040 AIRASIA X GROUP AIRASIA XBERHAD NETWORKvia Malaysia (asat31March 2017) • MACAU • MALDIVES • SRI LANKA • INDIA • BANGLADESH • MYANMAR • LAOS • CHINA • HONG KONG • TAIWAN • VIETNAM • CAMBODIA • PHILIPPINES • BRUNEI • THAILAND • SINGAPORE • INDONESIA • MALAYSIA AIRASIA ROUTES • INDONESIA • THAILAND UNITEDSTATES OFAMERICA • • IRAN • SAUDI ARABIA • INDIA • NEPAL • CHINA • SOUTH KOREA • TAIWAN • JAPAN • NEW ZEALAND • AUSTRALIA • MALAYSIA AIRASIA XROUTES SOUTH KOREA JAPAN

CHINA

IRAN NEPAL UNITED STATES BANGLADESH OF AMERICA HONG KONG SAUDI ARABIA MYANMAR TAIWAN

LAOS MACAU

THAILAND INDIA VIETNAM CAMBODIA PHILIPPINES

SRI LANKA BRUNEI MALAYSIA

MALDIVES SINGAPORE

INDONESIA

AUSTRALIA

NEW ZEALAND

AIRASIA ROUTES AIRASIA X ROUTES

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Except for Macquarie Bank Limited (Australian Credit Licence (ACL) 237502) ABN 46 008 583 542 (MBL), any Macquarie entity referred to on this page is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Cth). That entity’s obligations do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of that entity, unless noted otherwise. Before making a decision about whether to acquire a credit or lending product, a person should obtain and review the terms and conditions relating to that product and also seek independent financial, legal and taxation advice. ANNUAL REPORT 2016 Corporate Structure

AIRASIA X BERHAD

THAI AIRASIA X PT. INDONESIA CO., LTD AIRASIA EXTRA 49% 49%

AAX CAPITAL AAX CAPITAL II AAX MAURITIUS LIMITED LIMITED ONE LIMITED 100% 100% 100%

AAX LEASING I FLY X AIRASIA X LIMITED LIMITED SERVICES PTY LTD 100% 100% 100% 043 044 as 20March2017 Organisation Structure AIRASIA XBERHAD AIRASIA XBERHAD Charter and Charter and Group CEO DATUK KAMARUDINMERANUN Operations CEO BENYAMIN ISMAIL Corporate Corporate Finance, Finance, Leasing Flight Flight Group Safety Senior Director, Senior Director, CEO’s Office Engineering QA, Safety Revenue Route Route Corporate Quality Corporate Quality Assurance Legal Internal Audit Internal Audit Management Security & Risk & Risk Operations Ground Ground People Operations Financial Financial Officer Chief Chief Line Line Commercial Operations In-flight In-flight Regulatory & Regulatory & Relations Network Investor Investor (MIA 8008) Ching KoonKah@ChinKon Kah (MAICSA 7002687) Jasmindar KaurA/PSarban Singh COMPANY SECRETARIES Benyamin BinIsmail Dato’ FamLeeEe Datuk KamarudinBinMeranun Tan SriRafidahAziz SAFETY REVIEWBOARD Varun Bhatia Benyamin BinIsmail Datuk KamarudinBinMeranun SCHEME COMMITTEE EMPLOYEES’ SHAREOPTION Dato’ FamLeeEe Dato’ YusliBinMohamedYusoff Tan SriRafidahAziz REMUNERATION COMMITTEE NOMINATION AND Lim KianOnn Tan SriAsmatBinKamaludin Dato’ YusliBinMohamedYusoff AUDIT COMMITTEE Corporate Information DIRECTORSBOARD OF a :+60378872318 :+60374914318 Fax Tel Selangor DarulEhsan 47301 PetalingJaya Jalan PJU1/39,DataranPrima Menara PrimaTowerB B-13-15, Level13 (Company No.734161-K) AirAsia XBerhad REGISTERED OFFICE :+60321731288 :+60321731188 Fax Tel Wilayah Persekutuan P.O. Box10192,50706KualaLumpur Jalan Rakyat,KualaLumpurSentral Level 10,1Sentral Chartered Accountants PricewaterhouseCoopers (AF1146) AUDITORS Non-Executive Director Non-Independent (also knownasDato’Fam) DATO’ FAMLEEEE Non-Executive Director Non-Independent (also knownasTanSriDr.TonyFernandes) FRANCIS FERNANDES TAN SRIDR.ANTHONY and GroupChiefExecutiveOfficer Non-Independent ExecutiveDirector (also knownasDatukKamarudinMeranun) MERANUN DATUK KAMARUDINBIN Non-Executive Chairman Senior Independent (also knownasTanSriRafidah) TAN SRIRAFIDAHAZIZ Website : :+603 86607722 www.airasiax.com :+60386604600 Email : Fax aax_shareholder@airasia.com Tel Selangor DarulEhsan 64000 KLIA Lumpur (KLIA2) Lapangan TerbangAntarabangsaKuala Jalan Pekeliling5 RedQ HEAD OFFICE SHARE REGISTRAR Independent Non-ExecutiveDirector (also knownasDato’Yusli) YUSOFF DATO’ YUSLIBINMOHAMED Independent Non-ExecutiveDirector (also knownasTanSriAsmat) KAMALUDIN TAN SRIASMATBIN Non-Executive Director Non-Independent (also knownasMr.Lim) LIM KIANONN tc oe :5238 :AAX Stock Code :10July2013 Stock Name Listing Date Berhad Main MarketofBursaMalaysiaSecurities STOCK EXCHANGELISTING :+60364190823 :+603 64190822 Fax Tel Malaysia 50480 KualaLumpur No. 1JalanKiara,Mont’ 13-1 Menara1MK,Kompleks1Mont’Kiara Foong &Partners SOLICITOR :+60378418008 :+60378418000 Fax Tel Selangor DarulEhsan 47301 PetalingJaya Jalan PJU1A/46 Pusat DaganganDana1 Level 6,SymphonyHouse Symphony ShareRegistrarsSdnBhd ANNUAL REPORT 2016

045 046 AIRASIA XBERHAD BOARD OF From lefttoright: • TanSriDr. Tony Fernandes•Dato’Yusli BinMohamedYusoff• LimKianOnn•TanSriAsmat BinKamaludin • Dato’FamLee Ee•DatukKamarudin BinMeranun•TanSriRafidah Aziz ANNUAL REPORT 2016

