AirAsia delays Bahrain hub and London flights amid fuel cost surge and capacity cuts
Low-cost group plunges to quarterly loss on high fuel costs AirAsia Group has again delayed the launch of its Bahrain hub – as well as flights to London – in a bid to "preserve capital", and as part of a wider network "reset". The low-cost airline group says it will postpone the launch to 2027, but stops short of specifying a launch timeline. It would only say that it was doing so to "preserve capital, conserve liquidity, and prevent near-term long-haul margin dilution". Flights to Bahrain and London – AirAsia's return to Europe after 14 years – were to have started on 26 June, but the war in the Middle East, and the consequent spike in fuel prices, complicated its plans. By June, executives said the flights would be launched "some time" in August, citing a dip in jet fuel prices. The latest delay comes as the group, which has units in Malaysia, Thailand, Indonesia, the Philippines and Cambodia, restructures its operations to mitigate the spike in fuel prices. For the April-June quarter, group capacity was down 11% year on year "to protect unit margins against extreme spot fuel volatility". "Capacity shifted quickly to routes with stronger demand as conditions evolved, such as away from soft regional sectors toward high-yielding core domestic and high-density…trunk routes [in Southeast Asia]," notes AirAsia. AirAsia adds that its short-haul operations in Thailand, the Philippines, and Indonesia, and long-haul operations from Malaysia were loss-making during the quarter, while Malaysia and Cambodia short-haul operations were in the black. As part of its network restructuring, it permanently axed 33 "unviable" routes operated by its Indonesia and Philippines units, while further suspending 17 routes across the group. AirAsia will further cut capacity in the July-September quarter, with ASKs expected to decline 20-25% year on year. However, it expects to "fully" ramp up operations for the peak fourth-quarter. At the same time, AirAsia says it expects to remove 25 older aircraft – including 17 early returns – from its fleet this year, with no new deliveries expected until 2027. For the April-June quarter, AirAsia Group reported a loss after tax of MYR831 million ($203 million). In the same period last year, the group posted a pro-forma profit after tax of MYR919 million. The group's fuel expenses for the quarter was up 58%, outpacing reductions in maintenance and user charges. At the same time, AirAsia also took on foreign exchange losses during the period.