i remember i studied about saudi aramco in Harvard case study. how they act as swing producer and lost billions of dollar per year as other OPEC countries were cheating. perhaps, that is why they are very reluctant to commit to OPEC. something like game theory.

secondly, back to demand, US shale oil does hit them hard. I think another factor is that the world is shifting to using less oil. Many of our actions are irreversible to oil demand. For example, building more efficient/hybrid car, airplanes, using etc.

from what i know, the oil producing countries are reluctant to cut because once they cut, the demand will be taken up by other countries and it is usually not replaceable.

also, they cut, then shale oil fill up demand, still lose. that's why susah.

At least Calvin starts to use the word operating lease. We tried so hard to explain to this guy in his AAX airasia sitting on bomb thread. A
Unfortunately, he still doesn't understand capital commitment. I think he did not see the fine print that that is outstanding order in future.
I initially first time reply him and had respect to him as a person. Now, I just think he is so annoying and no more respect or whatsoever.

lol Calvin already got crushed in his AAX airasia time bomb thread until refuse to reply. Now come here spinning his story again.

How many times need to explain to you about operating lease and depreciation.

Still he made a lot of money in the leasing Corp.
Check airasia operating leasing in annual report.

Radzi, he is planning to sell of his master franchise. Asia Aviation Capital Limited.

I think this is a case of stupidity without boundary.

radzi, RM110 is for 12 years.

Calvin won't reply here anymore. He is not willing to admit his mistakes.

Currency is one big headache.
Usually, company operating with a big basket of different currencies will use natural hedge. This is because, hedging is risk transferring and this is done with a premium price. Laymen term, you pay to transfer the risk.

I think no one will really understand how it works. I am curious and waiting for it for next quarter results. My guess, it will be muted.

Operating lease is common for new airlines. This is because, the cost of capital will be too high if they want to buy the plane. The fact that they are covering the operating lease and still make money is enough to tell you they are able to cover expenses.

If you want to argue on depreciation, there is something else to argue about. I am not going to tell you. hahaha.

Wanna argue, must be hit the nerve. you hitting wrong place, bro.

Mr Calvin, comet2232 already pointed out to you the the value is depreciated over 25 years for major part like engine and airframe. Secondly, there is 10% residual value.

Bacalah annual report if wanna comment like a research house.

I recently talked to a friend who worked in O&G engineering firm. His firm deal with Armada too.

So he told me, Engineering firm has been working on contract at loss even at crude oil price ~USD100. The reason they are accepting works is to keep afloat, hoping some contracts will cover the loss. The company he is working now had also just been taken-over and the new company is also making losses.

He told me, Armada hired a lot of Indian engineers (From India). These guys, will just accept any drawing, design, quote etc, basically what also can. then, will give problem later to reject.

According to him, Armada bids for many contracts at ridiculously low price, so low that my friend's firm cannot understand how they can do it.

So, my thought is, even when future works are completed, will they be able to make money?

i don't hold armada's stock. Thought of going in many months ago when price was around RM0.8. but after meeting that guy few days ago, I am hesitating. Appreciate if anyone can contribute any information.

hng33 style, go in and out very fast. nothing wrong with his style. if you guys follow, don't blame him later.

i think this round, he eyes on technical rebound.

comet2232 well done. thanks for the calculation. in annual report 2015, it also shows they are charged ~RM987mil (C). A-B-C almost the same.

TheContrarian, AAX is charged ~ RM1 bil/annum. However, they also sublease and earn income ~RM300mil/annum. So, it is ~RM700mil/annum. I think this is partly because they still own some aircrafts or maybe some other accounting term like leaseback (I am not sure)

What triggered me was Mr Calvin was saying, the company has revenue of 1bil/qtr and net profit of RM11mil/qtr and sitting on debt of RM110bil. He obviously thought the RM110bil is quarterly unrecorded debt instead of a sum of 12 years.

I am thinking, if AACL sold to third parties, these asset and liabilities will be parked under the new company instead of currently recorded somewhere in some company's balance sheet.

Then, AAX just continue business like usual. They may have to foregone the RM300mil income, but they will record gain from asset sales and slash off the liabilities (because I think they still own some planes). correct me if I am wrong.

Mr Calvin, yesterday in your reply to me you threw me the word off balance sheet. I thought you understand already,but no. You did not.

In layman term, you just consider AAX lease the plane from a lessor. As lessee, they pay the operating lease. So, they are not putting the plane as their asset and liabilities. So, you don't see depreciation. Or even easier to understand, operating lease is the depreciation. The operating lease is the revenue for the lessor. In the lessor book, the will put the plane as their asset and liabilities,thus they depreciate it there.