047 048 Our BoardataGlance AIRASIA XBERHAD Non-Executive Chairman Senior Independent 50-59 70-79 60-69 1 14% – COMMITTEE MEMBERSHIP BOARD OFDIRECTORS GENDER AGE GROUP BOARD COMPOSITION Independent Non-Executive Director DATO’ YUSLI MOHAMEDYUSOFF Independent Non-ExecutiveDirector TAN SRIASMATKAMALUDIN Non-Independent Non-Executive Director LIM KIANONN Non-Independent Non-ExecutiveDirector DATO’ FAMLEEEE Non-Independent Non-ExecutiveDirector TAN SRIDR.TONYFERNANDES Non-Independent ExecutiveDirectorandGCEO DATUK KAMARUDINMERANUN Senior IndependentNon-ExecutiveChairman TAN SRIRAFIDAHAZIZ 14% 1 29% Executive Director Non-Independent 1 2 14% 57% 4 6 Non-Executive Directors Non-Independent 3 AEFEMALE MALE 43% ETHNICITY Malay Employees’ ShareOptionSchemeCommittee Nomination andRemunerationCommittee Safety ReviewBoardoftheCompany Audit Committee 57% NATIONALITY :100% 4 Non-Executive Directors Independent hns Indian Chinese 29% 2 29% 2 Malaysian 14% 1 1 T Malaysia Studioandthepatron ofseveralNGOs. Supermax CorporationBerhad andPinewoodIskandar She alsoservesasChairman ofMegasteelSdnBhd, University ofCalifornia,UnitedStatesAmerica. Malaysia, UniversityMalayaandtheDominican Utara Malaysia,UniversityTunRazak University PutraMalaysia, Honorary Doctoratesfromthe She hasalsobeenconferred from ArgentinaandChile. and Terengganuaswell Selangor, Perak,Melaka awards fromthestatesof She hasreceivedvarious Malaysia. Business, UniversityUtara Professor attheCollegeof now servesasanAdjunct between 1966and1976.She at theUniversityofMalaya of EconomicsandAdministration experience lecturingattheFaculty to 1980.TanSriRafidahalsohas Deputy MinisterofFinancefrom1977 Enterprises from1980to1987and portfolio ofMinisterPublic Prior tothis,shehasalsoheldthe of internationalexperience. 1987 to2008,andcontributesawealth having servedinthatcapacityfrom of InternationalTradeandIndustry, She isMalaysia’slongest-servingMinister between 1966and1976. Faculty ofEconomics,UniversityMalaya She workedasTutorandLecturerinthe Malaya. Master’s degreeinEconomicsfromtheUniversityof She holdsaBachelorofArtsdegreeinEconomicsand Company. Committee oftheBoardandSafetyReview is alsoChairmanoftheNominationandRemuneration Chairman uponlistingoftheCompanyon10July2013.She re-designated asaSeniorIndependentNon-Executive Senior IndependentNon-ExecutiveChairman TAN SRIRAFIDAHAZIZ Board ofDirectors’Profile and Chairman of the Board on 3 March 2011 and and ChairmanoftheBoardon3March2011 appointed asanIndependentNon-ExecutiveDirector an SriRafidah(Female),Malaysian,aged73,was ANNUAL REPORT 2016

049 050 D Titiwangsa. He isalsoaDirectorofYayasan Pendidikan Executive DirectorofTune ProtectGroupBerhad. AirAsia BerhadandaNon-Independent Non- He isaNon-IndependentExecutive Chairmanof Yang di-PertuanAgongon21November2013. (PJN), whichcarriesthetitleDatuk,from He receivedtheDarjahPanglimaJasaNegara Michigan University. Finance in1986andanMBA1987fromCentral Distinction (MagnaCumLaude)majoringin Malaysia in1983.HereceivedaBScwith Student” bytheLifeInsuranceInstituteof (UiTM) andwasnamedthe“BestActuarial Science fromUniversityTechnologyMARA received aDiplomainActuarial Datuk KamarudinMeranun Bhd. Capital ManagementSdn was laterrenamedIntrinsic Management SdnBhd,which partner ofInnosabahCapital shares ofthejointventure subsequently acquiredthe Securities SdnBhd.He subsidiary ofInnosabah Management SdnBhd,a Innosabah Capital Executive Directorof 1994, hewasappointed clients’ investmentfunds.In high net-worthindividual managing bothinstitutionaland 1993 asaPortfolioManager, worked atArab-MalaysianMerchantBankfrom1988to Prior tojoiningtheCompany,DatukKamarudinMeranun member oftheSafetyReviewBoardCompany. Employees’ ShareOptionSchemeCommittee,andisa Company’s co-founders,servesasChairmanofthe Officer (GCEO)on30January2015.Heisoneofthe Independent ExecutiveDirectorandGroupChief 3 March2011.DatukKamarudinwasre-designatedasNon- appointed asChairmanoftheBoardon3February2010till Group ChiefExecutiveOfficer Non-Independent ExecutiveDirectorand DATUK KAMARUDINBINMERANUN Board ofDirectors’Profile AIRASIA XBERHAD Director of the Company on 6 June 2006. He was Director oftheCompanyon6June2006.Hewas was appointedasNon-IndependentNon-Executive atuk KamarudinMeranun(Male),Malaysian,aged55, T of TuneProtect GroupBerhad. Officer ofAirAsia BerhadandaNon-Independent Non-Executive Director He isaNon-IndependentExecutive DirectorandGroupChiefExecutive and personalintegrityorinfluence. performance, strategicdirection, globalorcommunityimpact,innovation entrepreneurs whohavedemonstrated entrepreneurialspirit,financial Entrepreneurial Excellence Award.TheaccoladeisawardedtoAsean profitability. TanSriDr.TonyFernandesalsowonthe 2016EYAsean CAPA CentreforAviationsuccessfullysteeringAirAsia toincreased Chief ExecutiveOfficeroftheYearbyinfluential aviationconsultancy Obama. InOctober2016,TanSriDr.TonyFernandes wasnamedAirline recipient oftheawardafterAdministrationUS PresidentBarack extraordinary contributiontowardsthegrowthofAsean, thesecond the US-AseanBusinessCouncilwithFourthPillar Awardforhis West. InFebruary2016,TanSriDr.TonyFernandes was recognisedby Nadella, NobelPrizelaureateMalalaYousafzaiandhip-hop artistKanye world whichincludedChinesePresidentXiJinping,Microsoft CEOSatya list, themagazine’sannuallistof100mostinfluential peopleinthe TIME MagazineincludedTanSriDr.TonyFernandes inthe2015TIME100 and BrandBuilderoftheYearat2014WorldBrandingAwards. named AirlineIndustryLeaderoftheYearat4thAviation100Award, win CorporateGovernanceAsia’sBestCEOforMalaysiaAward.Hewas Economic ForuminDavos,Switzerland2013.In2013,hewentonto Prime MinisterDato’SriMohdNajibTunHajiAbdulRazakattheWorld Tan SriDr.TonyFernandeswasnamedaMalaysiaBrandAmbassadorby India’s InternationalBusinessmanoftheYear2012. CEOs bytheEdgeBillionRinggitClub(BRC);andannouncedasGQ Association Berhad(MIRA),namedasoneofMalaysia’sOutstanding CEO forIR–MidCapawardbytheMalaysiaInvestorRelations Singapore in2011.Inthefollowingyear,hewashonouredwithBest Award heldinLondonandCNBCTravelBusinessLeader, named CEOoftheYearatAnnualBudgiesWorldLowCostAirline Business LeadershipAward(MBLA).TanSriDr.TonyFernandeswas in TokyoandtheMasterclassGlobalCEOofYearat2ndMalaysia successful globalbrand,asidefrombeingawardedtheNikkeiAsiaPrize honour –fordemocratisingairtravelandtransformingAirAsiaintoa by ForbesAsia–thefirstpersonfromMalaysiaandAseantoreceive In 2010,TanSriDr.TonyFernandeswasnamedBusinessmanoftheYear a formerYangdi-PertuanAgong. Sembilan andPahang,Dato’SeribytheSultanofPerakTanSrifrom industry. HewasthenawardedthetitleDato’bySultanofNegeri by theSultanofSelangorforhiscontributionstoMalaysianmusic Tan SriDr.TonyFernandesreceivedthetitleofSetiaMahkotaSelangor towards theeconomyofFrancethroughaviationindustry.In1999, awarded bytheFrenchGovernmentforhisoutstandingcontributions Elizabeth IIin2011,andtheCommanderofLegiond’Honneur, of theOrderBritishEmpire,conferredbyHerMajestyQueen over thecourseofhiscareer.TheseincludeHonorCommander Tan SriDr.TonyFernandeshasreceivednumerousawardsandaccolades AirAsia in2001. Southeast Asiain1999andenteringtheairlinebusinessasCEOof Malaysia andbecomingWarnerMusicGroup’sVicePresidentfor began hiscareerinRichardBranson’sVirginGroupbeforereturningto Member in1996.Anaccountantbytraining,TanSriDr.TonyFernandes the AssociationofCharteredCertifiedAccountantsin1991andFellow School ofEconomicsinBritain,andqualifiedasanAssociateMember Tan SriDr.TonyFernandesstudiedatEpsomCollegeandtheLondon founders. Non-Independent Non-ExecutiveDirector TAN SRIDR.TONYFERNANDES Company on18July2006andisoneoftheCompany’sco- appointed asNon-IndependentNon-ExecutiveDirectorofthe an SriDr.TonyFernandesCBE(Male),Malaysian,aged53,was ANNUAL REPORT 2016

