam Airlines 3,864 24.4% 3,864 24.2% 3,864 23.4% 3,864 26.2% 0.0% 0.0%

Total 15,844 100.0% 15,999 100.0% 16,508 100.0% 14,756 100.0% 4.2% -10.6%


Cambodia

MAS 2,720 41.8% 2,805 35.6% 2,952 43.9% 2,952 43.9% 8.5% 0.0%

AirAsia 3,780 58.2% 3,780 48.0% 3,780 56.1% 3,780 56.1% 0.0% 0.0%

Cambodia Angkor Air - 0.0% 1,288 16.4% - 0.0% - 0.0% nm nm

Total 6,500 100.0% 7,873 100.0% 6,732 100.0% 6,732 100.0% 3.6% 0.0%

31 Dec 2012 - 6 Jan 2013 1-7 Jul 2013 30 Dec 2013 - 5 Jan 2014 30 Jun - 6 Jul 2014 Increase (%)








AirlinesAirAsia Bhd

February 27, 2014

15

Further details on AirAsia's 4Q13 results

Figure 17: Malaysia AirAsia's core net profit (RM m)

41

16 9

51

14 13 11

92

18

50 47

111

24

-4

-77

124

166

128

34

122107

165

209

348

124143

171

282

157

130

168

327

154

98

131137

-100

-50

0

50

100

150

200

250

300

350

400

1Q 05

2Q 3Q 4Q 1Q 06

2Q 3Q 4Q 1Q 07

2Q 3Q 4Q 1Q 08

2Q 3Q 4Q 1Q 09

2Q 3Q 4Q 1Q 10

2Q 3Q 4Q 1Q 11

2Q 3Q 4Q 1Q 12

2Q 3Q 4Q 1Q 13

2Q 3Q 4Q

SOURCES: CIMB, COMPANY REPORTS

Figure 18: Core net profit breakdown, by country

FYE Dec (RM m) 4QFY13 4QFY12 yoy % qoq % 4QFY13 4QFY12 yoy %

chg chg Cum Cum chg Comments

Malaysia core net profit 136.9 326.5 (58.1) 4.8 519.3 782.2 (33.6) Malaysia saw a 58% decline in core net profit, due to yield pressure

and weaker ringgit offsetting capacity growth.

+ Share of Thai AA (45%) 18.1 33.4 (45.8) 29.3 85.8 85.1 0.8 Thailand's core earnings plunged 46% due to weak yields and lower

loads, partially offset by higher capacity.

+ Share of Indo AA (49%) (58.1) 12.1 nm nm (49.5) 22.8 nm Indonesia plunged into the red amid significant yield pressure and

the rupiah depreciation, despite strong capacity growth.

+ Share of AA Php (40%) (9.9) (9.1) 9.3 16.4 (36.0) (34.2) 5.3 The Philippines's losses widened, likely due to deterioration in yields

amid heavy competition in the Philippine aviation space.

+ Share of AA Japan (49%) - (19.4) (100.0) nm (59.5) (50.2) 18.5 Japan saw the last of its losses in 2Q13, as it has been sold back

to partner ANA.

+ Share of AACOE (50%) 1.7 2.4 (29.2) (39.3) 8.9 9.0 (1.1) The training school saw weaker earnings.

+ Share of Expedia (50%) 8.9 3.1 187.1 25.4 8.1 (11.8) 168.6 Expedia's earnings improved, but we caution that its contribution

has regularly swung between profits and losses.

+ Share of BIG (50%) -0.8 0.2 nm nm (3.8) (5.4) (29.6) The BIG loyalty programme remains in the red.

Group core net profit 96.8 349.2 (72.3) (33.5) 473.2 797.5 (40.7) Group core earnings for 4Q13 fell 72% yoy. SOURCES: CIMB, COMPANY REPORTS

AirlinesAirAsia Bhd

February 27, 2014

16

Figure 19: Revenue metrics

4QFY13 4QFY12 yoy % qoq % 4QFY13 4QFY12 yoy %


Revenue (RM m) 1,354.0 1,408.4 (3.9) 5.8 5,181.3 4,995.9 3.7 4Q13 revenue dipped 3.9% yoy, led by commendable capacity increases

- Underlying fare 934.1 1,050.4 (11.1) 5.1 3,632.7 3,684.0 (1.4) but offset by a sharp reduction in yields. RASK was similarly weak as

- Ancillary income 234.6 216.3 8.5 8.8 882.5 777.0 13.6 loads only rose by 2.2% pts despite the cheaper fares. Fare revenue fell,

- Lease income & others 185.3 141.7 30.8 5.3 666.2 534.9 24.5 though ancillary and lease income increases picked up some of the slack.