This, it is off balance sheet. I read in annual report, AACL has started to take over the plane. Thus, I think in future, all planes will be part there. And by the way, AACL is making profits too.

In business, there are different strategy employed by companies.
It boils down to Build, Borrow, Buy. This is to add-on why I say, I won't say leasing cause the business model to be unsustainable.
You can read the book if you want, same name as the strategy name.

coolinvestor - thanks god someone understand.

there are pro and cons in using operating lease. You can read below link and see the benefits AAX get from it. It is a standard in airlines business. I would not say, operating lease cause the business model to be unsustainable.

Feel free to read here.
http://www.diffen.com/difference/Capital_Lease_vs_Operating_Lease

Mr Calvin, instead of putting down your counter argument on the points you mentioned in your main articles, you threw me articles on others things such as about their investment in associates. Some are with counter arguments already given by Airasia themselves.

lol. now i ask you one direct question about being car salesman, how you consider depreciation (also tell you about your question on the current assets) when renting, you avoid again.

calvintan, i have no intention to make fun of your name. but wow, you don't even recognise my claim on the RM110bil as 12 years capital commitment instead of your claim as debt.

Since you car salesman, if you rent a car from a rental company, do you care about the depreciation? You pay the rent (Operating lease) and deprecation is not your problem already.

the question, where do they book the plane? answer lie on Operating Lease accounting practice and AACL.

Mr Calvin, my opinion below.

First and foremost, airlines do not purchase aircraft at list price like you mentioned (A330-300 at USD256.4mil/aircraft). It is usually sold at much lower price depends on bulk purchase and negotiation.

Secondly, the figure RM110 bil you pointed out is the capital commitment for aircrafts purchase over the next 12 years. Future minimum lease payments and sublease receipts under non-cancellable operating leases are RM8.5bil and RM2.4bil respectively in 3Q16 report. However, this figure is for 12 years. You must refer 2015 annual report for clearer picture for both the capital commitment and min lease. In annual report 2015, you will see the min lease payment is around net ~700mil/annum for 2016. It is much less for the years after 2016 but have to do some maths (data available, so you can do yourselves). As AAX is reporting their aircraft purchase using operating lease accounting practice, this minimum lease payment is the rent for using the aircraft. Under this accounting practice, they do not recognise depreciation of the aircraft although I suspect, not all aircrafts are categorised this way or subleasing the aircraft out require them to book some depreciation (the reason we are seeing depreciation around ~RM27mil). As such, for their ~RM4bil business, the aircraft renting part cost them around RM700mil/annum and they booked them under Operating Expense. Again, the RM110 you mentioned is the capital committed in 12 years to purchase the aircrafts.

Now, they have been saying that they will sell out Asia Aviation Capital Limited (AACL). Basically, this company will lease the planes to all Airasia and its associates companies. This company will also assume the asset of the planes, debts, and the depreciation. Also, by having a lessor, I think they will have more flexibility on aircraft utilization too. This is how TF intends to unlock the value.

I am not an accountant. But I hold an MBA and I like accounting. So, any sifu please correct me if I am wrong.

what is this announcement? shareholder benefits?

AirAsia X Berhad ("AAX" or "the Company") is pleased to announce that the Board of Directors of AAX has approved the extension of the Shareholders' Benefit Programme for a period of three (3) years commencing on 2017, as per indicated to its shareholders during AAX's 10th Annual General Meeting held on 31 May 2016.

so, with current 4QR PE around 4. what do the naysayers expect? That this stock should be trading at PE of 2 or 3 even though they turnaround with 4QR consecutively profit? Worst case scenario, there is no rally after the results. I don't think burn is what will happen.

cashflow from operating activities is also very good at 203mil compare to previous losses.

i think results is quite good la. less than expected but nevertheless, it is a profit. now AAX PE is like ~3.81 (0.4/0.105).

This stock hits new low always.

What TF saying is Corporate Strategy 101. Company either go for product differentiation or cost leadership. If you pursue both, you will end up in a situation called "stuck in the middle" (feel free to google). AAX and AA have since long time ago said they are Low Cost Carrier (LCC). That's why, they even argue on KLIA2's name (it may sound petty to some) because, it is part of who they are, LCC. On the other hand, MAS is a full service airlines. A full service airline should target product differentiation (high price and service). This is because, the profitability will be determined by cost structure. A full service airlines will have a higher cost structure overall. So, if they start targeting low cost segment, they will end up losing margin / making loss. Therefore, in some company, when they do want to compete with lower cost players, they spin out a new company. Under new company, the cost structure will be entirely different. Thus, the lower end company can compete with other same segment (low end) without losing money. However, this will cause cannibalism to mother company. Furthermore, spinning a new brand will avoid brand name damage.