051 052 Board ofDirectors’Profile AIRASIA XBERHAD D Executive DirectorofAirAsiaBerhad. He alsoservesasaSeniorIndependentNon- Heamodialysis CentreinPJ. charitable organisationssuchasYayasanSSL the ChineseGuildsandAssociation 2001, hehasalsoservedasalegaladvisorto of YayasanPEJATIfrom1996to2007.Since Dato’ FamusedtositontheBoardofTrustees managing partneratMessrsLeFam&Co. practising lawsince1991andiscurrentlya of LegalPracticein1990,hehasbeen England in1989.UponobtainingaCertificate (Hons) fromtheUniversityofLiverpool, University ofMalayain1986andanLLB He receivedhisBA(Hons)inLawfromthe February 2016. member oftheSafetyReviewBoardon26 the Board.Dato’Famwasappointedasa Nomination andRemunerationCommitteeof 24 March2008.Heisalsoamemberofthe Non-Independent Non-Executive Director Non-Independent Non-ExecutiveDirector DATO’ FAMLEEEE Executive Director of the Company on Executive DirectoroftheCompanyon appointed Non-IndependentNon- ato’ Fam,Malaysian(Male),aged56,was M Non-Independent Non-ExecutiveDirector LIM KIANONN Singapore andatrusteeofECMLibraFoundation. Plato CapitalLimited,acompanylistedontheStock Exchangeof He alsoservesastheNon-ExecutiveNon-Independent Chairmanof ECMLFG witheffectfrom16July2015. He wassubsequentlyre-designatedasManagingDirectorof as Non-IndependentNon-ExecutiveDirectorofECMLFG. August 2010.On62010,hewasre-designated effect from1May2007,apositionheheldtill5 2006 andre-designatedasManagingDirectorwith Financial GroupBerhad(“ECMLFG”)on16June He wasappointedtotheBoardofECMLibra and co-foundedtheECMLibraGroupin2002. Mr. LimfoundedtheLibraCapitalGroupin1994 corporate finance,researchandinstitutionalsales. in thestockbrokingarmresponsiblefor Leong Group,MalaysiaasanExecutiveDirector Between 1984and1993,hewaswithHong Andersen Consultingfrom1981to1984. in Londonandwasaconsultantwith his articleshipwithKMGThomsonMcLintock Malaysian InstituteofAccountants.Heserved Accountants inEngland&Walesandthe He isamemberoftheInstituteChartered also amemberoftheAuditCommitteeBoard. as Non-IndependentNon-ExecutiveDirector.Mr.Limis on 26February2016.On24May2016,hewasre-designated was re-designatedasIndependentNon-ExecutiveDirector Non-Executive DirectoroftheCompanyon10July2012.Mr.Lim to Dato’SeriKalimullahandwasappointedasaNon-Independent Hassan on 11 June 2007. He ceased as an Alternate Director Hassan on11June2007.HeceasedasanAlternateDirector Alternate DirectortoDato’SeriKalimullahBinMasheerul r. Lim,Malaysian(Male),aged60,wasappointedasan ANNUAL REPORT 2016

