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 2012-2014 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.