ASK (m) 8,139 7,357 10.6 4.0 31,582 28,379 11.3 Demand growth was slightly better than capacity growth, leading to a

RPK (m) 6,885 6,059 13.6 12.5 25,333 22,731 11.4 2.2% pts improvement in PLF. 4Q13's loads is now close to AirAsia's

Load factor (%) 84.6% 82.4% 2.2% 6.4% 80.2% 80.1% 0.1% internal target of 85% PLF.

Pax carried (000) 5,913 5,206 13.6 12.3 21,853 19,679 11.0 Pax carried rose 13.6% yoy in 4Q13, in line with RPK growth.

Pax yield (sen/RPK) 16.97 20.91 (18.8) (6.0) 17.82 19.63 (9.2) Pax yields fell by a massive 19% yoy in 4Q13 as fare yields collapsed.

- Underlying fare 13.57 17.34 (21.7) (6.6) 14.34 16.21 (11.5) Despite the sharply lower fares, AirAsia's planes were not very much

- Ancillary income 3.41 3.57 (4.6) (3.3) 3.48 3.42 1.9 fuller, with PLF rising just 2.2% pts. As MAS and Malindo are embarking

on similar load active, yield passive strategies, AirAsia had to offer huge

Pax RASK (sen/ASK) 14.36 17.22 (16.6) 1.8 14.30 15.72 (9.1) discounts in fares to compete. Ancillary yield dropped as well as marginal

- Underlying fare 11.48 14.28 (19.6) 1.1 11.50 12.98 (11.4) passengers are most cost-conscious.

- Ancillary income 2.88 2.94 (2.0) 4.7 2.79 2.74 2.1

Avg rev / pax (RM) 198 243 (18.8) (5.8) 207 227 (8.9) Average revenue/pax dipped 19% in 4Q13, with base fare/pax falling

- Underlying fare 158 202 (21.7) (6.5) 166 187 (11.2) by a significant 22%.

- Ancillary income 40 42 (4.5) (3.1) 40 39 2.3

No of aircraft @ end 72.0 64.0 12.5 9.1 72.0 64.0 12.5 Malaysia added eight aircraft over the past year.

Avg no of aircraft 69.0 61.5 12.2 4.5 66.5 58.6 13.4 SOURCES: CIMB, COMPANY REPORTS

Figure 20: AirAsia average fare breakdown (RM/pax)

142156

174192

155180

154178 171 170 174

214189 198 195

229

198

160142

176 172 173 173188

165 164180

196177 177

192 202 181159 169 158

7

10

12

11

11

13

11

1212 13 15

15

1618 23

22

29

2736

25 3843 44

49

45 4439

40

40 37

4042

42

3941

40

0

50

100

150

200

250

300

1Q 05

2Q 3Q 4Q 1Q 06

2Q 3Q 4Q 1Q 07

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2Q 3Q 4Q 1Q 10

2Q 3Q 4Q 1Q 11

2Q 3Q 4Q 1Q 12

2Q 3Q 4Q 1Q 13

2Q 3Q 4Q

Ancillary income/pax Underlying fare/pax


AirlinesAirAsia Bhd

February 27, 2014

17

Figure 21: MAA - RPK vs. ASK growth (%) and PLF yoy change (% pts)

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

1Q 06

2Q 3Q 4Q 1Q 07

2Q 3Q 4Q 1Q 08

2Q 3Q 4Q 1Q 09

2Q 3Q 4Q 1Q 10

2Q 3Q 4Q 1Q 11

2Q 3Q 4Q 1Q 12

2Q 3Q 4Q 1Q 13

2Q 3Q 4Q

PLF yoy change (% pts) - LHS

RPK yoy growth (%)

ASK yoy growth (%)


Figure 22: MAA - Passenger load factor and yoy change (%)

50%

55%

60%

65%

70%

75%

80%

85%

90%

-10%

-5%

0%

5%

10%

15%

1Q 06

2Q 3Q 4Q 1Q 07

2Q 3Q 4Q 1Q 08

2Q 3Q 4Q 1Q 09

2Q 3Q 4Q 1Q 10

2Q 3Q 4Q 1Q 11

2Q 3Q 4Q 1Q 12

2Q 3Q 4Q 1Q 13

2Q 3Q 4Q

PLF yoy change (LHS) Passenger load factor (%)


Figure 23: Malaysia's overall yield (sen/RPK) and growth (%)

