Management Discussion and Analysis - For the year ended 31 December 2020 - SEC
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Management
Discussion and Analysis
For the year ended
31 December 2020Executive Summary
The year 2020 brought the unique challenge, the crisis of investment and exports decreased at a slower pace. The
coronavirus pandemic (“Covid-19”), to the world tourism sector growth has somewhat recovered, as the
economy, in which already bottomed out. The global inbound tourists in 4Q/2020 were only 10,822 people as a
economic activities have recovered from easing of result of opening the border for the Special Tourists Visa
lockdown measures, the government’s economic stimulus (“STV”) in this quarter. Nevertheless, the government has
packages, and the success in the vaccine development. promoted domestic tourism through “We Travel Together”
However, the recovery remains clouded by uncertainties to stimulate domestic spending and enhance liquidity for
such as the prolonged pandemic situation, the entrepreneurs, resulting in a recovery of visitors and
ineffectiveness of the vaccine, and the vaccine incomes. Thai tourists in this quarter increased to 45.3
distribution. The US economy in the fourth quarter of 2020 million-time, despite the impact of the new wave of Covid-
(“Q4/2020”) contracted by 2.5 percent, gradually 19 infections in mid-December. In 2020, Thai and
improving from the third quarter of 2020 (Q3/2020), due to international travellers decreased by 46.4 percent and
a rise in the export and consumer spending, which 83.2 percent, respectively compared to those of the same
reflected from the increasing manufacturing purchasing period last year. Whereas, the revenue generated by Thai
managers' index (“PMI”), eventhough the government and international tourists declined by 55.4 percent and
spending has been cut. Thus, the US economy in 2020 82.6 percent, respectively compared to those of the same
declined by 3.5 percent, from a 2.2 percent growth in the period last year. Hence, the Thai economy in 2020
previous year. Meanwhile, China's economy continuously dropped by 6.1 percent, from a 2.3 percent growth in
expanded during Q4/2020 to 6.5 percent compared to the 2019.
same period last year, thanks to a growth in the
In Q4/2020, Thai AirAsia has recovered from the high
manufacturing, investment, and consumption, as well as
travel demand in the festive season and the tourism
the exports on the back of the recovery of global demand.
stimulus schemes. Our domestic capacity resumed to
As a result, the Chinese economy in 2020 grew by 2.3
above the pre-pandemic level in the said quarter. Thai
percent, contracting from a 6.0 percent growth in 2019. In
AirAsia carried more than 2.81 million passengers and
contrast, the Eurozone economy decreased by 5.1
almost reached 80 percent of load factor in November
percent in 4Q/2020, continually contracting from 3Q/2020,
resulted in posting a 74 percent load factor in this quarter
due to the reimplemented lockdown policies to contain the
after the impact of the new outbreak. In 2020, Thai AirAsia
infections, which reflected from a decrease in
served 9.49 million passengers with a load factor of 75
manufacturing PMI. Hence, the EU economy in 2020
percent as expected.
declined by 6.8 percent, from a 1.3 percent growth in
2019. Given the aforesaid impact, Asia Aviation Public Company
Limited’s posted total revenues in 2020 of Baht 16,237.3
In Q4/2020, the Thai economy decreased by 4.2 percent,
million, a net loss for the year of Baht 4,764.1 million, and
gradually recovering from the previous quarter, despite a
a net loss in the statement of comprehensive income of
short-term slowdown after the new wave of the epidemic.
Baht 4,882.8 million. In 4Q/2020, Asia Aviation had total
Notably, private consumption and government spending
revenues of Baht 4,158.6 million and a net loss for the
from the government economic stimulus packages
period of Baht 1,114.4 million.
enhanced the Thai economy. Meanwhile, privateFinancial Performance Summary
Asia Aviation Public Company Limited (“Asia Aviation”) is a major shareholder of Thai AirAsia Company Limited
(“Thai AirAsia”) who is an airline operator of Thai AirAsia, in which the Company currently holds 55 percent.