You may think, if MAS are targeting low cost customers, isn’t it will eat up AA/AAX market share. The answer is Yes. AA/AAX exists initially because Malaysian airline industry was known to have high fixed cost. However, last 1-2 years, they have been renegotiating contract, cut staffs, etc. This allows them to lower their selling price and this poses challenges to AAX/AA.
One example I can relate “stuck in the middle” is the Dogfight between Ryanair and British Airway/Aer Lingus in 1980s. In the dogfight there was high cost in European airline environment. Then, Ryanair comes in. Make profit and then they expand into BA’s route. BA retaliated and BOOM, Ryanair almost went into bankruptcy despite passenger volume was up significantly. It was last minute cash injection from Ryan family that saved Ryanair.
However, one difference between Ryanair and AAX/AA now is, Ryanair go into the fight with a “stuck in the middle” strategy. They are offering first-class customer service (meal, amenities comparable), low fare and no restriction ticket, thus they cannot survive. Classic “stuck in the middle” strategy.

So, what do I think about all this? MAS seems to be heading to “stuck in the middle” strategy. First class service but want to compete with various budget airlines in the region (quote from the article). Does he really mean it? Peter Bellew is, afterall, from Ryanair though at much later period after the dogfight. Does he has a the wild card that we don’t know? Perhaps, the worst scenario is MAS has decided to bleed to fight AA/AAX until 1H18 so that they can IPO in 2019, after all, they have government money.

I still believe, MAS’s overall cost such as staff, selling, handling charges, food, drink, services, baggage, are still much higher than AA/AAX as they are still a full service airlines. TF said about a unified low cost company in the region (it is about bringing down cost). Also, like I mentioned long ago, AA/AAX still have many rooms to play. Other low cost airlines do not charge customers macam-macam. I still believe AAX has competitive advantage.

this counter kena tabao again suddenly. looking to enter more

wow. genting-wa spike up

Theedge weekly article about psc this week. Mavcom provided data about psc rate justification. One thing is interesting. They compared psc increase in other countries and tourist arrival. They found that there is no decrease in general.

MAS's Peter Belly now say they don't want to move to klia2. Lol. He got what he wants. Now, buat der

hold on tight, kawan-kawan sekalian

http://edition.cnn.com/2016/11/01/us/slot-machine-winner-steak-dinner-trnd/index.html

no win for the USD42mil jackpot. machine malfunctioned.

lols. the joke will be on MAHB if AA and AAX moved to KLIA.

same when it goes down. someone sure say crash. biasala. first day?

big brand company like airasia trading at price of o.4xx. turnaround business. mana mau cari.

big volume makan at 0.43. i think 5mil gone if not mistaken. wah.

preliminary operating statistics look good.
PSC increases which is bad. Asean fare is more related to Airasia than to AAX. AAX fly long haul destinations. From the news, it seems like, International PSC increased from RM32 to RM50 (56%). Domestic RM6 to RM11 (83%).

MAS' Peter Bellew will shout too since his PSC increase from RM32 to RM73 (128%).
He has been calling for standardization or reduction of the fee.

About the tower company edotco, there has been contradicting report about the direction. If the industry becomes too competitive, then most likely, there will be merger and acquisition like those companies in the USA.

I think Axiata is a hidden gem. It was my darling stock many years ago. Start buying it from ~RM3 till sell off at ~rm7. I think there may be opportunities for dividend if they sell off their non core assets/ overseas assets. They are also the only telco with regional exposure. I am collecting back real slowly.

Collect more genting-wa at 1.29.

Yup. I remember I drew a triangle chart. 7.8+/- is the support line. I am looking forward to collect more.

Here the link.
http://m.thestar.com.my/story.aspx?hl=Axiata-Groups-India-associate-fined-RM594mil&sec=business&id=%7B36839FD2-8E7E-43CD-BB2B-E7606E5EA429%7D

tshu99, TF said few times they are supermarket in the sky. Ancillary revenue is the focus I believe. Get passenger on the sky to cover fix cost. Then, earn on a Ancillary revenue like meals, baggage, seat etc.

Tenggelam again.

Congratulations to all holders..
Damn syok today.

Cummming

I constantly travel to South Korea as well. My friends taking different flights to meet in in seoul has been experiencing almost full flight as well.

Once the daily big queue at 0.39 realised the price is not reachable, then, it will shoot up.

Never understand why would anyone be interested to repeat similar "negative" postings. It is not that you can short the stock. Either you are taking things personally or you want to buy low by enticing ppl to sell.

In case you haven't realised, genting already disposed stake in genhk. Genhk now owned by limkokthye and family only.