0

5

10

15

20

25

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

1Q 05

2Q3Q4Q1Q 06

2Q3Q4Q1Q 07

2Q3Q4Q1Q 08

2Q3Q4Q1Q 09

2Q3Q4Q1Q 10

2Q3Q4Q1Q 11

2Q3Q4Q1Q 12

2Q3Q4Q1Q 13

2Q3Q4Q

Growth (LHS) Overall yield (sen/RPK)


AirlinesAirAsia Bhd

February 27, 2014

18

Figure 24: AirAsia's overall RASK (sen/ASK) and growth (%)

0

2

4

6

8

10

12

14

16

18

20

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

1Q 05

2Q3Q4Q1Q 06

2Q3Q4Q1Q 07

2Q3Q4Q1Q 08

2Q3Q4Q1Q 09

2Q3Q4Q1Q 10

2Q3Q4Q1Q 11

2Q3Q4Q1Q 12

2Q3Q4Q1Q 13

2Q3Q4Q

Growth (LHS) Overall RASK (sen/ASK)


Figure 25: Growth in AirAsia's underlying fare and ancillary income (%)

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

1Q 05

2Q3Q4Q1Q 06

2Q3Q4Q1Q 07

2Q3Q4Q1Q 08

2Q3Q4Q1Q 09

2Q3Q4Q1Q 10

2Q3Q4Q1Q 11

2Q3Q4Q1Q 12

2Q3Q4Q1Q 13

2Q3Q4Q

Underlying fare/pax growth (%)

Ancillary income/pax growth (%)


Figure 26: AirAsia's fleet in Malaysia (number of aircraft)

5 711

1519

27 2933

37 4044 46 46 46

47 48 48 5052 53 53 53 54

57 57 58 5964 66 66 66

72

1919

1916

15

1010

8

86

4

0

10

20

30

40

50

60

70

80

1Q 06

2Q 3Q 4Q 1Q 07

2Q 3Q 4Q 1Q 08

2Q 3Q 4Q 1Q 09

2Q 3Q 4Q 1Q 10

2Q 3Q 4Q 1Q 11

2Q 3Q 4Q 1Q 12

2Q 3Q 4Q 1Q 13

2Q 3Q 4Q

B737 A320


AirlinesAirAsia Bhd

February 27, 2014

19

Figure 27: Cost metrics

FYE Dec (RM m) 4QFY13 4QFY12 yoy % qoq % 4QFY13 4QFY12 yoy %


Operating costs (RM m) 905.0 811.9 11.5 7.4 3,455.7 3,173.6 8.9 Op costs rose 11.5% yoy in 4Q13 due to higher capacity. Fuel

- Fuel cost 573.0 550.7 4.0 6.5 2,132.3 1,947.9 9.5 consumption grew by 11% yoy but US$-denominated

- Staff cost 161.8 166.8 (2.9) 17.9 606.8 580.3 4.6 jet fuel prices dipped by a similar 11%. The ringgit depreciated

- Maint, user & station, etc. 113.8 112.6 1.1 (33.8) 605.8 533.3 13.6 5% against US$.

- Others 56.3 -18.2 nm nm 110.8 112.1 (1.1)

Asset-related costs (RM m) 320.6 287.8 11.4 0.2 1,256.2 1,100.5 14.1

- Depreciation 160.5 149.0 7.7 (2.7) 634.5 562.2 12.9 Higher depreciation and interest expense due to the increase in

- Leasing of aircraft 49.9 41.6 19.9 2.2 189.4 159.5 18.7 AirAsia's fleet size.

- Interest expense 110.3 97.2 13.5 3.7 432.4 378.8 14.1

UNIT COST ANALYSIS

Cost / ASK (sen) 11.12 11.04 0.8 3.3 10.94 11.18 (2.2) Unit cost rose by a marginal 0.8% yoy in 4Q13 due to higher

- Fuel cost 7.04 7.49 (6.0) 2.4 6.75 6.86 (1.6) non-fuel costs and leasing charges.

Fuel unit cost dipped due to lower jet fuel prices.

- Non-fuel costs 4.08 3.55 14.9 4.8 4.19 4.32 (3.0)

- Staff cost 1.99 2.27 (12.3) 13.4 1.92 2.04 (6.0)

- Maint, user & station, etc. 1.40 1.53 (8.6) (36.3) 1.92 1.88 2.1

- Others 0.69 -0.25 nm nm 0.35 0.39 (11.2)

- Other costs 3.94 3.91 0.7 (3.6) 3.98 3.88 2.6

- Depreciation 1.97 2.02 (2.6) (6.4) 2.01 1.98 1.4

- Leasing of aircraft 0.61 0.57 8.4 (1.7) 0.60 0.56 6.7

- Interest expense 1.36 1.32 2.6 (0.2) 1.37 1.33 2.6 SOURCES: CIMB, COMPANY REPORTS

Figure 28: Fuel cost analysis

4QFY13 4QFY12 yoy % qoq % 4QFY13 4QFY12 yoy %


Net jet fuel price (US$/bbl) 131.0 148.0 (11.5) (0.8) 135.0 134.8 0.1 AirAsia's jet fuel price fell by US$17/barrel to US$131/barrel. AirAsia's

Barrels consumed (m) 1.35 1.22 11.3 8.0 4.59 4.69 (2.0) earnings was aided by the lower fuel price.