Asia Aviation’s financial performance for the three-month and the year ended 31 December 2019 and 2020 have been
summarised below:
Statement of Comprehensive Income
Asia Aviation Public Company Limited Consolidated Consolidated
Unit: Baht million For the three-month For the year ended
Change Change
period ended 31 December
31 December
2020 2019(1) 2020 2019(1)
Total revenues 4,158.6 10,329.3 -60% 16,237.3 41,530.9 -61%
Total expenses 5,423.2 10,291.6 -47% 23,788.1 41,653.1 -43%
Profit (loss) from operating activities (1,264.6) 37.7 ->100% (7,550.8) (122.2) ->100%
Profit (loss) for the period (2,028.6) (132.7) ->100% (8,666.9) (866.2) ->100%
Equity holders of the Company (1,114.4) (72.1) ->100% (4,764.1) (474.0) ->100%
Non-controlling interests of the subsidiary (914.2) (60.6) ->100% (3,902.8) (392.2) ->100%
Total comprehensive income for the period (1,489.7) (67.3) ->100% (8,882.7) (800.8) ->100%
Equity holders of the Company (818.0) (36.1) ->100% (4,882.8) (438.1) ->100%
Non-controlling interests of the subsidiary (671.7) (31.2) ->100% (3,999.9) (362.7) ->100%
Earnings (loss) Per Share (Baht) (0.2298) (0.0149) ->100% (0.9823) (0.0977) ->100%
(1)
Reclassification of the comprehensive income statement
For the year ended 2020 (“FY2020”), Asia Aviation had total revenues of Baht 16,237.3 million, decreased by 61
percent compared to the same period last year. Meanwhile, total expenses were in a total of Baht 23,788.1 million,
declined by 43 percent from the year ended 2019 (“FY2019”), resulting in a net loss for the period attributable to
equity holders of the Company in FY2020 of Baht 4,764.1 million, compared to the net loss in an amount of Baht 474.0
million for the previous year, thereby a basic loss was at Baht 0.9823 per share. With other comprehensive income
from a loss on cash flow hedges in an amount of Baht 170.0 million and from the actuarial loss in reassessments of
employee benefit obligations in an amount of Baht 45.7 million, the Company posted a loss in total comprehensive
income attributable to equity holders in an amount of Baht 4,882.8 million, from a loss in FY2019 in an amount of Baht
438.0 million.
In Q4/2020, Asia Aviation had total revenues of Baht 4,158.6 million, decreased by 60 percent compared to the same
period last year at Baht 10,329.3 million. Meanwhile, total expenses were in a total of Baht 5,423.2 million, declinedby 47 percent from the same period last year. In Q4/2020, a net loss for the period attributable to equity holders of
the Company amounted to Baht 1,114.4 million, compared to the net loss in an amount of Baht 72.1 million for the
same period last year, and a basic loss was at Baht 0.2298 per share.
Statement of Financial Position
Asia Aviation Public Company Limited Consolidated Change
Unit: Baht million As at 31 December 2020 As at 31 December 2019
Total assets 67,977.7 62,902.6 +8%
Total liabilities 50,617.4 35,214.1 +44%
Equity attributable to owners of the Company 14,266.1 19,943.9 -28%
Non-controlling interests of the subsidiary 3,094.2 7,744.6 -60%
Total shareholders’ equity 17,360.3 27,688.5 -37%
Assets
As at 31 December 2020, total assets amounted to Baht 67,977.7 million, increased by 8 percent compared to as at
31 December 2019, due to;
(1) Current assets decreased by Baht 4,666.7 million, mainly from a decrease in cash and cash equivalents in
an amount of Baht 2,871.9 million and the redemption of debenture of which principal amounted to Baht
1,000.0 million. Meanwhile, the amounts due from related parties decreased by Baht 1,104.6 million.
