KUALA LUMPUR (May 14): AirAsia X Bhd (KL:AAX) slipped into the red in the first quarter of this year as foreign exchange (forex) losses and higher fuel costs outweighed record revenue and resilient passenger demand.

The budget carrier posted a net loss of RM154.9 million for the quarter ended March 31, 2026 (1QFY2026), compared with a net profit of RM50.2 million a year earlier and RM191.8 million in the preceding quarter. The reversal was primarily due to a RM232.2 million forex loss arising from the depreciation of regional currencies including the Thai baht, Indonesian rupiah and Philippine peso against the US dollar.

Revenue for 1QFY2026 climbed to a record RM5.95 billion, following the completion of the acquisition of Capital A Bhd’s (KL:CAPITALA) aviation business in January.

AAX co-founder and adviser Tan Sri Tony Fernandes had earlier warned of near-term earnings pressure, saying during the carrier’s May 7 announcement of a 150 Airbus A220 aircraft order that the airline was unlikely to meet its original profit target amid challenging operating conditions.

In a statement on Thursday, AAX said passenger traffic remained robust, with the group carrying 18.9 million passengers in 1QFY2026, up 9% from a year earlier. Capacity expanded 10%, while load factor held steady at 85%.

The airline was also hit by a spike in jet fuel prices in late March, with prices briefly exceeding US$200 (RM785.44) a barrel. AAX said the impact was initially concentrated in Malaysia due to weekly fuel pricing adjustments, resulting in about RM200 million in additional fuel costs.

Other regional markets were cushioned by monthly pricing mechanisms, though the broader impact of elevated fuel prices is expected to flow through in the second quarter.

AirAsia Aviation Group Ltd group chief executive officer Bo Lingam said the carrier remains cautious amid elevated fuel prices and geopolitical uncertainty, prompting a more tactical operating approach focused on protecting yields and margins rather than expanding capacity.

The airline has temporarily suspended 21 routes and plans to reduce second-quarter capacity by 10% from a year earlier. Capacity deployment will be concentrated on routes that meet minimum return thresholds, while retaining flexibility to restore services when market conditions improve, he said.

On the financing front, AAX secured US$300 million in funding during the quarter on improved terms to refinance existing debt and lower principal obligations. The group is also targeting private or public bond issuances in the second and third quarters while pursuing additional refinancing and working-capital facilities from local and foreign lenders.

Despite near-term headwinds, the carrier said its long-term strategy of building a low-cost network airline remains intact, supported by fleet modernisation plans. AAX took delivery of its first Airbus A321LR (long range) in April and recently placed an order for 150 A220 aircraft.

AAX shares closed unchanged at RM1.22 on Thursday, valuing the airline at about RM4.1 billion. The stock has declined nearly 32% so far this year.