053 054 T Economic ResearchInstituteforAseanandEastAsia. years asGovernorontheGoverningBoardofThe JACTIM. HehasalsorepresentedMalaysiaforseveral all publiccompanies.TanSriAsmatisaGovernorof Royal BankofScotlandBerhadandJACTIMFoundation, Chairman ofYTLCementBerhadandaDirectorThe Malaysia SecuritiesBerhad.HeisalsoNon-ExecutiveVice Berhad, companieslistedontheMainMarketofBursa Manufacturing MalaysiaBerhadandCompugatesHoldings UMW OilandGasCorporationBerhad,Panasonic Tan SriAsmatservesastheNon-ExecutiveChairmanof Development CorporationandPerbadananJohor. Nasional Berhad,SmallandMediumIndustries Malaysian TradeDevelopmentCorporation,Permodalan Corporation, MultimediaDevelopment Board memberofMalaysiaTechnologyDevelopment prior tohisretirementin2001,TanSriAsmatservedasa position heheldsinceMay1992.Inthelastfiveyears Ministry ofInternationalTrade&IndustryMalaysia,a public servicewasastheSecretaryGeneralof capacities inthepublicserviceandhislastpost Tan SriAsmathasvastexperienceof35yearsinvarious Integration fromtheUniversityofAmsterdam. He alsoholdsaDiplomainEuropeanEconomic with aBachelorofArts(Honours)degreeinEconomics. Tan SriAsmatgraduatedfromtheUniversityofMalaya member oftheAuditCommittee. Independent Non-Executive Director Independent Non-ExecutiveDirector TAN SRIASMATBINKAMALUDIN Board ofDirectors’Profile AIRASIA XBERHAD Director of the Company on 13 May 2013. He is a Director oftheCompanyon13May2013.Heisa appointed asanIndependentNon-Executive an SriAsmat(Male),Malaysian,aged73,was D X Berhad. and/or majorshareholderofAirAsia relationship withanyotherDirector None oftheDirectorshasanyfamily Family Relationship NOTES: Independent Non-ExecutiveDirector DATO’ YUSLIBINMOHAMEDYUSOFF Malaysian InstituteofCorporateGovernance. Patron oftheVictoriaInstitutionOldBoysAssociation. Currently,Dato’YusliisthePresidentof Governance andInfinityTrusteeBerhad.Outsidehis professionalengagements,healsoservesasthe Shah Foundation,AustralaysiaResources&Minerals Berhad,MalaysianInstituteofCorporate Mudajaya GroupBerhadandWestportsHoldings Berhad.HealsositsontheBoardsofDato’HM listed companiesinMalaysianamelyYTLPowerInternational Berhad,MulphaInternational He alsoservesasanIndependentNon-ExecutiveDirector ontheBoardofDirectorsafewpublic Foundation ofMalaysia. Committee memberoftheFinancialReporting Market DevelopmentFundandwasanExecutive period, healsosatontheBoardofCapital Lumpur StockExchange.Duringthesame Malaysia Berhad,previouslyknownastheKuala Director/Chief ExecutiveOfficerofBursa From 2004to2011,hewastheExecutive Companies Malaysiafrom2003to2004. of theAssociationStockbroking 2000 to2004.HealsoservedasChairman Director ofCIMBSecuritiesSdnBhdfrom when hewasappointedasChiefExecutive He enteredthestockbrokingindustry merchant banking. telecommunications, engineeringand and infrastructuredevelopment, different industriesincludingproperty him withexperienceinanumberof groups inthecountry’scapital,providing key positionsatindustrialandfinancial He returnedtoMalaysiaandheldvarious London, UnitedKingdom. Accountant withPeatMarwickMitchell&Coin He commencedhisprofessionalcareerin1981asan Certified PublicAccountants. Malaysian Instituteof Internal AuditorsMalaysia.Dato’YusliisalsoamemberofThe of AccountantsaswellanHonoraryMembertheInstitute Chartered AccountantsEnglandandWales,theMalaysianInstitute a BachelorofEconomicsin1981.HeisMembertheInstitute He graduatedfromtheUniversityofEssex,UnitedKingdomwith the Board. a memberoftheNominationandRemunerationCommittee 13 May 2013. He is Chairman of the Audit Committee and 13 May2013.HeisChairmanoftheAuditCommitteeand Independent Non-ExecutiveDirectoroftheCompanyon ato’ Yusli,Malaysian(Male),aged58,wasappointedasan Group. of interestwithAirAsiaXBerhad None oftheDirectorshasanyconflict Conflict ofInterest offences, ifany. the past5years other thantraffic regulatory bodiesandoffenceswithin penalty imposedbytherelevant convicted foranypublicsanction or None oftheDirectorshasbeen Conviction forOffences Corporate Governance. disclosed intheStatementon Board ofDirectors’meetingsis The attendanceoftheDirectorsat Attendance ofBoardMeetings ANNUAL REPORT 2016

055 AIRASIA X BERHAD

THE CHIEF EXEC MALAYSIA • THAILAND • INDONESIA

NADDA BURANASIRI BENYAMIN BIN ISMAIL Chief Executive Officer, Chief Executive Officer, AirAsia X Thailand AirAsia X Berhad 6 5 0 ANNUAL REPORT 2016

UTIVE OFFICERS

DATUK KAMARUDIN BIN MERANUN CAPTAIN SULISTYO NUGROHO HANUNG Non-Independent Executive Director Acting Chief Executive Officer/Director of Flight Operations and Group Chief Executive Officer AirAsia X Indonesia AirAsia X Berhad 057 AIRASIA X BERHAD

LEADERSHIP TEAM

From left to right:

8 • Raymond Cheong • Hanif Idrose Mohamed • Yogesh Upadhyay • Sharmizan Abdul Ghani • Amos Aw Shing Chien • Jurvena Lee Nian-Cheh • Moses Devanayagam • Captain Leslie Wu • Benyamin Ismail • Cheok Huei Shian 5 • Jaisharan Kaur Gill • Azahar Othman 0 ANNUAL REPORT 2016

TEAM

From left to right: • Eddie Tan Kim Hong • Fairuz Majid • Venggatarao Niadu • Datuk Kamarudin Meranun • Captain Suresh Bangah • Arik De • Muhammad Alif Soon • Yeoh Sai Yew • Abdullah Bin Hashim

• Pavenraj Singh • Aspa Linda Ahmad • Wong Ooi Ling • Daphne Tan 059 AIRASIA X BERHAD Profiles of the Leadership Team

DATUK KAMARUDIN MERANUN BENYAMIN ISMAIL Non-Independent Executive Director and Group Chief Executive Officer Chief Executive Officer

Age: 55 Age: 40 Gender: Male Gender: Male Nationality: Malaysian Nationality: Malaysian