(2) Non-current assets increased by Baht 9,741.8 million due to a recognition of the right-of-use assets in an
amount of Baht 28,527.3 million from TFRS16 adoption. Whereas, the aircraft, leasehold improvement and
equipment decreased in an amount of Baht 18,646.8 million, mainly from ten aircraft disposal.
Liabilities
As at 31 December 2020, total liabilities amounted to Baht 50,617.4 million, increased by 44 percent compared to as
at 31 December 2019, due to;
(1) Current liabilities increased by Baht 3,864.3 million, resulting largely from an increase in liabilities under lease
agreements net with liabilities under finance lease agreements in an amount of Baht 4,691.3 million mainly
due to TFRS16 adoption. Whereas, the unearned income decreased by Baht 2,275.7 million as travel
restrictions have slashed advance bookings and as a portion of the long-term debenture in an amount of
Baht 1,500.0 million was reclassified from non-current liabilities to current liabilities.
(2) Non-current liabilities increased by Baht 11,539.0 million, resulting largely from an increase in liabilities under
lease agreements net with liabilities under finance lease agreements in an amount of Baht 14,515.7 million
mainly due to TFRS16 adoption. Whereas, long-term borrowings from financial institutions decreased by Baht
1,212.6 million, owing to the repayments of liabilities and the interest paid.Equity
As at 31 December 2020, total shareholders’ equity amounted to Baht 17,360.3 million, decreased by Baht 10,328.2
million or 37 percent compared to as at 31 December 2019, mainly due to the operational loss for the period and the
loss on impairment of the right-of-use assets. Hence, equity attributable to owners of the Company and non-controlling
interests of the subsidiary as at 31 December 2020 amounted to Baht 14,266.1 million and Baht 3,094.2 million,
respectively. The return on equity (ROE) was at -27.9 percent.
Statement of Cash Flows
Asia Aviation Public Company Limited Consolidated
Unit: Baht million For the year ended 31 December
2020 2019
Net cash generated from (used in) operating activities (897.9) 965.7
Net cash generated from (used in) investing activities 12,064.4 (1,793.9)
Net cash generated from (used in) financing activities (14,031.4) 828.8
Net increase (decrease) in cash and cash equivalents (2,864.9) 0.6
Unrealised exchange gain (loss) on cash and cash equivalents (6.9) (141.0)
Cash and cash equivalents at the beginning of the period 3,982.2 4,122.6
Cash and cash equivalents at the end of the period 1,110.4 3,982.2
For the year ended 31 December 2020, Asia Aviation had net cash used in operating activities in an amount of Baht
897.9 million mainly due to the operating loss in the period under review. Meanwhile, net cash generated from
investing activities was at Baht 12,064.4 million, mainly from proceed of ten aircraft disposal. Net cash used in
financing activities was Baht 14,031.4 million, mainly due to payments for early termination of lease agreements and
long-term borrowings together with repayment for liabilities under lease agreements and interest paid as well as
repayment of long-term debenture. As a result, the net decrease in cash and cash equivalents amounted to Baht
2,864.9 million, while the cash and cash equivalents at the end of the period amounted to Baht 1,110.4 million.Thai AirAsia’s financial performance for the three-month and the year ended 31 December 2019 and 2020 have
been summarised below
Statement of Comprehensive Income
Thai AirAsia Company Limited For the three-month period For the year ended
Change Change
Unit: Baht million ended 31 December 31 December
2020 2019(1) 2020 2019(1)
Total Revenues 4,157.8 10,328.3 -60% 16,236.3 41,529.3 -61%
Total Expenses 5,426.0 10,292.9 -47% 23,794.6 41,658.4 -43%
Profit (loss) from operating activities (1,268.3) 35.3 ->100% (7,558.3) (129.2) ->100%
Net Profit (loss) for the period (2,031.5) (134.6) ->100% (8,673.0) (871.5) ->100%
Total comprehensive income for the year (1,492.6) (69.2) ->100% (8,888.7) (806.1) ->100%
Earnings (loss) per share (Baht) (46.64) (3.09) ->100% (199.12) (20.01) ->100%
(1)
Reclassification of the comprehensive income statement