ASK / barrel used 6,010.0 6,046.6 (0.6) (3.8) 6,876.4 6,056.3 13.5

Average RM:US$ 3.21 3.06 5.0 (1.0) 3.15 3.09 2.0 In 4Q13, the ringgit weakened against the US dollar, which increased

Cost of fuel (US$ m) 177.4 180.1 (1.5) 7.2 620.0 631.7 (1.8) RM-denominated fuel cost.

Cost of fuel (RM m) 573.0 550.7 4.0 6.5 2,132.3 1,947.9 9.5 SOURCES: CIMB, COMPANY REPORTS

Figure 29: Average jet fuel price (US$/barrel)

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AirlinesAirAsia Bhd

February 27, 2014

20

Figure 30: Quarterly results

FYE Dec (RM m) 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13

Revenue 1,272.7 1,168.4 1,181.6 1,237.5 1,408.4 1,300.8 1,246.3 1,280.3 1,354.0

Operating costs (763.8) (804.5) (830.9) (844.3) (853.5) (906.5) (892.1) (891.7) (954.8)

EBITDA 508.9 363.9 350.7 393.2 554.9 394.3 354.2 388.6 399.2

EBITDA margin (%) 40.0 31.1 29.7 31.8 39.4 30.3 28.4 30.4 29.5

Depn & amort. (142.2) (130.7) (137.9) (144.5) (149.0) (154.0) (155.2) (164.8) (160.5)

EBIT 366.7 233.2 212.7 248.7 405.9 240.4 198.9 223.8 238.7

Interest expense (95.8) (90.5) (94.4) (96.6) (97.2) (106.3) (109.4) (106.3) (110.3)

Interest & invt inc 15.3 18.4 19.6 20.5 20.9 24.3 14.3 16.4 13.7

Associates' contrib (1.8) (11.0) (8.3) (4.0) 19.5 (3.8) 12.9 23.9 28.7

Exceptionals 53.4 62.4 1,087.4 90.6 13.6 (22.8) (4.1) (132.6) 2.7

Pretax profit 337.9 212.4 1,217.0 259.1 362.8 131.8 112.6 25.1 173.5

Tax (202.2) (40.0) (22.1) (101.3) (12.1) (27.0) (54.3) 10.4 71.8

Tax rate (%) 59.8 18.8 1.8 39.1 3.3 20.5 48.2 (41.3) (41.4)

Minority interests - - - - - - - - -

Net profit 135.7 172.4 1,194.9 157.8 350.6 104.8 58.3 35.5 245.4

Core net profit 309.5 166.5 117.5 164.3 349.2 141.6 89.3 145.5 96.8

EPS (sen) 4.9 6.2 43.0 5.7 12.6 3.8 2.1 1.3 8.8

Core EPS (sen) 11.1 6.0 4.2 5.9 12.6 5.1 3.2 5.2 3.5

Reconciliation to core net profit

Net profit 135.7 172.4 1,194.9 157.8 350.6 104.8 58.3 35.5 245.4

- Associates 1.8 11.0 8.3 4.0 (19.5) 3.8 (12.9) (23.9) (28.7)

- Exceptionals (53.4) (62.4) (1,087.4) (90.6) (13.6) 22.8 4.1 132.6 (2.7)

+ Deferred tax/(income) 198.1 36.2 14.6 96.9 9.0 22.8 48.0 (13.6) (77.1)

Malaysia core net profit 282.1 157.3 130.3 168.2 326.5 154.2 97.6 130.6 136.9

+ Share of Thai AA (45%) 30.8 30.8 11.9 9.0 33.4 31.7 22.0 14.0 18.1

+ Share of Indo AA (49%) 2.7 (6.1) 4.9 11.9 12.1 0.2 8.0 0.4 (58.1)

+ Share of AA Phiippines (40%) (3.7) (5.0) (9.9) (10.2) (9.1) (8.0) (9.6) (8.5) (9.9)

+ Share of AA Japan (49%) (3.0) (11.2) (16.6) (19.4) (33.2) (26.3) - -

+ Share of AA India (49%)

