About AirAsia

• AirAsia is Asia's largest low-fare, no-frills airline and a pioneer of low-cost travel in Asia

• Serve over 400 destinations spanning 25 countries

• AirAsia was established in 1993 and began operations on 18 November 1996

• Was bought by former Time Warner executive Tony Fernandes's company Tune Air Sdn Bhd for the token sum of one ringgit

About AirAsia

• Fernandes turned the company around, producing a profit in 2002 and launching new routes from its hub in Kuala Lumpur, undercutting former monopoly operator Malaysia Airlines with promotional fares as low as MYR 1

• Recently voted as the best low cost carrier in the world by SKYTRAX

Ancillary Income

Fleet Development

Attractive Valuation among Airlines(as at February 2011)

5 Years Financial Highlights: Airasia Berhad

Share Performance: Airasia BerhadShare Price & Volume Traded2011 Monthly Trading Volume & Highest-Lowest Share Price

Bursa Malaysia: Airasia Berhad• Symbol & Code : AIRASIA (5099)• Board : Main• Industry : Trading/Services• Current Share Price as below (Y- August 2011 till July 2012):

Selected Airlines Daily Share Price Movements (% change):

Achieve 6.7% of share price movement

Share Performance: Airasia Berhad

Market CaptalizationAs at 31 December 2011

Contribution of GDP

Airasia Berhad – Airlines Industry

The BCG Matrix

AirAsia Business Units• AirAsia profit centre would be the sales of

airlines fares, foods, gift and passenger luggage.• But Air Asia business unit contributions will be

best measured according to the popular routes and its sales figures.

• For the BCG Matrix, we have identified five most popular routes that contribute to AirAsia business earnings

The BCG Matrix

Most Popular Airline Routes From KL1. KL-London2. KL-Gold Coast, Australia3. KL-Singapore4. KL-Penang5. KL-Johore Bahru

The BCG Matrix

Market Share CalculationMarket Share = The no. of Air Asia Fleets (179) The No. of MAS Fleets (151)

= 1.2On Average, AirAsia market share is 20% more than MAS market share when it comes to the sales of that five most popular destinations.

The BCG Matrix

Industries Sales Growth Rate Calculation

ISGR = S&P Industry Survey Data or; Average annual increase in revenue of competitor or; Country Economic Growth (GDP) Rate

The BCG Matrix

• MAS is losing its market share due to its loss making financial performance.

• Their growth rate is zero or negative• But since Malaysia GDP is expected to grow at

5.5% this year, we proposed that Industry Growth Rate to be set at 3.0%, after adjusting it for Inflation. In the worse case scenario, the industry will shrink to -3.0%

The BCG MatrixAirAsia Business Unit

No Routes Cost Per Seat (MYR)

No of Passenger per

Year

Average Sales per Seat (MYR)

Profits (MYR) Relative Market Share

Industry Growth Rate

%

1 KL- London 1,500.00 328,000 1,299.00 -65,928,000.00 0.30 -3.00

2 KL-Gold Coast 500.00 220,000 700.00 44,000,000.00 0.40 2.00

3 KL-Singapore 60.00 164,200 150.00 14,778,000.00 0.60 1.50

4 KL-Penang 60.00 118,650 110.00 5,932,500.00 0.85 3.00

5 KL-JB 60.00 97,600 110.00 4,880,000.00 0.80 3.00

The BCG Matrix

Invest

Select a Few

Liquidate

4 & 5

13

2

0.50

3.0%

-3.0%

The BCG Matrix for Air AsiaDOGS (Low Growth, Low Market Share)

•Have low market share, and the market itself is not growing•Strong cause for exiting the market – high liabilities as they needs more $$$

1. KL- London Route is the lease profitable route. AirAsia is losing as much as MYR 20 million a year to sustain this route

2. Business Travelers prefer full service airline due to long haul flight3. Casual Travelers opted for MAS economy class as they can ride on

excess baggage benefit and in flight meal and entertainment4. MAS is strong in this route. AirAsia decided to cancel this route

starting on Jan 2012

Recommendation• Exit Strategy. Cancel the route. Use the resources to cover for

other profitable routes by means of increasing the frequency.

The BCG Matrix for Air AsiaQUESTION MARKS (High Growth, Low Market Share)

•Have low market share but operate in high growth market•Potential either become stars, if sufficient cash is pumped into them, or else fizzle out into dogs

1. KL- Gold Coast is the most promising destination2. It is a cheap solution to long haul flight to Europe3. The Airport tax is lower in Coolanggata Airport, thus help AirAsia

to reduce the price. MAS is landing in Brisbane, which caters for premium flight operations

4. AirAsia has added its flight frequencies from once daily to thrice daily

5. Currently, one of the most highly sought routes

Recommendation• Use the available resources and capital to increase the frequency

of this route. It has huge potential to return higher profitability.

The BCG Matrix for Air AsiaSTARS (High Growth, High Market Share)

•Diametric opposite of dogs, garnering high market share in a high growth market•Generate maximum profitability - $$$•Involve strong marketing and branding

1. KL-Penang and KL-JB are the two most profitable domestic routes2. Achieve 98% sold out rates3. Provide the highest profit margin of almost 90%

Recommendation• AirAsia must use the position to further strengthen its dominance. It

can be done by providing additional service counter to serve this route. AirAsia can continue to offer excellence service and the best deals to all passengers flying this routes. To entice new passenger, they can increase the baggage limits or offers a package deal that may include meals or discounted feeder fare.

The BCG Matrix for Air AsiaCASH COWS (Low Growth, High Market Share)

•High market share in a mature market with little or no Growth•High revenue generators•Should focus less on advertising and more on customer retention

1. The growth is stagnant but the demand for KL-Singapore route never ended

2. High tax and administrative cost. Profit margin is the narrowest compares to other routes

3. Highly competitive

Recommendation• AirAsia just need to focus on its core services, to ensure there will be

no flight delays or any other mishap. Need not to invest for promotion as the sales will remain stagnant but strong. People already recognize AirAsia in this area.

The End

Q & A Session