In FY2020, total revenues of Thai AirAsia amounted to Baht 16,236.3 million, decreased by 61 percent from Baht
41,529.3 million in FY2019. Primarily, revenues from sales and services amounted to Baht 13,633.9 million, decreased
by 66 percent compared to the same period last year due to the Covid-19 outbreak, whereby Thai AirAsia temporarily
hibernated operations on all international flights from 22 March 2020 onwards, resulting in a 57 percent decrease in
passengers to 9.49 million in FY2020, especially for international passengers declined by 84 percent from last year,
in line with the tourism industry. Thai AirAsia rearranged its flights and capacity to match the travel demand. As a
consequence, the load factor was at 75 percent as expected. Moreover, the average fare in FY2020 was at Baht 1,199
per passenger, decreased by 19 percent from last year, as having revenues mainly from domestic routes. In FY2020,
total ancillary revenues of Thai AirAsia amounted to Baht 2,284.7 million, decreased by 70 percent from last year, due
to the drop in the international passengers and international routes, which impacted to the checked baggage fee and
the freight revenue, accordingly. Furthermore, Civil Aviation Authority of Thailand (“CAAT”) disallowed food and
beverages service on the flight in the second quarter, and allowed to resume the service in September. As a result,
the ancillary revenue amounted at Baht 241 per passenger, or down by 29 percent from last year.
In FY2020, total expenses of Thai AirAsia amounted to Baht 23,794.6 million, decreased by 43 percent compared to
the same period last year at Baht 41,658.4 million. The cost of sales and services amounted to Baht 20,484.2 million,
reduced by 47 percent from FY2019 at Baht 38,358.5 million, attributable primarily to a 72 percent decrease in fuel
cost (before hedging) in support of lower fuel consumption and reference fuel price, thanks to active capacity
management to match travel demand. Meanwhile, the net fuel cost (including net loss from fuel hedging) decreased
by 54 percent compared to last year. The reduction also reflected in staff costs from the leave without pay and furlough
schemes and expenses related to ramp and airport operations from the discount of landing charge, parking charge
and air navigation charge. The maintenance and overhaul expenses also decreased along with lower flight hours,
even it recorded higher maintenance reserves for those sales and leaseback aircraft. Nevertheless, the depreciationexpense increased due to a recognition of the right-of-use assets according to TFRS16. Furthermore, the selling and administrative expenses amounted to Baht 1,857.3 million, declined by 44 percent from FY2019, mainly from the branding license fee on net revenue, staff costs, and marketing expenses. Whereas, the cost per available seat kilometres excluding fuel cost (CASK ex-fuel) was at Baht 1.68, up by 63 percent from the last year, resulting from a 62% decrease in the available seat kilometres (“ASK”) along with active capacity management to match the travel demand. Fuel cost per available seat kilometres was at Baht 0.63, up by 22 percent from the last year from a realised fuel hedging loss. Meanwhile, Thai AirAsia continuously monitors our punctuality, reflecting in the on-time- performance (“OTP”) of 96 percent, increased from 86 percent compared to the last year. Nevertheless, the utilisation of aircraft in operations was at 7.4 hours per day of the operating aircraft, declining from 12.3 hours per day from the previous year. In FY2020, the other incomes rose to Baht 2,602.5 million from Baht 1,348.6 million in FY2019, attributable primarily to the recognition of gain on the aircraft disposal of Baht 1,331.6 million and the unrealised gain on the foreign exchange rate difference of lease liabilities of Baht 545.6 million from the Baht appreciation. Simultaneously, the other expenses increased attributable primarily to a loss on impairment of right-of-use assets of Baht 1,416.0 million and a derivatives loss of Baht 37.2 million due to hedging ineffectiveness. Hence, loss from operating activities in FY2020 amounted to Baht 7,558.3 million. Moreover, finance costs