+ Share of AACOE (50%) 4.1 3.3 2.2 1.1 2.4 1.9 2.5 2.8 1.7

+ Share of Expedia (50%) (2.2) (8.6) (8.8) 2.5 3.1 (4.2) (3.7) 7.1 8.9

+ Share of BIG (50%) (4.5) (2.2) (1.9) (1.5) 0.2 (1.0) (1.3) (0.9) (0.8)

Group core net profit 309.5 166.5 117.5 164.3 349.2 141.6 89.3 145.5 96.8 SOURCES: CIMB, COMPANY REPORTS

Figure 31: Breakdown of exceptional items

FYE Dec (RM m) 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13

Total exceptionals 53.4 62.4 1087.4 90.6 13.6 -22.8 -4.1 -132.6 2.7

- Exchange gain / (loss) -137.4 166.7 -160.3 164.2 8.9 -63.7 -179.5 -260.1 -45.5

- Effective forex derivative gain/(loss) 66.8 -104.1 111.0 -106.1 -7.1 33.8 63.3 85.3 12.2

- Ineffective derivative gain/(loss) 24.0 -10.4 -23.6 32.7 12.3 4.6 33.8 27.4 26.8

- Currency hedge unwinding gain - - - - - - - - -

- AAJ 49% stake disposal gain - - - - - - 78.27 - -

- Asset disposal gains 50.3 10.1 1160.4 -0.3 -0.5 2.5 0.0 14.8 9.2 SOURCES: CIMB, COMPANY REPORTS

AirlinesAirAsia Bhd

February 27, 2014

21

Figure 32: Quarterly operating metrics

4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13

Revenue (RM m) 1,272.7 1,168.4 1,181.6 1,237.5 1,408.4 1,300.8 1,246.3 1,280.3 1,354.0

- Underlying fare 951.2 852.8 869.6 911.2 1,050.4 934.1 875.7 888.8 934.1

- Ancillary income 193.4 191.1 180.0 189.6 216.3 217.2 215.1 215.6 234.6

- Lease income & others 128.1 124.5 132.0 136.7 141.7 149.5 155.5 175.9 185.3

ASK (m) 6,775 6,907 7,038 7,077 7,357 7,700 7,915 7,828 8,139

RPK (m) 5,620 5,546 5,621 5,505 6,059 5,997 6,333 6,118 6,885

Passenger load factor (%) 83.0% 80.3% 79.9% 77.8% 82.4% 77.9% 80.0% 78.2% 84.6%

Passengers carried (000) 4,855 4,821 4,903 4,749 5,206 5,168 5,510 5,263 5,913

Passenger yield (sen/RPK) 20.37 18.82 18.67 20.00 20.91 19.20 17.22 18.05 16.97

- Underlying fare 16.93 15.38 15.47 16.55 17.34 15.58 13.83 14.53 13.57

- Ancilliary income 3.44 3.45 3.20 3.44 3.57 3.62 3.40 3.52 3.41

Pax RASK (sen/ASK) 16.89 15.11 14.91 15.55 17.22 14.95 13.78 14.11 14.36

- Underlying fare 14.04 12.35 12.36 12.88 14.28 12.13 11.06 11.35 11.48

- Ancillary income 2.85 2.77 2.56 2.68 2.94 2.82 2.72 2.75 2.88

Avg rev / pax (RM) 236 217 214 232 243 223 198 210 198

- Underlying fare 196 177 177 192 202 181 159 169 158

- Ancillary income 40 40 37 40 42 42 39 41 40

No of aircraft @ end 57 57 58 59 64 66 66 66 72

Avg no of aircraft 55.5 57 57.5 58.5 61.5 65 66 66 69

4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13

Operating costs (RM m) 734.3 764.1 792.6 805.0 811.9 861.8 846.0 842.9 905.0

- Fuel cost 475.1 442.3 481.5 473.4 550.7 522.5 498.6 538.1 573.0

- Staff cost 127.0 151.0 123.9 138.7 166.8 146.3 161.4 137.3 161.8

- Maint, user & station, etc. 114.3 136.3 135.7 148.7 112.6 160.9 159.2 171.9 113.8