Responsibilities: Qualifications and Professional Responsibilities: Qualifications and Professional Membership: Membership: • Spearheads AirAsia X Group’s • Provides leadership and vision overall business growth and • Diploma in Actuarial Science, towards increasing shareholder • Bachelor of Commerce (Banking strategies in line with the vision University Technology MARA (UiTM) value and growth of AirAsia X & Finance), Curtin University of and mission of AirAsia X as • BSc with Distinction (Magna Cum approved by the Board of Laude) majoring in Finance, Central while delivering our Corporate Technology, Australia Directors Michigan University, US, 1986 Responsibility commitment • Master of Electric Commerce, • Drives operational excellence and • MBA, Central Michigan University, • Manages the Group’s business Edith Cowan University, Australia strong governance to deliver US, 1987 and affairs, ensuring operational long-term value for shareholders, excellence and strong governance Membership of Board Committees customers, employees and all Directorship of Public Listed • Executes the turnaround plan of in AirAsia X: other stakeholders Companies: AirAsia X • Entrusted to execute AirAsia X’s • Employees’ Share Option Scheme • AirAsia Berhad • Develops and spearheads turnaround plan • Tune Protect Group Berhad Committee (Member) high-level business and growth • Safety Review Board (Member) Experience: Membership of Board Committees strategies in line with AirAsia X’s • Portfolio Manager in Arab- in AirAsia X: vision and mission, as approved by Awards/Recognition: Malaysian Merchant Bank, the Board • Employees’ Share Option Scheme • Four-time winner of Best Investor 1988-1993 Committee (Chairman) • Executive Director of Innosabah • Safety Review Board (Member) Experience: Relations Officer by Corporate Capital Management Sdn Bhd, a Governance Asia (2011-2014) • Handled Debt Capital Markets subsidiary of Innosabah Securities Awards/Recognition: • Two-time winner of Best IR Sdn Bhd, 1994 portfolio at Affin Investment Professional award by Bursa • Acquired the shares of the joint • Best Actuarial Student by the Life Bank, 2003 Insurance Institute of Malaysia, 1983 Malaysia’s Malaysian Investor venture partner of Innosabah • Joined Maybank Investment Bank Capital Management Sdn Bhd, Relations Association (MIRA) (2011 Declaration: to manage Debt Capital Markets, & 2012) which was later renamed Intrinsic 2004 Capital Management Sdn Bhd • He is a substantial shareholder of • Joined CIMB Investment Bank • Co-founded AirAsia X and AirAsia X Berhad Declaration: appointed Non-Independent • He is the Executive Chairman of focusing on Debt Capital Markets, Non-Executive Director of the AirAsia Berhad and founder of 2007 • No family relationship with any Company on 6 June 2006 Tune Group Sdn Bhd, which are • Joined AirAsia as Head of other Director and/or major • Chairman of the Board, 3 substantial shareholders of Investor Relations, March 2010 shareholder of AirAsia X February 2010 till 3 March 2011 AirAsia X Berhad • Promoted to Group Head of • No conflict of interest with • Re-designated as Non- • No family relationship with any Investor Relations, Corporate AirAsia X Independent Executive Director other Director and/or major Development and Implementation, • No conviction for any public and Group Chief Executive Officer shareholder of AirAsia X sanction during the financial year on 30 January 2015 • No conflict of interest with 2014 AirAsia X • Appointed AirAsia X Chief ended 31 December, 2016 or • No conviction for any public Executive Officer (CEO) effective penalty imposed by the relevant sanction during the financial year 1 September 2015 after assuming regulatory bodies and offences ended 31 December, 2016 or the role of Acting CEO on within the past 5 years other than penalty imposed by the relevant 30 January 2015 traffic offences, if any regulatory bodies and offences • He/She has no directorship in within the past 5 years other than public companies

060 traffic offences, if any ANNUAL REPORT 2016

LEADERSHIP TEAM

CHEOK HUEI SHIAN MOSES DEVANAYAGAM Chief Financial Officer Senior Director

Age: 40 Age: 66 Gender: Female Gender: Male Nationality: Malaysian Nationality: Malaysian

Responsibilities: Responsibilities: • Manages our financial, business risk and assurance, capital funding and • Leads the coordination of operational functions with AirAsia Group, treasury functions airport authorities and government agencies including the Malaysian • Develops and implements initiatives and strategies to improve the Aviation Commission company’s financial performance • Advises and mentors the Operations team • Instrumental in setting up the Operations function, which includes Flight Experience: Operations, Engineering, Group Operations, In-Flight Operations, Safety and Security • Joined Ernst & Young as an auditor, 2000 • Joined AirAsia as a financial analyst, 2004 Experience: • Promoted to Management Reporting Manager, 2004 • Served Malaysia-Singapore Airlines, from 1971-1972 • Promoted to Financial Controller of AirAsia, 2008 • Served Malaysia Airline System Berhad, holding various key positions • Chief Financial Officer (CFO) of PT Indonesia AirAsia, 2011-2014 including General Manager-Operations, Head of Contracts Management • CFO of Philippines AirAsia, 2014-2015 and Warranty and Contracts Manager, from 1972-2007 • CFO of AirAsia X, as of 26 February 2015 • Joined AirAsia X as Director of Operations, July 2007 • Appointed as Senior Director, 2013 Qualifications and Professional Membership: • Fellow member of the Association of Chartered Certified Accountants Qualifications and Professional Membership: (ACCA) • Associate Member of the Royal Aeronautical Institute United Kingdom • Member of the Malaysian Institute of Accountants (MIA) (by award) since 1975 • Cadet/apprentice technical services in-house training with Malaysia- Awards/Recognition: Singapore Airlines, 1972 • Type-rating licenses from Qantas and Air New Zealand, 1971 • 10 Years Long-Service Award with AirAsia Group Awards/Recognition: Declaration: • 40-years Long-Service Award from Malaysia Airlines in 2007 • No family relationship with any other Director and/or major shareholder of AirAsia X Declaration: • No conflict of interest with AirAsia X • No conviction for any public sanction during the financial year ended • No family relationship with any other Director and/or major shareholder of AirAsia X 31 December 2016 or penalty imposed by the relevant regulatory bodies • No conflict of interest with AirAsia X and offences within the past 5 years other than traffic offences, if any • No conviction for any public sanction during the financial year ended • He/She has no directorship in public companies 31 December 2016 or penalty imposed by the relevant regulatory bodies and offences within the past 5 years other than traffic offences, if any • He/She has no directorship in public companies 061 AIRASIA X BERHAD Profiles of the Leadership Team

ARIK DE CAPTAIN SURESH BANGAH FAIRUZ MAJID Chief Commercial Head Flight Operations Director Group Head of Communications

Age: 38 Age: 42 Age: 36 Gender: Male Gender: Male Gender: Male Nationality: Canadian Nationality: Malaysian Nationality: Malaysian