increased mainly from interest expenses of lease liabilities under TFRS 16. The income tax revenue amounted to Baht 661.5 million, mostly from an increase in deferred tax assets regarding the adoption of new financial reporting standards. In consequence, Thai AirAsia had a net loss for the period of amounted to Baht 8,673.0 million. With other comprehensive income from a loss on cash flow hedges in an amount of Baht 170.0 million and a loss on the reassessment of employee benefit obligations in an amount of Baht 45.7, it had a loss in total comprehensive income the period amounted to Baht 8,888.7 million. Thai AirAsia Company Limited Q4/2020 Q4/2019 Change 2020 2019 Change Passenger Carried (Million) 2.81 5.42 -48% 9.49 22.15 -57% Capacity (Million seats) 3.82 6.27 -39% 12.64 26.08 -52% Load Factor (%) 74% 86% -12 ppts 75% 85% -10 ppts Revenue Passenger Kilometres (Million seats-km) 2,368 5,433 -56% 7,735 22,670 -66% Available seat kilometres (Million seats-km) 3,158 6,398 -51% 10,174 26,940 -62% Average fare (Baht) 1,023 1,508 -32% 1,199 1,478 -19% Revenue per Available seat kilometres (Baht) 1.09 1.56 -30% 1.34 1.49 -10% Cost per Available seat kilometres (Baht) 1.73 1.61 8% 2.31 1.55 49% Cost per Available seat kilometres (ex-fuel)(Baht) 1.21 1.11 9% 1.68 1.03 63%
In Q4/2020, the tourism industry has continuously rebounded from the last quarter due to a well-controlled Covid-19
spread, the tourist stimulus packages in the festive season, and relaxation for the STV tourists. Therefore, revenues
from sales and services in 4Q/2020 amounted to Baht 3,432.8 million, declined by 66 from the fourth quarter of 2019
("Q4/2019"), due to a 100 percent and 12 percent decrease in international and domestic passengers, respectively.
While it rose by 62 percent from Q3/2020, in support of 2.81 million passengers in Q4/2020 or up by 51 percent from
the past quarter. In the said quarter, ASK increased by 70 percent compared to Q3/2020, on the back of the capacity
and flight management plans align with the travel demand, leading to a 74 percent of the load factor in 4Q/2020.
Besides, total ancillary revenues of Thai AirAsia in 4Q/2020 in an amount of Baht 560.5 million decreased by 69
percent from the same period last year, due to the drop in international passengers. However, this quarter's total
ancillary revenues increased by 105 percent from the previous quarter on the back of a rise in domestic passengers,
which enhanced the checked baggage, seat selection, including the resumption of in-flight meal and beverage
services in September. Also, the booking fees through AirAsia.com increased in line with new normal behaviour.
Freight revenues also improved from an enhancement of Don Mueang and Suvarnabhumi Airports' cargo services.
Consequently the ancillary revenue amounted at Baht 199 per passenger in this period. In Q4/2020, Thai AirAsia
continuously monitors our punctuality, resulting in an OTP of 98 percent increased from 88 percent compared to the
same period last year.
In Q4/2020, the cost of sales and services of Thai AirAsia of Baht 4,543.3 million fell by 52 percent from Baht 9,401.8
million in Q4/2019, thanks to the active capacity management align with the travel demand. The fuel costs (before
hedging) fell by 74 percent on the back of lower fuel consumption and reference fuel price, while the net fuel cost
(including net loss from fuel hedging) decreased by 48 percent from the same period last year. Furthermore, Thai
AirAsia has controlled its cost along with the operational flight. The reduction also reflected in staff costs from the
furlough scheme and ramp and airport operation costs from the discount of landing charge, parking charge, and air
navigation charge. Also, the depreciation expense increased due to a recognition of the right-of-use assets according
to TFRS16. Furthermore, the selling and administrative expenses amounted to Baht 594.4 million, declining by 33
percent compared to the same period last year, mainly from the cost reduction on branding license fee on net revenue
and marketing expenses. However, Thai AirAsia recorded the provision of debt restructuring of AirAsia X Berhad in
an amount of Baht 65.0 million.