- Others 17.9 34.5 51.5 44.2 -18.2 32.1 26.8 -4.4 56.3

Other costs (RM m) 267.5 261.7 270.7 280.4 287.8 304.9 310.7 319.9 320.6

- Depreciation 142.2 130.7 137.9 144.5 149.0 154.0 155.2 164.8 160.5

- Leasing of aircraft 29.5 40.4 38.3 39.3 41.6 44.7 46.1 48.8 49.9

- Interest expense 95.8 90.5 94.4 96.6 97.2 106.3 109.4 106.3 110.3

UNIT COST ANALYSIS

Cost / ASK (sen) 10.84 11.06 11.26 11.38 11.04 11.19 10.69 10.77 11.12

- Fuel cost 7.01 6.40 6.84 6.69 7.49 6.79 6.30 6.87 7.04

- Non-fuel costs 3.83 4.66 4.42 4.69 3.55 4.41 4.39 3.89 4.08

- Staff cost 1.87 2.19 1.76 1.96 2.27 1.90 2.04 1.75 1.99

- Maint, user & station, etc. 1.69 1.97 1.93 2.10 1.53 2.09 2.01 2.20 1.40

- Others 0.26 0.50 0.73 0.63 -0.25 0.42 0.34 -0.06 0.69

- Other costs 3.95 3.79 3.85 3.96 3.91 3.96 3.93 4.09 3.94

- Depreciation 2.10 1.89 1.96 2.04 2.02 2.00 1.96 2.11 1.97

- Leasing of aircraft 0.44 0.58 0.54 0.55 0.57 0.58 0.58 0.62 0.61

- Interest expense 1.41 1.31 1.34 1.37 1.32 1.38 1.38 1.36 1.36 SOURCES: CIMB, COMPANY REPORTS

Thai AirAsia

Please see our separate results report also issued today.

AirlinesAirAsia Bhd

February 27, 2014

22

Indonesia AirAsia

Figure 33: IAA ASK (m) Figure 34: IAA RPK (m)

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Growth (LHS) IAA RPK (m)

SOURCES: CIMB, COMPANY REPORTS SOURCES: CIMB, COMPANY REPORTS

Figure 35: IAA - RPK vs. ASK growth (%) and PLF yoy change (% pts)

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Figure 36: IAA ASK vs. RPK growth (%) Figure 37: IAA Passenger load factor and yoy change (%)

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PLF yoy change (% pts) Passenger load factor (%)


AirlinesAirAsia Bhd

February 27, 2014

23

Figure 38: IAA passengers carried (000) Figure 39: IAA fleet breakdown

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B737 A320


Figure 40: IAA yield (US cts/RPK) Figure 41: IAA RASK (US cts/ASK)

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Figure 42: IAA RASK vs. EBIT/ASK (US cts/RPK) Figure 43: IAA core net profit (US$ m)

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AirlinesAirAsia Bhd

February 27, 2014

24

Figure 44: Sector Comparison

PriceTarget

Price

(local curr) (local curr) CY2013 CY2014 CY2013 CY2014 CY2013 CY2014 CY2013 CY2014

AirAsia Bhd AIRA MK Hold RM2.38 RM2.40 2,024 14.0 24.7 -29.0% 1.32 1.18 9.5% 5.0% 2.5% 2.3%

AirAsia X Bhd AAX MK Hold RM0.86 RM0.99 623 na na na 1.65 1.49 -4.3% -8.4% 0.0% 0.0%

Asia Aviation Pcl AAV TB Reduce THB3.80 THB2.70 566 13.6 23.1 -3.4% 0.95 0.89 7.7% 4.0% 0.0% 0.0%

Tiger Airways TGR SP Reduce S$0.42 S$0.33 327 na na na 1.26 1.23 -41.7% -16.7% 0.0% 0.0%

Cebu Air CEB PM Reduce PHP48.95 PHP37.30 665 18.6 28.8 -16.2% 1.36 1.31 7.6% 4.7% 0.0% 0.0%

SpiceJet SJET IN Not Rated INR13.40 - 116 na na na na na 62.5% 226.7% 0.0% 0.0%

Air Arabia AIRARABI UH Not Rated AED1.53 - 1,944 16.0 14.4 10.8% 1.29 1.25 8.1% 8.8% 4.6% 4.6%

Ryanair RYA ID Not Rated 7.27 - 13,743 20.4 19.8 9.0% 3.15 3.00 16.0% 15.5% 1.5% 0.7%

easyJet EZJ LN Not Rated 16.76 - 11,063 18.6 15.2 19.3% 3.43 2.99 18.8% 21.1% 1.8% 2.2%

Southwest LUV US Not Rated US$22.44 - 15,753 21.0 16.3 15.3% 2.16 1.99 10.4% 12.7% 0.6% 0.6%

JetBlue JBLU US Not Rated US$9.04 - 2,673 17.8 12.7 11.4% 1.32 1.24 7.4% 10.1% 0.0% 0.0%

GOL GOL US Not Rated US$4.80 - 1,339 na na na 3.22 3.93 -56.5% -0.1% 0.2% 0.8%

WestJet WJA CN Not Rated C$25.19 - 2,918 13.4 12.0 3.7% 2.04 1.81 15.1% 15.9% 1.5% 1.9%