Responsibilities: Responsibilities: Responsibilities: • Responsible for the commercial functions of the airline • Coordinates, supervises and monitors the • Aligns messaging and coordinates which includes the Company’s Network, Revenue, communications across the Group to ensure Marketing, Branding, Ancillary and Sales & Distribution functions and performance of management personnel, pilots, cabin crew and all AirAsia X Group and AirAsia Group continue to be seen as one brand Experience: departments within Flight Operations • He has over 17 years of experience in aviation • Manages the safety and security of all flights Experience: • Liaison person with local and international • Started his career at the International Monetary Fund • He brings over a decade of experience in the (IMF) as a young economist regulators, ensuring operations are in line fields of marketing and communication • At WestJet in Canada was Manager of Network with the Air Operator Certificate • Underwent an internship under the Pemuda Planning from 2010 to 2013 where he led the network • Represents the company’s interest in national Internship Programme (PINTAR) in the Naza and fleet planning team to grow a primarily domestic and international bodies and institutions as Group of Companies, where he was airline into the largest non-US airline in the Caribbean, far as flight operations are concerned subsequently offered a permanent job, Hawaii and prime US leisure points of Las Vegas and 2005-2007 Florida. He was also instrumental in evaluating the first Experience: • Joined AirAsia Berhad in 2007 and later code share partnerships, and was part of the core team moved to AirAsia X as part of the pioneering that studied and introduced WestJet Encore, the • Started as a pilot with AirAsia, 2003 team, focused on setting up the Commercial regional arm of WestJet • Internal auditor of Flight Operations at department • Served SH&E/ICF Aviation in 2008 and InterVistas in • Became Sponsorship and Events Manager in 2013 where he was engaged in over 100 consulting AirAsia, 2005 • Cadet Pilot Coordinator managing the Cadet 2010, then Regional Marketing Manager in projects in commercial aviation including that at GOL 2012, and Head of Marketing in 2013 Brasil, LAN Chile, Turkish Airlines, Aero Mexico, Japan Pilot Training Programme, December 2009 • Promoted to Head of Marketing and Airlines, South African Airways, Virgin Atlantic, • Flight Deck Recruitment Manager responsible Communications overseeing AirAsia X’s Singapore Airlines, Jeju, SpiceJet, Air India, Gulf Air and for hiring and promoting pilots internally marketing strategies and communication, Kuwait Airways. At InterVistas, he went on to become • Joined AirAsia X as Chief Pilot, Operations, public relations, events and sponsorship Senior Vice President, and Head of the Airline Practice October 2010 activities, 2014 and was seconded to act as interim Chief Commercial • Promoted to Flight Operations Director, • Appointed as Head of Communications of Officer at TACV, the national airline of Cabo Verde October 2013 AirAsia X, 2015 • Joined AirAsia X in January 2016 as Head of • Promoted as Group Head of Communications Commercial and subsequently designated as Chief for AirAsia X Group, February 2017 Commercial Head in January 2017 Qualifications and Professional Membership: Qualifications and Professional Membership: Qualifications and Professional Membership: • Air Transport Pilot License, 1999 • A320 Type Rating License, 2007 • Bachelor of Business Administration (Hons) in • Bachelor of Arts in Economics, from Connecticut Marketing, Universiti Teknologi MARA, College • A340 Type Rating License, 2009 • A330 Type Rating License, 2011 Malaysia • Master of Finance and Public Policy, from the • Member of the Malaysia Australia Business University of Chicago Phi Beta Kappa Honors Society Council (MABC) Awards/Recognition: Awards/Recognition: • 10 Years Long-Service Award, AirAsia Group Awards/Recognition: • “40 Under 40”, Business Insider 2014; Airline Planner • Asia’s Best Marketer by CMO Asia, 2016 Award, 2013 Declaration: Declaration: Declaration: • No family relationship with any other Director • No family relationship with any other Director and/or and/or major shareholder of AirAsia X • No family relationship with any other Director major shareholder of AirAsia X • No conflict of interest with AirAsia X and/or major shareholder of AirAsia X • No conflict of interest with AirAsia X • No conflict of interest with AirAsia X • No conviction for any public sanction during • No conviction for any public sanction during • No conviction for any public sanction during the the financial year ended 31 December 2016 or financial year ended 31 December 2016 or penalty the financial year ended 31 December 2016 or imposed by the relevant regulatory bodies and penalty imposed by the relevant regulatory penalty imposed by the relevant regulatory offences within the past 5 years other than traffic bodies and offences within the past 5 years bodies and offences within the past 5 years other than traffic offences, if any other than traffic offences, if any

062 offences, if any • He/She has no directorship in public companies • He/She has no directorship in public companies • He/She has no directorship in public companies ANNUAL REPORT 2016

LEADERSHIP TEAM

SHARMIZAN ABDUL GHANI YEOH SAI YEW CAPTAIN LESLIE WU Head of Engineering Head of People Safety Director

Age: 43 Age: 42 Age: 46 Gender: Male Gender: Male Gender: Male Nationality: Malaysian Nationality: Malaysian Nationality: Malaysian