In Q4/2020, Thai AirAsia recorded an unrealised gain on the foreign exchange rate difference of lease liabilities in an
amount of Baht 1,562.5 million, where Thai Baht strengthen against the US Dollar. At the same time, the other expense
rose attributable to the nonrecurring item from a loss on impairment of right-of-use assets of Baht 1,416.0 million. The
finance cost also increased mainly from interest expenses of lease liabilities under TFRS 16. In consequence, Thai
AirAsia had a net loss for the period in an amount of Baht 2,031.5 million.Statement of Financial Position
Thai AirAsia Company Limited As at As at
Change
Unit: Baht million 31 December 2020 31 December 2019
Total assets 45,129.8 39,067.0 +16%
Total liabilities 48,625.6 32,228.6 +51%
Total shareholders’ equity (3,495.8) 6,838.4 ->100%
Assets
As at 31 December 2020, total assets amounted to Baht 45,129.8 million, increased by 16 percent compared to as at
31 December 2019, due to;
(1) Current assets decreased by Baht 4,675.0 million, mainly from a decreased in cash and cash equivalents in
an amount of Baht 2,877.5 million and from the redemption of debenture of which principal amounted to Baht
1,000.0 million. While the amounts due from related parties decreased by Baht 1,104.6 million.
(2) Non-current assets increased by Baht 10,737.8 million due to a recognition of the right-of-use assets in
an amount of Baht 28,527.3 million from TFRS16 adoption. Whereas, the aircraft, leasehold improvement and
equipment decreased by Baht 18,646.8 million, mainly from ten aircraft disposal.
Liabilities
As at 31 December 2020, total liabilities amounted to Baht 48,625.6 million, increased by 51 percent compared to as
at 31 December 2019, due to;
(1) Current liabilities increased by Baht 3,864.5 million, resulting largely from an increase in liabilities under lease
agreements net with liabilities under finance lease agreements in an amount of Baht 4,691.3 million, mainly
due to TFRS16 adoption. Whereas, the unearned income decreased by Baht 2,275.7 million as travel
restrictions have slashed advance bookings and as a portion of the long-term debenture in an amount of
Baht 1,500.0 million was reclassified from non-current liabilities to current liabilities.
(2) Non-current liabilities increased by Baht 12,532.5 million, resulting largely from an increase in liabilities under
lease agreements net with liabilities under finance lease agreements in an amount of Baht 14,515.7 million,
mainly due to TFRS16 adoption. Whereas, long-term borrowings from financial institutions decreased by Baht
1,212.6 million, owing to the repayments of liabilities and the interest paid.Equity As at 31 December 2020, total shareholders’ equity deficit amounted to Baht 3,495.8 million from the previous year at amount of Baht 6,838.4 million from the previous year, mainly due to the operational loss for the period and loss on impairment of the right-of-use. Thai AirAsia’s Debt-to-Equity ratio (Interest Bearing Debt) and Net Gearing ratio as at 31 December 2020 were -11.06 x and -10.77 x, respectively. Excluding the lease liabilities under TFRS16, D/E Ratio and Net Gearing Ratio were -3.41x and -3.12x, respectively. Statement of Cash Flows Thai AirAsia Company Limited For the year ended 31 December Unit: Baht million 2020 2019 Net cash generated from (used in) operating activities (903.5) 958.8 Net cash generated from (used in) investing activities 12,064.3 (1,794.0) Net cash generated from (used in) financing activities (14,031.4) 828.8 Net increase (decrease) in cash and cash equivalents (2,870.6) (6.4) Unrealised exchange gain (loss) on cash and cash equivalents (6.9) (141.0) Cash and cash equivalents at the beginning of the period 3,889.6 4,037.0 Cash and cash equivalents at the end of the period 1,012.1 3,889.6 For the year ended 31 December 2020, Thai AirAsia had net cash used in operating activities in an amount of Baht 903.5 million mainly due to the operating loss in the period under review. Meanwhile, net cash generated from investing activities was at Baht 12,064.3 million, mainly from proceed of ten aircraft disposal. Net cash used in financing activities was Baht 14,031.4 million, mainly due to payments for early termination of lease agreements and long-term borrowings together with repayment for liabilities under lease agreements and interest paid as well as repayment of long-term debenture. As a result, the net decrease in cash and cash equivalents amounted to Baht 2,870.6 million, while the cash and cash equivalents at the end of the period amounted to Baht 1,012.1 million.
