This reports of Du Pont Analysis of AirAsia includes industry comparison, major challenge faced by AirAsia and how the company overcome the challenges.

1. FINANCIAL MANAGEMENT
DuPont Analysis
ATEERA BT AHMAD DAHALAN KBB16011
NUR HAZLINA BT ABDULLAH KBA14032
PREPARED FOR : DR SENTHIL KUMAR

2. COMPANY BACKGROUND
AIRASIA
 Founded in 1993
 Tony Fernandes – Co – founder and CEO of AirAsia Group
 Aireen Omar - CEO
 Main hub – KLIA2
 Affiliates airlines include Thai AirAsia, Indonesia AirAsia,
Philippines AirAsia, AirAsia India, AirAsia X
 Revenue increases RM 5.01 billion in 2016
 Net income increases RM 1.574 billion in 2016

3. FINANCIAL SITUATION
 Transform time to time
 High value of transaction in and out
 Financial analysis – analyze stability, solvency, liquidity and
profitability of Air Asia business
 2014- incident crash of airplane QZ8501 in Indonesia
 How hard AirAsia work in order to restore trust from victim’s
fasmily and public
 After this tragedy, AirAsia faced an impact to investment and
market sales

4. FINANCIAL STATEMENT
Financial
Statement
Data (RM
MILLION)
2015 2014 2013 2012 2011
Sales 6,298 5,416 5,112 4,946 4,495
EBIT 2037 826 863 1029 1163
Interest
Expense (Non-
Operating)
159 150 97 98 99
Tax Expense -222 -173 1 60 326
Net Income
(Income for
Primary EPS)
541 83 362 790 555
Assets 21,316 20,664 17,856 15,729 13,906
Equity 4,451 4,555 5,001 4,860 4,036

5. DuPont Analysis – 5 step
Year /
Particulars 2015 2014 2013 2012 2011
Pre-Interest
Pre-tax Margin
(%)
32 15 17 21 26
Asset Turnover 0.30 0.26 0.29 0.31 0.32
Interest Burden
(%) 93 83 89 91 92
Tax Efficiency
(%)
112 126 99 93 69
Equity Multiplier
4.79 4.54 3.57 3.24 3.46
Return on
Equity (%) 12.15 1.82 7.24 16.26 13.75

6. 0
20
40
60
80
100
120
140
2011 2012 2013 2014 2015
DuPont Analysis
Pre-Interest Pre-tax Mrgin Asset Turnover Interest Burden Tax Efficiency Equity Multiplier Return On Equity

7. INDUSTRY COMPARISON
 Advent of airplane has drastically changed
 Competition is high among airline company- AirAsia best low cost airline
 Important financial metrics for analyzing firms in the airline industry examine short-
term liquidity, profitability and long-term solvency
 Analysts utilize the quick ratio to measure an airline’s short-term liquidity and cash
flow. Indicator for the overall financial strength or weakness of a company
 ROA - measure an airline company’s profitability. For airline industry, even a
relatively low ROA value represents substantial absolute profits.
 Total debt-to-capitalization ratio useful in evaluating companies that able to
withstand extended economic or market downturns and resulting periods of
revenue losses or diminished profit margins. In industry, prefer to see ratios that
are lower than one, as they are indicative of an overall lower level of financial risk
for the company

8. MAJOR CHALLENGE
 The crash of airplane QZ8501 into the Java Sea
 Plane had legal issue with Indonesia authorities – AirAsia did
not have approval to operate flight
 Terrible implication for AirAsia
 Passengers seem to doubt on AirAsia – ability to keep their
safety first
 Make into list for World’s Most Dangerous Airline
 AirAsia stock drops most since 2011

9. HOW DID AIRASIA OVERCOME
CHALLENGE
 Executive responsibility by Tony Fernandes
 Tony Fernandes won praise and support for his crisis
management and proactive communication
 AirAsia Team handling the crisis well with a good preparation,
leadership, communication
 Action via social media – Twitter, Instagram, AirAsia website
 AirAsia take every incentives to save cost and offer much
lower and competitive prices