Responsibilities: Responsibilities: Responsibilities: • Oversees the Engineering Department • Provides overall leadership in ensuring • Implements and maintains our Safety including Maintenance Planning, Warranty & strategic and effective human capital Management System Reliability, Technical Services, Technical management across the Group • Manages Operational Quality Assurance Procurement, Projects, Communications and • Manages the rewards structure for the whole across AirAsia Group AirAsia Group IT for Engineering • Manages the Document Control Management System across AirAsia Group Experience: Experience: • 18 years in various disciplines in Human Experience: • Started his career with Malaysia Airlines as a Resources (HR) in diverse industries, from Trainee Aircraft Maintenance Engineer, 1995 telecommunications to IT, banking, • Started serving commercial airlines in 1992, • Became a Licensed Aircraft Engineer with a hospitality, aviation and retail becoming a commercial jet captain five years Boeing 737-400 rating in mid-1999, and later • Started his career as an HR Executive with later obtained a Boeing 777-200 rating Super Komtar, 1999 • Deputy Chief Pilot Training of AirAsia, end • Joined AirAsia as an Avionics Licensed • Worked with several companies such as DiGi, 2004 Aircraft Engineer, 2001; promoted to Shift CSA, Scope International & Genting Resorts • Flew for Qatar for several years, based in the Duty Engineer and Maintenance Operations Berhad Middle East Controller, 2003 • Joined AirAsia Group as Head of Rewards, • Joined AirAsia X as Chief Pilot Flight Safety, 2010 • Joined Jet Premier One Sdn Bhd as an mid-2009 • Appointed Head of People of AirAsia X, • Appointed as Safety Director, 2012 Avionics Duty Engineer, 2007; promoted to January 2016 Technical Services Manager, 2009 Qualifications and Professional Membership: • Joined AirAsia X as Head of Engineering, Qualifications and Professional Membership: 2015 • Commercial pilot license from the US and • Bachelor of Science from Universiti Malaysia Malaysia Sabah Qualifications and Professional Membership: • Diploma in Safety Management for Airlines, • MBA from Universiti Utara Malaysia from IATA • Aircraft Maintenance Engineer License (Civil • Diploma in Airline Quality System, from IATA Aviation Authority UK) Awards/Recognition: • Aircraft Maintenance Engineer License (Dept • Featured in various HR magazines Awards/Recognition: of Civil Aviation Malaysia) • Invited speaker at several regional HR conferences • King Scout Award, 1989 Declaration: • Judge for several HR awards programmes Declaration: • No family relationship with any other Director Declaration: and/or major shareholder of AirAsia X • No family relationship with any other Director • No conflict of interest with AirAsia X • No family relationship with any other Director and/or major shareholder of AirAsia X and/or major shareholder of AirAsia X • No conviction for any public sanction during • No conflict of interest with AirAsia X • No conflict of interest with AirAsia X the financial year ended 31 December 2016 or • No conviction for any public sanction during • No conviction for any public sanction during the financial year ended 31 December 2016 or penalty imposed by the relevant regulatory the financial year ended 31 December 2016 or bodies and offences within the past 5 years penalty imposed by the relevant regulatory penalty imposed by the relevant regulatory bodies and offences within the past 5 years other than traffic offences, if any bodies and offences within the past 5 years other than traffic offences, if any • He/She has no directorship in public companies other than traffic offences, if any

• He/She has no directorship in public companies 063 • He/She has no directorship in public companies AIRASIA X BERHAD Profiles of the Leadership Team

JURVENA LEE NIAN-CHEH RAYMOND CHEONG ABDULLAH BIN HASHIM Head of Marketing Head of Sales Head of Internal Audit and Risk Management

Age: 35 Age: 38 Age: 45 Gender: Female Gender: Male Gender: Male Nationality: Malaysian Nationality: Malaysian Nationality: Malaysian

Responsibilities: Responsibilities: Responsibilities: • Leads the sales and distribution team in growing • Oversees the management of internal control • Leads the team in stimulating travel demand revenue from various distribution channels for AirAsia X and working closely with • Plays a key role in launching new routes including and reviews its effectiveness, adequacy and partners and tourism bodies to achieve Hawaii, Mauritius, Adelaide, Chongqing, Xi’an, Busan integrity and Tehran similar goals • Set up new sales team and distribution channels in Australia, China, Taiwan, Japan, South Korea, Iran Experience: Experience: and Mauritius • Internal Audit Department, PLUS Expressways • Played an instrumental role in the distribution • Started her career as Promotions Assistant set-up and market entry campaigns of Thai AAX in Berhad, 2001-2008 with Tesco Malaysia in 2004 where she spent Japan and Korea, and Indonesia AAX in Australia • Group Internal Audit, TM Berhad, 2009-2010 • Part of the AirAsia Group Regional Sales Team • Chief Internal Auditor, Syarikat Prasarana seven years handling multiple roles including overseeing the Australia, Japan and Korea offline Advertising Executive, Local & Stores channel sales for all carriers within the AirAsia Negara Berhad, 2010-2011 • Chief Internal Auditor, Petra Energy Berhad, Marketing Executive, with her last post being Group 2011-2014 Local & Stores Manager Experience: • Joined AirAsia X as Head of Internal Audit • Joined AirAsia Berhad in 2011 as a Marketing • He brings more than 10 years of management and Risk Management, September 2014 Manager and quickly moved on to assume experience in global sales, international business the position of Regional Marketing Manager a development, regional distribution set-up and expansion and key account management in the Qualifications and Professional Membership: year later aviation, telecommunications and fast moving • Assumed current role as Head of Marketing consumer goods industries • Bachelor of Accounting (Hons), University of of AirAsia X in 2015 – Joined Yee Lee Marketing (P&G Strategic Malaya, Malaysia Distributor) as a Key Account Executive in 2004, • MBA, London South Bank University, UK responsible for formulating and executing tactical • Chartered Accountant (Malaysia) Qualifications and Professional Membership: sales strategies, customer marketing strategies, delivering in-store fundamentals and trade • Certified Internal Control Auditor by the • Bachelor of Business, Auckland University of merchandising Institute of Internal Control (IIC) Technology, New Zealand – Moved to Motorola Malaysia as Regional Channel • Associate member of the Institute of Internal Manager in 2007, responsible for channels distribution management of mobile devices in Auditors (IIA) Malaysia Declaration: the Northern & East Coast regions of Malaysia – Joined AirAsia as Sales Manager in 2010, Awards/Recognition: • No family relationship with any other Director responsible for growing corporate sales; and and/or major shareholder of AirAsia X became the Regional Sales Manager in 2011, • Invited speaker at internal audit and risk • No conflict of interest with AirAsia X administering indirect channel sales for Indochina management conferences in Malaysia and – Appointed as Head of Sales of AirAsia X in 2015 • No conviction for any public sanction during Singapore the financial year ended 31 December 2016 or Qualifications and Professional Membership: penalty imposed by the relevant regulatory • BA (Hons) in Business Administration, University of Declaration: bodies and offences within the past 5 years Hertfordshire, UK • No family relationship with any other Director other than traffic offences, if any Declaration: and/or major shareholder of AirAsia X • He/She has no directorship in public • No family relationship with any other Director and/ • No conflict of interest with AirAsia X companies or major shareholder of AirAsia X • No conviction for any public sanction during • No conflict of interest with AirAsia X the financial year ended 31 December 2016 or • No conviction for any public sanction during the financial year ended 31 December 2016 or penalty penalty imposed by the relevant regulatory imposed by the relevant regulatory bodies and bodies and offences within the past 5 years offences within the past 5 years other than traffic other than traffic offences, if any

064 offences, if any • He/She has no directorship in public companies • He/She has no directorship in public companies ANNUAL REPORT 2016

LEADERSHIP TEAM

DAPHNE TAN ZUI XIANG YOGESH UPADHYAY MUHAMMAD ALIF SOON Head of Legal Head of Corporate Finance, Charter and Leasing Head of Ground Operations

Age: 31 Age: 41 Age: 41 Gender: Female Gender: Male Gender: Male Nationality: Malaysian Nationality: Indian Nationality: Malaysian