Business Outlook
In January 2021, the IMF projects the world economic (2) Currency fluctuation: the Thai baht is predicted to
growth to recover by 5.5 percent in 2021, from strengthen throughout the year in the range of 29.5 –
contracted by 3.5 percent in 2020. The vaccines' 30.5 per US dollars, in line with the global economic
distribution will primarily be a critical factor in driving recovery, which leads the fund flow from the safe
global economic activities and gaining consumer assets into the emerging market. Thai AirAsia would
confidence and global trade volume. Furthermore, the benefit from Baht appreciation as it has expenses in
government stimulus plan and the supporting policies various currencies such as maintenance expense and
from the leading economic countries such as the US aircraft lease.
and Japan will fuel the global economic recovery. (3) Fuel costs fluctuation: Thai AirAsia forecasts the
However, the economic recovery remains under prices to stand within the average range of 60-65 US
pressure from several aspects such as the new wave dollars per barrel, tended to rise gradually from the
of Covid-19, new variants of the virus, the delay in increasing oil consumption demand. The recovery of
vaccines distribution, and reimplementing of the world economy and vaccination programmes will
lockdown measures. To respond to the risks that may fuel global economic activities, logistics, and tourism.
arise and affect the company’s operation, the Moreover, the oil price has supported the Organization
company analyses possible factors that may prevent of the Petroleum Exporting (OPEC) that considered
the company in achieving its goals and mitigate its cutting its production. Nevertheless, EIA expects non-
risks as follows; OPEC petroleum and other liquid fuels to increase by
(1) Interest rate fluctuation: the US economy tends to 1.2 million barrels per day of production in 2021,
improve following the recovery of global economic putting pressure on the oil market. In an attempt to
continually. As a result, the Federal Reserve (Fed) kept minimise the impact of the fluctuation in fuel costs, the
a stable interest rate at 0 to 0.25 percent in January Company’s policy is to mitigate its exposure to the
2021 to promote the employment and stabilise inflation volatility of oil price by fuel hedging. For 2021, it has
rate. While, Bank of Thailand (BoT) maintained its hedged against Brent crude oil price at the average
policy rate at 0.50 percent in February 2021 to mitigate rate of 62 US dollars per barrel in range of 0-6.0
the impact of Covid-19 and support the economic percent of the quarter fuel consumption.
recovery. As the company might incurred substantial In February 2021, The Office of the National Economic
debt to operate the business in the future, the and Social Development Council (“NESDC”) forecasts
uncertainty of the interest rate would impact the Thailand economic growth for 2021 in the range of 2.5
company’s borrowing cost. Thus, the company has set
– 3.5 percent, which continues to recover from the
a measure to alleviate interest rate risk by fixing
latter half of 2020. Positively, the rebound will
interest rate during the negotiation for financial lease
contracts and by considering using financial accelerate from a low-base effect from 2020 and the
instruments at an appropriate time. As of December process of the vaccination campaigns in the major
31, 2020, Thai AirAsia has a ratio of long-term debts global economic countries. The improvement of the
after a swap between floating interest rates and fixed Thai economy supported mainly by an increase in
rates of approximately 10 to 90. household consumption from implementing thegovernment's economic stimulus plan such as 'Half- be 9.4 million with the load factor of 75 percent, due to
Half' co-payment scheme, and "We travel together' the reopening border for the international travellers in
project. Besides, the economic activities in fewer the fourth quarter, in line with the
epidemic areas could operate normally owing to the industry outlook. Thai AirAsia is focusing more on the
partial lockdown measures. However, the economic logistics sector, particularly air cargo, in support of
recovery may be delayed as the risks of the global vaccines' transport domestically and regionally.
