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Financial Performance

Air Asia Bhd. shows really strong financial performance year by year.
This paper focusing on the performance in 20012 to 2014 based on the
annual report published by Air Asia Bhd. From 2008 to 2014, the revenue
increase with the lowest revenue reported in 2008 with RM 2.85 billion and
highest in 2014 with RM 5.42 billion. In term of Gross profit, 2014 indicate
the highest (RM 2.81 billion) and 2010 shows the lowest gross profit with RM
2.2 billion with slight decrease in 2012-2013 ( RM 2.73-RM2.57 billion) from
2010 to 2014. The operating expenses between 2010 to 2014 which
increases year by year with the highest is in 2014 (RM 2.14 billion). The
operating income in 2008 shows RM-352 million. However, it keep increasing
to 2011 (RM 1.16 billion) and drop back in 2012 (RM 1.03 billion) and
decreasing to RM 0.85 billion in 2014.
Balance Sheet
For asset in balance sheet, total Non-current asset in 2012 is RM 12.13
billion for Company and RM 12.33 billion for Group which is the smallest
within the three years. The value increase in 2013 in which the values are RM
14.54 billion for Company and RM 14.93 billion for Group and keep increasing
until the total value of RM 17.7 billion for Company and RM 18.13 billion for
Group. However, for current asset the highest value was in 2012 that are RM
3.34 billion for Company and RM 3.40 billion for Group and kept decreasing
to 2014. The total current assets in 2013 were RM 2.93 billion and RM 2.92

billion for Company and Group respectively. 2014 shows the lowest total
current assets which were RM 2.62 billion and RM 2.53 billion.
Secondly, current liabilities and non-current liabilities in balance sheet.
In 2012, the total of current liabilities for company was RM 2.36 billion and
increase in 2013 with total of RM 2.498 billion. The value continues to
increase in 2014 with a very large total of RM 4.12 billion. The same patterns
followed by Groups current liabilities with the increment from 2012 to 2014.
Starting from the sum of RM 2.39 billion followed by RM 2.57 billion and RM
4.11 billion a year after. Then, the non-current liabilities of Air Asia Bhd.
within 3 year period were analyzed. Companys non-current liabilities showed
increment with the total of RM 8.47 billion, RM 10.28 billion and RM 11.98
billion respectively while Groups non-current liabilities also indicates
augmented total value. Starting from RM 8.47 billion in 2012, RM 10.28
billion in 2013 and RM 11.99 billion in 2014. Lastly, the total equity also
showed an increment from 2012 to 2013 with the value of RM 4.86 billion
and RM 5.00 billion respectively. However, in 2014 the value dropped to RM
4.56 billion.
Cash Flow
In this section, cash flow is analyzed within five year period (5-year
trend). Starting from 2010, the Net Operating Cash Flow is RM 307 million.
The values then increases as the years with RM 961 million in 2011, RM 1.32
billion in 2012, RM 1.40 billion in 2013 and RM 1.62 billion in 2014. Secondly,

the Net Operating Cash Flow Growth that was also increased downs the year.
Starting with -68.09% in 2010, the percentage grew to -27.40% in 2011 and
-5.70% in 2012. In 2013, the value dropped back to -13.29% before reached
0% in 2014. Lastly, the Net Operating Cash Flow/Sales performance is
determined. Despite the decreasing of Net Operating Cash Flow Growth in
2013, the Net Operating Cash Flow/Sales kept increasing within 5-year trend.
With the percentage of 5.66% in 2010, 18.80% in 2011, 26.77% in 2012,
31.23% in 2013 and 41.01% in 2014, it can be concluded that the
performance will keep increasing.
Profit and Loss
Based on the Income Statement of 2012, 2013, and 2014, the
Operating Profit, Net Operating Profit, Profit before Taxation and Net Profit for
The Financial Year of AirAsia Bhd. were determined. Firstly, the Operating
Profit of Company in which the trend observed is decreasing from 2012 to
2014. Starting from RM 1.02 billion, the value decreased to RM 912 million in
2013 and RM 893 million in 2014. The same performance also identified for
Groups Operating Profit. RM 1.03 billion in 2012, RM 1.01 billion in 2013, and
RM 853 million in 2014.
Secondly, the Profit/Loss before taxation from 2012 to 2014 was
studied. In 2012, the company gain RM 835 million profits, decrease to RM
184 million in 2013 and suffered RM 27.32 million loss in 2014. For Groups

financial performance, the profit in 2012 is RM 962 million, followed by RM


361 million in 2013 and RM 22.7 million in 2014.
Lastly, the Net Profit for the financial year for company and group
Income Statement of AirAsia Bhd. is observed. With the value of RM 662
million in 2012 for Company and RM 789 million for Group, Net Profit
decreased to RM 184 million for company and RM 362 million for Group in
2013. In 2014, the Net Profit is the smallest within 3-year period with value of
RM 32.8 million for company and RM 82.8 million for group.

