HAVING pursued its AirAsia Super App ambition at the peak of the COVID-19 pandemic when its entire budget carrier fleet was grounded – prior to gradual resumption of its flight operations with the re-opening of international borders since April – Capital A Bhd is now eyeing a slice of the pie in the so-called lucrative umrah (mini haj) market.
The IKHLAS platform, which aims to transform the umrah experience through digitalisation, was initially rolled out on June 30 in partnership with licensed umrah operators Ikhlas Com Travel and Umrah Sdn Bhd to provide global Muslim communities with unparalleled access to faith-based practices.
But the million dollar question is how will the group’s Muslim-friendly line of business contribute towards resuscitating its current bleeding financials, after having widened its net loss to RM1.835 bil during 1H FY2022 ended June 30, 2022 (1H FY2021: RM1.35 bil) amid surging operating expenses stemming from the jump in fuel costs (by 68% in 2Q FY2022), staff costs and maintenance expenses.
Nevertheless, Capital A’s cumulative revenue more than doubled to RM2.28 bil during its 1H FY2022 (1H FY2021: RM710.05 mil) on the back of the resumption of domestic and international travels.
Amid optimism that the recovery in air travel will further accelerate from 2H 2022, Kenanga Research is wary that the clock is ticking on a more viable and holistic regularisation plan to lift Capital A out of its Practice Note 17 (PN17) status.
“We widen our FY2220F loss by 36% to RM2.1 bil and reduce our FY2023F net profit by 44% as we tone down our passenger growth assumptions,” projected analyst Raymond Choo Ping Khoon, who reiterated a “market perform” stance on Capital A in its latest results review. “We lower our target price by 8% to 60 sen (from 65 sen).
“While we reduce the valuation of its airline operations (to reflect our earnings downgrade and the recent multiple de-rating of airlines globally), we for the first time put a value to its digital assets,” he added.
At the close of Friday’s (Sept 2) trading, Capital A was up 2 sen or 3.3% to 62 sen with 3.44 mil shares traded, thus valuing the company at RM2.58 bil.
Umrah offerings
Meanwhile, the IKHLAS platform, parked under Capital A’s venture capital fund RedBeat Capital, features easy booking, booking status checking and an app that allows users to browse locations of interest and topics in destinations of their choice for the pilgrimage.
“As a business under Capital A, the parent company of AirAsia, we are leveraging the AirAsia ecosystem and network by enabling our guests to make payments and collect AirAsia points upon paying for their umrah packages,” explained IKHLAS’ CEO Ikhlas Kamarudin.
In essence, IKHLAS’ umrah packages include not only the essentials such as flights, hotels, ground transport and ziarah trips to holy sites but also a number of additional benefits and perks.
These include a medical card, mobile card, insurance coverage and AirAsia points that can be used to redeem other products and services throughout the AirAsia ecosystem, including future umrah packages with IKHLAS.
More recently, IKHLAS is targetting more than 1,000 pilgrims to join its umrah packages through AirAsia X’s direct flights to Jeddah beginning Nov 16.
The company is introducing three packages – Umrah Lite, Umrah Jejak Rasul and Umrah Hawa – with prices starting as low as RM5,990 for departures from November 2022 until February 2023 via the Malaysian Association of Tour and Travel Agents (MATTA) Fair.
“Since our umrah offerings were launched in June, we have seen a high demand, especially from younger groups to experience performing the umrah for packages that cater to their needs,” observed Ikhlas.
“Pilgrims can attend our complimentary umrah courses (both online and offline) with accredited mutawwifs (knowledgeable persons responsible for guiding/taking care of pilgrims during haj) and receive digital reading materials regarding umrah and the visits to make it more accessible to them in the Holy Land.”
Apart from umrah packages, IKHLAS is also offering Muslim-friendly travel packages with direct AirAsia flights to popular destinations like Seoul, Busan and Perth.
There are also ground package to Maldives, Langkawi, Pulau Mabul and Kota Kinabalu-Kundasang starting from RM359. – Sept 4, 2022
