KUALA LUMPUR -- Budget airline pioneer Tony Fernandes has built AirAsia Group into a benchmark for aviation in Southeast Asia in the 17 years since he founded the company.
No longer satisfied with just flying passengers from A to B, Fernandes wants to use the data collected from the 100 million passengers he transports each year to transform the group into the "Amazon of travel."
Buffeted in recent months by the global trade war, high fuel costs, increased competition and other hurdles such as a failure to crack the lucrative Vietnamese market, the company's shares are down nearly two-thirds from the all-time high of 4.6 ringgit ($0.53) in February last year.
As AirAsia Group reveals its financial results for the second quarter on Wednesday in Kuala Lumpur, here are five things investors will be watching.
One of the aviation industry's most important metrics that measures the average fare per passenger per kilometre, Maybank Investment Bank's Mohshin Aziz, is expecting lower yields to dampen profits.
Mohshin is forecasting a second-quarter net profit of 111 million ringgit ($13 million), that's 65% lower than for the same period last year, but up 9% on the first quarter.
"Load factor declined by 0.4 percentage points year-on-year to 85.1% in second-quarter 2019 on the back of 16.8% year-on-year capacity growth," Mohshin said. " This is a very respectable load but it likely came at the expense of lower yields, in our view."
Mohshin said in terms of yields, AirAsia's published fares look relatively weak in the second quarter of 2019 when compared to the same period last year.
In the first quarter of 2019, yield declined by 4.1% year-on-year. "We expect more of this in the reported second quarter of 2019."
Rising fuel prices have hit other regional carriers such as Virgin Australia hard, with the airline reporting a loss of AU$315.4 ($212.5 million) on Wednesday for the 12 months to June 30.
But MIDF Amanah Investment Bank's Adam Mohamed Rahim believes AirAsia's prudent hedging policy could help the bottom line this quarter.
"Our positive outlook on the group stays intact on its more prudent hedging policy, stable operations with added capacity and continuous improvement to derive higher values per kilometre flown," said Adam.
Adam will also be watching out for any estimate from AirAsia on whether a new departure tax to levied from September 1 of 8 Ringgit per passenger for destinations within the Association of Southeast Asian Nations, and 20 Ringgit for non-ASEAN destinations will cause a dip will impact on passenger growth.
AirAsia carried 42.2 million passengers in Malaysia last year, making it one of the group's most profitable markets, but operations in Indonesia, Thailand and elsewhere have struggled, with net income slipping 92% in the three months to the end of March from the same period a year ago.
Second quarter earnings could tell a different story though, said Ahmad Maghfur Usman of Nomura Securities, who believes AirAsia's short-haul operations, especially to Indonesia and Japan, will show significant improvement.
Ahmad added that improving supply and demand dynamics were in the carrier's favor, with lower fuel costs going forward also expected to help boost profitability.
'Amazon of Travel'
After announcing a leadership reshuffle earlier this month, Fernandes' ambitious plans to morph AirAsia into something other than a budget carrier is starting to take shape.
"We are now the 13th largest airline flying about 100 million passengers annually and collecting piles of data in the process," Fernandes told Nikkei Asian Review in June. "It is not a huge leap to say we are becoming a digital power."
Any further light that Wednesday's results can shed on exactly how Fernandes plans to expand online, and fend off established rivals such as Expedia and Booking.com, will also be keenly anticipated.
When Philippine business mogul Michael Romero revealed in June that he had upped his stake in Philippines AirAsia to 45%, as well as announcing a $350 million capital infusion, it seemed like the long-awaited initial public offering of the AirAsia Group affiliate would finally get off the ground.
That was until last weekend when Fernandes told reporters in Bangkok that he was still in wait-and-see mode regarding the Philippine unit's bid to go public.
"It's there, but with no particular rush to be honest," Fernandes said. "We want to maximise the valuation, so you know after a very tough start our earnings are very strong, the fuel price is going down, tourism is going up."