KUALA LUMPUR (Jan 26): AirAsia X Bhd (AAX) announced Wednesday a major new air logistics partnership with global transport and logistics provider GEODIS, providing additional cargo capacity and boosting revenue during the downtime in commercial flying.
AAX said in a statement that the agreement is set to run for an initial period of six months commencing from Jan 20, 2022 with further extensions to be contemplated.
AAX Malaysia chief executive officer Benyamin Ismail said: “We expect that our cargo operations moving forward will contribute at least 40% to 50% of our total revenue. Importantly we are now perfectly hedged to take advantage of the huge surge in air transport demand. Furthermore, passenger revenue will offset any drop in cargo rates when we start normal scheduled flights again.”
“Air cargo rates will continue to remain robust as long as planes remain grounded. We intend to capitalise on this opportunity for as long as it lasts. Cargo revenues were 4% of our total revenues pre-Covid. It has been our lifeline over the past two years,” he added.
Under the latest agreement with GEODIS, AAX will provide regular dedicated scheduled cargo flights between Kuala Lumpur and Hong Kong, Chennai, Shanghai and Sydney.
AAX said that with an extensive footprint in Asia Pacific, the partnership with GEODIS will not only complement the existing AAX network but will also stimulate additional air-cargo traffic in a number of markets that they both operate in.
Through its hub and spoke model, including the ability to switch transport modes at the Kuala Lumpur facility, the network also benefits from GEODIS’ expansive road network to ensure that cargo from its flights to Singapore, Malaysia, Thailand, and Vietnam are able to be transported across the whole of Southeast Asia, it added.
With highly integrated, multimodal transport solutions, it said GEODIS aims to help more customers to circumvent disruptions that have negatively affected both air and sea cargo flows historically.
AAX also noted that this innovative partnership is the first of many that will be finalised in coming months.
These augment the significant short-term cargo charters completed in recent months and represent a rapid financial turnaround post a comprehensive successful restructuring of the airline, it said.
Benyamin said: “We are tremendously excited with this new opportunity with GEODIS. We have operated ad hoc charter services for them in recent months but this new arrangement provides better certainty on utilisation of our planes and better visibility of earnings.”
Meanwhile, GEODIS Asia Pacific president and chief executive officer Onno Boots said it is more crucial now than ever to supplement integrated transport networks with strategic routes that offer customers a high degree of efficiency, personalisation and flexibility, especially given the increasingly complex supply chain landscape that has affected the logistical expectations and needs of industries across the board.
“These new intra-APAC flight routes represent our sustained commitment in bringing customers highly reliable, innovative, and cost-effective solutions that are tailored to what their business truly needs, allowing them to fully optimize the e-commerce boom and chart their long-term business growth.
“We look forward to working in partnership with AirAsia X to strengthen its logistics footprint,” he said.
At the time of writing, AAX was unchanged at 5.5 sen, valuing the group at RM228.14 million.