KUALA LUMPUR (Aug 30): Capital A Bhd posted a net profit of RM1.12 billion for the second quarter ended June 30, 2023 (2QFY2023), compared with a net loss of RM931.22 million a year earlier, thanks to the strong recovery in demand from both domestic and international travel.

The last time Capital A achieved a net profit of more than RM1 billion was in 1QFY2018, when it reported RM1.14 billion. 

This is the group's third straight quarterly profit and in line with the improvement in overall performance of its aviation segment. 

The rise in earnings was helped by a gain of RM1.37 billion from the remeasurement of an associate to subsidiary, Asia Aviation Public Company Ltd Group (AAV), in June, the group said in a bourse filing on Tuesday.

Earnings were also boosted by a lower foreign exchange loss of RM158.6 million, versus RM345.4 million in 2QFY2022. The forex loss was due to the appreciation of the US dollar against the group’s local currencies. 

Capital A said the improvement in the aviation segment’s performance also lifted the group's earnings before interest, tax, depreciation and amortisation (Ebitda) to RM461.9 million from RM108.6 million in 2QFY2022.

Quarterly revenue more than doubled to RM3.15 billion, the group's highest since the Covid-19 outbreak.

Other segments that contributed to Capital A's revenue are logistics business (5%), digital (2%) and engineering business (1%).

For the first six months of FY2023, Capital A’s net profit came in at RM1.18 billion as opposed to a cumulative net loss of RM1.84 billion previously, as revenue more than doubled to RM5.68 billion from RM2.28 billion.

Moving forward, Capital A, which maintains a confident outlook on its aviation prospects, anticipates further upside from the current high yield environment.

“In 2Q2023, fares remained 15% higher than pre-Covid levels in 2Q2019, and we anticipate a pick up in the second half to peak in the fourth quarter,” it said.

“We are buoyed by the upward trajectory of ancillary revenue per passenger, which is projected to gain momentum to reach US$358 million in the second half of this year, up 27% compared to the same period pre-Covid, driven by strong new product initiatives and dynamic pricing,” it added.

Meanwhile, Capital A expects cost to continue a downward trend as a result of the consolidation of AAV, enabling the group to achieve cost efficiency in aircraft maintenance, staff and user charges.

On its fleet reactivation plan, the group targeted to reinstate a total of 200 planes back into operations by year-end. Currently, the group has successfully taken 175 aircraft out of storage and expects to restore 180 aircraft into service by the end of the third quarter. 

“With all of the strategies put in place, the board expects the group to perform better than the previous year,” it added.

Shares in Capital A closed 7.5 sen or 7.28% lower at 95.5 sen, giving the group a market capitalisation of RM4.02 billion.