economy and finance volatilities as mentioned above. Moreover, Thai AirAsia has active cost management to
For the tourism industry, the recovery will primarily reduce the operation cost and defer the unnecessary
depend on the progress of the vaccination. The expense. In 2021, Thai AirAsia has no receiving plan
foreign tourists are expected to return in the fourth for new aircraft deliveries and expects to reduce the
quarter of 2021, positively, supported by the success aircraft owing to retirement and reallocation within the
in the Covid-19 containment, the wide distribution of AirAsia group, bringing its fleet to 54 aircraft by the
the vaccines, and the aggressive marketing with the end of this year. The reduction in fleet size aligns with
travel packages would encourage Thai tourism. the forecasted demand from the impact of the Covid-
NESDC predicts the inbound tourists at 3.2 million with 19, which will take time back to normal. Furthermore,
an estimated revenue of 0.32 trillion. Thai AirAsia offers new customer experiences,
including stringent health and hygiene with
In 2021, Thai AirAsia is ready to serve and stimulate
contactless measures, and is providing the biometric
travelling and tourism domestically and internationally
facial recognition (F.A.C.E.S) to increase customer's
while maintaining its leading position and market
convenience and safety.
share. The passenger carried in 2021 is anticipated to
Glossary
Load factor : Represents the number of passengers Average fare : Calculated as Thai AirAsia's total
carried as a proportion to capacity, which is the number passenger revenues and fuel surcharge divided by total
of seats available for passengers number of passengers carried
Available seat kilometres (ASK) : which is the total Revenue per ASK (RASK) : Calculated as Thai AirAsia's
number of seats available on all flights multiplied by the revenues divided by ASK
number of kilometres these seats were flown (2020: Cost per ASK (CASK) : Calculated as the sum of Thai
actual distance; 2019: standard distance) AirAsia's operating costs, selling expenses and
Revenue passenger kilometres (RPK) : Revenue administrative expenses divided by ASK
passenger kilometres, which is the number of paying Cost per ASK (CASK ex-fuel) : Calculated as the sum of
passengers carried on all flights multiplied by the Thai AirAsia's operating costs, selling expenses and
number of kilometres those seats were flown (2020: administrative expenses less fuel costs divided by ASK
actual distance; 2019: standard distance) Average stage length (kilometres) : Represents the
average number of kilometres flown per flightAircraft utilisation: Represents the average block hours Gross profit margin = Calculated as revenues from sales
per day per aircraft during the relevant period. Block and services less cost of sales and service divided by
hours is calculated by measuring the duration between revenues from sales and services.
the time of departure of an aircraft and the time of arrival The earnings before interest and tax, depreciation, and
at its destination. amortisation (EBITDA) margin = Calculated as total
Debt to Equity ratio (D/E) : Calculated as Thai AirAsia's income (excluding dividend income, gain on sale of
total interest bearing debt divided by total equity investments, gain on sale of assets, finance income, gain
Net Gearing ratio = Calculated as Thai AirAsia's total on exchange rate, and gain on derivative ) less total
interest bearing debt less (cash and cash equivalents + expenses plus depreciation and amortisation expenses
short-term investment + deposit) divided by total equity divided by revenues from sales and services
Net profit margin = Calculated as profit for the period
divided by revenues from sales and servicesYou can also read
