How Does AirAsia X Bhd Compare To Singapore Airlines Ltd?

AirAsia X Bhd (KLSE:5328.KL) is one of the newest experiment of the aviation industry. For the past decade, the airline industry has been seeing tremendous growth from its short-haul, low-cost carrier business model compared to the traditional full-service carrier model. However, it is only recently that we are seeing more long-haul low-cost carrier gaining popularity in the industry.

AirAsia X Bhd is one such airline, together with Scoot from Singapore Airlines Ltd (SGX: C6L), they focused more on long-haul travel using a lower cost business model. However, just how different is AirAsia X from the entire Singapore Airlines Group? Here are the key differences between them.


The most obvious difference between the two companies is their size. AirAsia X has been growing quickly in recent years, boosting its revenue from RM1.86 billion (S$620 million) in 2011 to more than RM3.0 billion (S$1.0 billion) by 2015. That is still just a mere 6.6% of the S$15.2 billion sales which SIA generated in 2015. In term of market capitalisation, AirAsia X is currently valued at RM1.6 billion (S$540 million), which is just about 4% of Singapore Airlines’ S$12.4 billion valuations.

Business Segment

Another key difference to note is that AirAsia X has a more simple business model. It operates mainly in one business segment; the long-haul low-cost traffic. Singapore Airlines, on the other hand, has multiple businesses, from its flagship Singapore Airlines to its short-haul service airline, Silkair. In its budget aviation division, the company operates Tiger Airways and Scoot. Moreover, SIA is also the major shareholder of SIA Engineering Company Ltd (SGX: S59), its aircraft maintenance, repair and overhaul division.


Lastly, the two companies have very different debt profile. Singapore Airlines has been a very conservative company, which still maintained a net cash position even when it is operating in a capital-intensive industry.

AirAsia X has a net debt to equity of 94% and an interest coverage ratio of just 1.5 times. The company is heavily in debt and can be considered higher in risk as a company.

Foolish Summary

Although both companies are in the aviation industry, we are able to see how AirAsia X and Singapore Airlines are so different in term of their size, business models and their debt profile.

Singapore Airlines is currently trading at 12.7 times earnings and offers a 4.3% yield. AirAsia X is trading at about 17 times earnings and does not pay a dividend.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn’t own shares in any companies mentioned.