00:00Tony, we heard from Airbus the software glitch, the fuselage issues.
00:05How are you responding to all of that?
00:07What's been your reaction to all of that?
00:09You know, Airbus were great.
00:11They gave us a heads up.
00:13Kristen Scherer called me straight away.
00:16There was a little bit of confusion on the actual problem.
00:20But as soon as we got that message, our team did an incredible job.
00:24And we were able to sort out 96 aircloth in about clinical hours.
00:29So we had no operational major delays caused by the software glitch.
00:37How about the fuselage issue?
00:40What's your own understanding?
00:43We saw the notice.
00:46I don't think it's major.
00:47It's a few panels that they have to fix this on impending aircraft.
00:53Again, I don't see a major delay.
00:55We haven't been given any notification of any delays caused by it.
00:58So, you know, what appeared to be a massive crisis, I think, through good communication, good crisis management, we were able to avoid a major disaster.
01:09So, just to be sure, it will not impact upcoming delays, and it's not impacting, you know, the aircraft that have been recently delivered to you?
01:22No, no, no issue on the panels.
01:26In terms of the software, after getting the full information, it was mostly a software downgrade, which our team were able to do per aircraft about an hour, hour and a half.
01:39And, honestly, my team did an incredible job, and I'm sure many, many airlines did that as well.
01:45So no operational delays.
01:49We've seen a host of issues to do with supply chains, with engines, and now issues to do with fuselage and software.
01:59Do these issues shake your confidence in Airbus in any way?
02:02How are you assessing the reliability of Airbus?
02:07Well, look, I've been one of Airbus's first customers in Asia.
02:11We have an order book of delivered about 250 aircraft, and we have another 350 in order.
02:19We're very, very close to them.
02:21We feel that they produce excellent product.
02:24Obviously, supply chain issues have been a problem, especially engines.
02:30But I think we're over the worst of it.
02:31I'm hoping by 2026, even in AirAsia's case, we have to bring back 230 planes.
02:37Our numbers have been crippled by the fact that we haven't had all our planes in operation,
02:42in spite of having a fantastic third quarter where we delivered a billion ringgit of EBITDA.
02:47I think fourth quarter, we will have all our planes back.
02:50We had our last issues with GE.
02:51And I think for most airlines, 2026 should be really the end of all these COVID issues
02:58and begin to see some stability in the supply chain as well.
03:03As you said, you're among the biggest operators of the A320s.
03:06I mean, when it comes to the A320s, it is the most used aircraft.
03:11Help us understand, help our viewers understand, how rare are these hiccups that we're addressing right now?
03:17I think it's the first time in my 20-odd years of AirAsia that we received a global notification such as this.
03:29I've never received a notification where all 6,000 aircraft had to be checked.
03:34So it was the first time.
03:35It is a good warning to Airbus and the supply chain operators to test things out properly.
03:43But it seemed a very odd one, that solar radiation effect of the software.
03:48It's kind of bizarre for me.
03:50But, you know, I applaud Kristen Scherer for calling me personally amongst many airlines.
03:57That gave us a good head start.
03:58And I think, you know, I applaud OEMs that actually go on the front foot and work with airlines quickly.
04:06It's been one of my biggest issues during COVID that many OEMs weren't proactive enough in helping airlines during this period.
04:14But I remain very, very confident and optimistic of airline manufacturers, especially Airbus.
04:21Why do you think we're seeing more and more manufacturing disclosures?
04:28Is it a case of perhaps the likes of Airbus are trying to produce as many planes as possible to meet the increasing demand from airlines?
04:40Well, I mean, I think it's, you know, there is a huge amount of orders per month versus what I started with.
04:48Airbus have ramped up its production tremendously.
04:53On top of that, technology is changing very fast.
04:56And in this case, software providers, you know, missed out on some things.
05:02So I think it's a combination of increasing orders trying to meet sustainability issues and make aircraft more efficient.
05:10Competition in the market, which is maybe putting a little bit of extra pressure.
05:14And so, you know, I always say to all OEMs, you know, take a step back and make sure that you can handle this ramp up.
05:23Make sure you test software properly.
05:26Don't rush out.
05:28So, you know, we, outside of aviation, we had a massive problem with cybersecurity, like CrowdStrike releasing something which wasn't fully tested.
05:41So, I think the pressures of quarterly results, sometimes the pressures of competition, probably the quality drops a little bit.
05:50So it's a good warning for everybody.
05:54As you indicated, Tony, I mean, there was limited disruption, but I'm sure there's still a cost.
05:59Is there a cost to that disruption?
06:02Yeah, of course.
06:04Whose cost will that be, Tony?
06:06Well, the biggest cost is to my health, sitting at 10.30 and suddenly receiving a notification like that.
06:14So I'll be sending my month yearly checkup to Airbus to pay for.
06:20It wasn't a major cost, to be honest, but a lot of time, a lot of effort.
06:24But it did show the amazing resilience of our airline, which I continue to tell everybody.
06:29We had a fantastic third quarter.
06:32Today, capital A.
06:35Finally, you know, my vision of capturing value outside of the airline has been encapsulated with a doubling of the share price.
06:45And so, you know, there are enormous pressures.
06:51There's a little bit of cost.