Low-Cost Carriers 21.4 18.4 9.1% 2.29 2.12 10.9% 11.9% 1.3% 1.2%

Cathay Pacific Airways 293 HK Add HK$15.14 HK$18.50 7,676 24.2 11.7 73.0% 0.99 0.92 4.2% 8.2% 0.9% 1.2%

China Eastern Airlines 670 HK Reduce HK$2.75 HK$2.30 4,976 21.8 12.5 -1.9% 1.02 0.94 5.3% 7.8% 0.0% 0.0%

China Southern Airlines 1055 HK Reduce HK$2.66 HK$2.40 3,905 23.1 10.2 4.5% 0.59 0.56 2.6% 5.6% 2.1% 1.4%

Air China 753 HK Hold HK$5.06 HK$5.40 8,096 14.3 9.9 9.0% 0.89 0.83 6.4% 8.6% 1.7% 1.7%

Korean Air 003490 KS Add Won34,450 Won40,000 1,898 na 47.3 na 0.96 0.86 -11.2% 1.9% 0.0% 0.0%

Asiana Airlines 020560 KS Hold Won5,260 Won5,200 963 na 85.1 na 1.02 1.00 -12.8% 1.2% 0.0% 0.0%

Malaysian Airline System MAS MK Reduce RM0.26 RM0.14 1,303 na na na 1.06 1.83 -40.3% -48.7% 0.0% 0.0%

Singapore Airlines SIA SP Hold S$10.14 S$10.50 9,408 22.7 18.3 22.4% 0.91 0.89 4.1% 4.9% 2.8% 3.7%

Thai Airways International THAI TB Reduce THB13.00 THB10.50 871 na na 26.3% 0.50 0.56 -9.4% -10.8% 0.0% 0.0%

Qantas Airways QAN AU Add A$1.27 A$1.39 2,505 na na -147.6% 0.51 0.57 -2.8% -6.1% 0.0% 0.0%

Virgin Australia Holdings VAH AU Reduce A$0.35 A$0.27 1,105 na na -232.1% 0.91 0.99 -8.0% -7.5% 0.0% 0.0%

China Airlines 2610 TT Not Rated TWD10.30 - 1,767 58.4 16.3 1534.7% 1.02 0.97 1.8% 6.1% 0.3% 0.6%

EVA Airways 2618 TT Not Rated TWD15.60 - 1,677 35.4 15.7 -3.9% 1.38 1.27 3.7% 8.4% 0.2% 0.6%

Garuda GIAA IJ Not Rated Rp481 - 935 21.9 10.1 0.0% 0.81 0.74 4.1% 7.6% 0.0% 0.0%

Full-Service Carriers 74.5 23.2 12.5% 0.86 0.84 1.2% 3.7% 1.2% 1.4%

P/BV (x)Recurring ROE

(%)

Dividend Yield

(%)CompanyBloomberg

TickerRecom.

Market

Cap (US$

m)

Core P/E (x)3-year

EPS

CAGR

(%)


AirlinesAirAsia Bhd

February 27, 2014

25

Balance Sheet

(RMm) Dec-13A Dec-14F Dec-15F Dec-16F

Total Cash And Equivalents 1,385 1,541 1,753 2,152

Total Debtors 1,887 1,991 2,099 2,228

Inventories 30 30 30 30

Total Other Current Assets 0 0 0 0

Total Current Assets 3,301 3,562 3,882 4,409

Fixed Assets 11,246 12,097 12,676 13,297

Total Investments 0 0 0 0

Intangible Assets 389 534 481 394

Total Other Non-Current Assets 2,245 2,296 2,279 2,300

Total Non-current Assets 13,880 14,927 15,437 15,991

Short-term Debt 726 726 726 726

Current Portion of Long-Term Debt

Total Creditors 2,073 2,287 2,423 2,591

Other Current Liabilities 5 5 5 5

Total Current Liabilities 2,805 3,018 3,154 3,322

Total Long-term Debt 9,089 9,594 9,926 10,336

Hybrid Debt - Debt Component

Total Other Non-Current Liabilities 281 281 281 281

Total Non-current Liabilities 9,370 9,876 10,208 10,617

Total Provisions 0 0 0 0

Total Liabilities 12,175 12,894 13,361 13,940

Shareholders' Equity 5,006 5,595 5,957 6,461

Minority Interests 0 0 0 0

Total Equity 5,006 5,595 5,957 6,461

Profit & Loss


Total Net Revenues 5,181 5,608 6,047 6,574

Gross Profit 1,536 1,587 1,788 2,019

Operating EBITDA 1,536 1,587 1,788 2,019

Depreciation And Amortisation (634) (770) (861) (943)