Analysis

Figure 1

Figure 2

Figure 3
Based on the analysis from 4-traders.com at figure 1, the sales of
AirAsia Bhd. from 2012 to 2014 increase every year with Operating profit and
Net Income decreasing. In year 2012, Net Income and Net Margin is the
highest since 2009 but dropped in 2014. The decreasing trend in Operating
profit is followed by Operating margin in which estimated to rise again in
2015 and 2016. The forecast also shown that AirAsia Bhd. sales will keep
increasing to 2017.
Secondly, Finance /Leverage analysis based on figure 2 shows that the
EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) from
2012 to 2014 had a very slight decrease. Lastly, from figure 3, cash flow per
share increases from 2012 to 2013 but dropped in 2014 in a big margin.
Then, the trend of book value per share which had a good growth from 2000
to 2012 but had a downtrend up to 2014.
Findings
In this section, the latest findings on financial report of AirAsia Bhd.
and overall finding in the body of the case study were discussed.
Based on the Quarterly report on consolidated results for the financial
period ended 30 Sep 2015 from www.bursamalaysia.com, the revenue of
AirAsia Bhd. until 30th September of individual year is RM 1.515 billion and

suffered loss of RM 461.701 million before tax. For the Cash Flow, the latest
report found showed:
Free Cash Flow (Q: Sept 2015) = Cash Flow Operations + Cash Flow for
Capital Expenditure
= 315.85616 + 3.38123
= 319 million
AirAsia Bhd Free Cash Flow for the Trailing Twelve Month (TTM) ended in
Sept. 2015 was:
= -37.1065 (Dec 2014) + 2.0974 (Mar 2015) + 129.3455 (Jun 2015) +
319.2374 (Sep 2015)
= 414 million
Free Cash Flow is not the subject to estimates of Depreciation,
Depletion and Amortization (DDA) and considered to be one of the most
crucial parameters to measure a company earnings power by value investors
(AirAsia Bhd (OTCPK:AIABF) Free Cash Flow $414 Mil (TTM As of Sep. 2015),
2015).
Secondly, the Management in term of Conventionality and Islamic
Approaches and Marketing Strategies of AirAsia Bhd were studied. AirAsia
focused in low fares for needy people and does not serve non-halal food.
Moreover, this company used an informative website, wide media

advertisement, On Board service and Frequent-flyer Program as their


Marketing Strategies. Next, AirAsia Bhd. Orgnizational Profile and Corporate
Culture and Core Values were identified. Some of the core values are caring,
passionate, integrity and hardworking. Other than that, this case study also
discussed about Human Resource Management, Technological Innovation
and Commercialization and Branding of AirAsia Bhd.

Executive Summary
This report provide the analysis of AirAsia Bhd. The aspects that
discussed were Organizational Profile, Corporate Culture and Core Values,
Management in term of Conventional and Islamic Approaches, Human
Resource Management, Marketing Strategies, Technological Innovation and
Commercialization, Branding, Financial Performance and Key Issues. Method
of analysis included were trend, vertical and horizontal tables analysis, and
data collection from AirAsia annual report from various years.
Results from data collection and analysis proved that the revenue and
sales of AirAsia Bhd increase each year. However, in a 3-year period of 20122014 the net profit was decreasing. In term of Organizational Profile, the CEO
of this company, Tony Fernandez has established Thai and Indonesian Unit

with bases in Bangkok and Jakarta. AirAsia Bhd. also was managed with
Islamic approaches by serving only halal food and beverages. Furthermore,
the marketing strategies applied were informative website, wide
advertisement, On Board service and Frequent-flyer Program which made
this airline well known all across Asia.

It is recommended that AirAsia Bhd. to:


1. Increase customer services as it is still low and not pleasing according
to the feedbacks.
2. Provide comfortable seats although they provide low cost airlines.
3. Increasing local responsiveness and global integration to capture
global market.