06:52But really, the major cost of COVID is now coming to an end.
06:56And I'm really optimistic about 26.
07:01Any way of quantifying that minimal cost that you mentioned?
07:07No, I honestly think it's negligible.
07:11Apart from a lot of man hours, it's not changing our numbers at all.
07:17And Tony, to your knowledge, do you think any other aircraft might be impacted by this at all?
07:23You know, I've been through too much to say never.
07:29It's a good warning.
07:31Obviously, you've seen a lot of issues with Boeing.
07:34So I think all aircraft manufacturers have to really redouble their efforts.
07:39I've said it for a while, even with the OEMs like engines, customer service, customer satisfaction.
07:47It has to come ahead of short-term quarterly profits.
07:52I think most OEMs are recording record profits.
07:57But I throw caution to the wind that that can turn very quickly if you don't maintain your quality and supply chain as well.
08:04So that is a good warning.
08:07It could have been much worse.
08:08Thank God it wasn't.
08:09You expressed optimism for 2026.
08:14What kind of numbers are you anticipating?
08:18What's the demand that you're anticipating?
08:21Well, the demand is incredibly strong.
08:24And we're moving on to the next chapter of our growth, which is creating a hub-and-spoke airline.
08:3010% of our customers fly and connect.
08:33We're looking at a new order book to bring in more aircraft, a smaller gauge that will enable us to create an even deeper network.
08:42ASEAN is very bullish.
08:44India is strong.
08:45China, Japan, Korea, and Australia.
08:47We started going westward into Kazakhstan, Uzbekistan, and now Turkey.
08:52So there's a huge appetite for travel.
08:55We're creating this new kind of hub-and-spoke product.
08:59So I see demand very strong.
09:01And, you know, our costs keep going down.
09:04We have a tailwind with oil and currencies.
09:08And so low fares means a greater appetite for travel.
09:12And we're feeling good.
09:14You know, we had a 23% EBITDA margin, which is remarkable if you think that we still had 15 of our planes on our ground.
09:22So demand remains strong.
09:24We can't get enough planes quick enough.
09:26But the question really is, how strong is that demand?
09:3020%, 30%, 40%?
09:31What are you, what's the number you're looking at?
09:34Well, I can't declare that just yet.
09:37But demand is strong.
09:39I can't because we're a public company.
09:41But, you know, we're growing again.
09:43We're adding 15 planes next year.
09:45Honestly, we could add 30 planes.
09:46So that gives you a sense that we believe we could grow, you know, 10%, 15% easily.
09:54So we'll have to wait and see.
09:56But demand is robust.
09:58We know that you're talking to Airbus, Embraer, and Comag.
10:03What's the status of those conversations?
10:06Are you any closer to making a decision of who you will go with for your additional aircraft?
10:12Yeah, we're getting close.
10:14We're getting close.
10:14I think, you know, these aircraft come with different engines.
10:21We have been a GE engine provider.
10:24I mean, Comag is also the GE engine, but Embraer has a plant training.
10:29We have to make absolutely sure we're going to get the right cost structure.
10:33But more importantly, that, you know, all the OEMs can deal with our very aggressive flying targets.
10:41And so we want to make absolutely sure that we give a fantastic low-cost product.
10:46So, you know, we're months away as opposed to days away.
10:51But we're making good progress.
10:55How much will engines be a factor in your final decision?
11:0470%.
11:0470%?
11:09I mean, that's a percentage coming out of my head.
11:13But really what I'm trying to say is it's the most important part of choosing the factor.
11:19And, Tony, as we inch ever closer to 2026, what's the biggest risk you think?
11:27I mean, we're seeing a lot of flashpoints around the world, uncertainties in terms of, you know, trade relations.
11:35What's the biggest risk for your business?
11:37Wow.
11:38You know, husband, I've been through every risk known to mankind.
11:40We've just come out of COVID.
11:43We've had trade wars.
11:44We've had oil spikes.
11:47We really can't predict what the latest risk is.
11:51But all I can say is AirAsia has been well tested.
11:54We have a very slipped operation judging by what we went through.
11:59We're going to have all our planes back.
12:00We're going to improve our customer service because we'll have more spare planes.
12:04Demand is strong.
12:06You know, we'll take whatever risk that comes.
12:08But right now where I'm sitting, 2026 looks a lot better than it was.
12:13Even trade wars have probably been a little bit of an advantage for us because geopolitically, more people are flying in our part of the world and staying in our part of the world than moving to Europe or America.
12:25So that's probably been a benefit.
12:27But we, you know, if Ukraine and Russia solves this issue, then all fights and jet pack is going to come down.
12:36It's going to be a massive bonus.
12:38For me, as long as I can stimulate demand through low fares and really our bread and butter is connecting cities and connecting loops that were never connected, then I think we have a fantastic 2026 coming up.
12:53You know, the most important thing is...
12:55Tony, thanks so much for joining us today.
12:57Go ahead, Tony.
12:59I was just going to say, it's fantastic looking at this outlook.
13:03You know, over the last six years, I don't think anyone gave us a time of day of surviving.
13:08Yet we've created a very strong airline.
13:09And more importantly, we've created five amazing companies in capital A where the value is not being seen.
13:14So we've risen from the dead and we're looking forward to the future.
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