Operating EBIT 902 818 927 1,076

Total Financial Income/(Expense) (405) (466) (484) (498)

Total Pretax Income/(Loss) from Assoc. 62 51 (17) 21

Total Non-Operating Income/(Expense) 42 50 50 50

Profit Before Tax (pre-EI) 600 453 477 649

Exceptional Items (157) 175 108 108

Pre-tax Profit 443 628 586 757

Taxation 1 128 (71) (106)

Exceptional Income - post-tax

Profit After Tax 444 756 514 652

Minority Interests 0 0 0 0

Preferred Dividends 0 0 0 0

FX Gain/(Loss) - post tax

Other Adjustments - post-tax

Net Profit 444 756 514 652

Recurring Net Profit 473 268 303 476

Fully Diluted Recurring Net Profit 473 268 303 476

Key Ratios

Dec-13A Dec-14F Dec-15F Dec-16F

Revenue Growth 3.7% 8.2% 7.8% 8.7%

Operating EBITDA Growth (7.6%) 3.3% 12.6% 12.9%

Operating EBITDA Margin 29.7% 28.3% 29.6% 30.7%

Net Cash Per Share (RM) (3.03) (3.16) (3.20) (3.20)

BVPS (RM) 1.80 2.01 2.14 2.32

Gross Interest Cover 2.09 1.69 1.84 2.06

Effective Tax Rate 0.0% 0.0% 12.2% 14.0%

Net Dividend Payout Ratio 28.7% 35.1% 32.1% 22.1%

Accounts Receivables Days 92.71 86.01 86.16 86.06

Inventory Days 2.67 2.68 2.53 2.37

Accounts Payables Days 198.7 197.9 201.8 201.4

ROIC (%) 5.58% 4.47% 4.75% 5.33%

ROCE (%) 6.49% 5.43% 5.82% 6.44%

Cash Flow


EBITDA 1,536 1,587 1,788 2,019

Cash Flow from Invt. & Assoc.

Change In Working Capital (423) 109 28 39

(Incr)/Decr in Total Provisions

Other Non-Cash (Income)/Expense

Other Operating Cashflow (269) 0 0 0

Net Interest (Paid)/Received 0 0 0 0

Tax Paid (11) (18) (18) (19)

Cashflow From Operations 833 1,679 1,798 2,039

Capex (2,271) (2,964) (2,143) (2,267)

Disposals Of FAs/subsidiaries 0 0 0 0

Acq. Of Subsidiaries/investments 56 1,478 812 812

Other Investing Cashflow 0 0 0 0

Cash Flow From Investing (2,215) (1,485) (1,331) (1,455)

Debt Raised/(repaid) 1,000 545 332 410

Proceeds From Issue Of Shares 0 0 0 0

Shares Repurchased 0 0 0 0

Dividends Paid (667) (167) (153) (147)

Preferred Dividends

Other Financing Cashflow 200 (416) (434) (448)

Cash Flow From Financing 533 (38) (255) (185)

Total Cash Generated (848) 156 212 399

Free Cashflow To Equity (382) 738 799 994

Free Cashflow To Firm (1,382) 194 467 584

0

5

10

15

20

25

30

35

40

45

50

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

Rolling FD P/E (x)

AirAsia Bhd AirAsia X Bhd

Asia Aviation PCL Malaysian Airline System

Tiger Airways

Key Drivers

Dec-13A Dec-14F Dec-15F Dec-16F

Av. Seat Km (ASK, Yoy Chg %) 11.3% 11.3% 5.4% 7.7%

Rev. Psg Km (RPK, Yoy Chg %) 11.4% 11.0% 5.4% 7.7%

Passenger Load Factor (%) 80.2% 80.0% 80.0% 80.0%

Pax yld per RPK (RM) 0.2 0.2 0.2 0.2

Pax rev. per ASK (RM) 0.1 0.1 0.1 0.1

Total Cost Per ATK (RM) - - - -

Fuel Cost Per ATK (RM) - - - -

Non-fuel Cost Per ATK (RM) 3,129.3 3,481.4 3,669.3 3,951.2

Jet Fuel Price (US$/barrel) 130.3 127.0 127.0 127.0

Fleet Size (no. Of Planes) 154 167 178 196

AirlinesAirAsia Bhd

February 27, 2014

26

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AirlinesAirAsia Bhd

Februar

Documents

5.Airasia-27Feb2014-Massive Hit From Yield Pressure-77503.1.0