Responsibilities: Responsibilities: Responsibilities: • Overlooks all legal matters of the airline • Maximises airline revenue by deploying • Leads our team of Guest Service Assistants in • Designated legal point of contact responsible excess fleet on wet lease operations improving our customer experience for advising the airline on legal risks exposure • Manages negotiations for all charter and wet • Ensures full compliance on all regulatory and liabilities lease contracts requirements by the department • Negotiates with banks, head lessors and • Handles litigation matters airliners on any corporate exercise and • Assists with the administration of Company aircraft related matters. Experience: Secretarial matters • Joined AirAsia in 2004 as a Guest Service Experience: Assistant Experience: • He brings 15 years of management • Moved to AirAsia X Berhad in 2010 as Duty • Started her career with Messrs Zaid Ibrahim & experience in the aviation industry, focused Executive Co, Malaysia as an associate, 2010 mainly on the charter and leasing of aircraft. • Promoted as Airport Manager in 2013 • Seconded to Messrs SokSiphana & – Head of Operations at Eurostar • Appointed as Head of Ground Operations in Associates, Cambodia as a Foreign Legal Communications Llc in Dubai, 2001-2007 April 2015 – Head of Charters and Leasing, Air Charter Counsel, 2015 International Arabia Ltd, Dubai, 2007-2014 • Appointed Head of Legal of AirAsia X, 2016 – Joined AirAsia X as Head of Charter and Qualifications and Professional Membership: Leasing, 2014 • Sijil Pelajaran Malaysia Qualifications and Professional Membership: – Took an additional role as Head of • Master of Laws, Northumbria University, UK Ancillary until early 2015 Awards/Recognition: – Appointed as Head of Corporate Finance, • Member of the Honourable Society of Charter and Leasing of AirAsia X, 2015 • Recipient of the 10 Years Long-Service Lincolns Inn, UK Award with AirAsia Group Qualifications and Professional Membership: Declaration: • Diploma in Hotel Management, Rizvi College Declaration: • No family relationship with any other Director of Hotel Management and Catering • No family relationship with any other Director Technology, Mumbai, India and/or major shareholder of AirAsia X and/or major shareholder of AirAsia X • No conflict of interest with AirAsia X Awards/Recognition: • No conflict of interest with AirAsia X • No conviction for any public sanction during • No conviction for any public sanction during the financial year ended 31 December 2016 or • Instrumental in AirAsia X’s recognition as a the financial year ended 31 December, 2016 penalty imposed by the relevant regulatory Top 10 Global Airline for Ancillary Revenue per Passenger by IdeaWorksCompany in 2015 or penalty imposed by the relevant bodies and offences within the past 5 years regulatory bodies and offences within the other than traffic offences, if any Declaration: past 5 years other than traffic offences, if any • He/She has no directorship in public • He/She has no directorship in public companies • No family relationship with any other Director and/or major shareholder of AirAsia X companies • No conflict of interest with AirAsia X • No conviction for any public sanction during the financial year ended 31 December 2016 or penalty imposed by the relevant regulatory bodies and offences within the past 5 years other than traffic offences, if any • He/She has no directorship in public companies 065 AIRASIA X BERHAD Profiles of the Leadership Team

ASPA LINDA AHMAD AMOS AW SHING CHIEN PAVENRAJ SINGH Head of Cabin Crew Head of Revenue Management Head of Ancillary

Age: 40 Age: 44 Age: 32 Gender: Female Gender: Male Gender: Male Nationality: Malaysian Nationality: Malaysian Nationality: Malaysian

Responsibilities: Responsibilities: Responsibilities: • Leads and manages manpower planning for • Maximises revenue and profitability by • Drives product innovation, enhancement and the entire AAX Cabin Crew Department developing/implementing revenue strategic decisions to increase take-up rates, • Ensures high standards of operations management strategies in Pricing, Inventory while ensuring continuous ancillary Revenue management and safety compliance & Distribution growth • Ensures cabin crew deliver world-class • Leads in managing fares across all markets, • Works towards raising product awareness customer service and developing pricing and revenue across the AirAsia X network to ensure strategies on all routes and markets ancillary growth Experience: • Applies demand forecasts across the network, and implements strategies to Experience: • More than 19 years of experience in the correct shortfalls as well as develop business aviation industry: opportunities for AAX • Started his career with Ernst & Young as an – Started her career with AirAsia as a Cabin • Develops comprehensive revenue structures associate auditor in Business Advisory Crew (2002) and was promoted to Senior to incorporate cross networking between the focusing on Technology & Security Risk Cabin Crew (2003), Purser (2005) and a short-haul and long-haul segments Services, 2009 Cabin Crew Executive (2009) • Moved to AirAsia X as an executive in 2010 & – Moved to AirAsia X and served as an Experience: promoted to Ancillary Assistant Manager in Assistant Cabin Crew Manager, 2010 • Amos has 13 years of management 2014 – Further enhanced her skills set by joining experience in the aviation industry • Appointed as Head of Ancillary of AirAsia X, the Cabin Safety Department as a Safety – Started his career with Malaysia Airlines 2015 Examiner, and was promoted to Cabin Berhad as a Revenue Analyst, 2003 Safety Manager in 2012 – Moved to Virgin Australia as Senior Qualifications and Professional Membership: Revenue Analyst, 2005 – Appointed as Head Cabin Crew of • Bachelor’s Degree in Accounting & – Served AirAsia as Senior Revenue Analyst, AirAsia X, leading more than 1,000 cabin Information Technology, Auckland University crew, 2015 2007 – Appointed as Head of Revenue of Technology, New Zealand Management of AirAsia X, 2015 Qualifications and Professional Membership: Declaration: • Sijil Pelajaran Malaysia/O-Level Qualifications and Professional Membership: • No family relationship with any other Director • Bachelor’s Degree in Commerce, Deakin and/or major shareholder of AirAsia X Declaration: University, Australia • No conflict of interest with AirAsia X • No family relationship with any other Director • No conviction for any public sanction during and/or major shareholder of AirAsia X Declaration: the financial year ended 31 December 2016 or • No conflict of interest with AirAsia X • No family relationship with any other Director penalty imposed by the relevant regulatory • No conviction for any public sanction during and/or major shareholder of AirAsia X bodies and offences within the past 5 years the financial year ended 31 December 2016 or • No conflict of interest with AirAsia X other than traffic offences, if any penalty imposed by the relevant regulatory • No conviction for any public sanction during • He/She has no directorship in public bodies and offences within the past 5 years the financial year ended 31 December 2016 or companies other than traffic offences, if any penalty imposed by the relevant regulatory • He/She has no directorship in public bodies and offences within the past 5 years companies other than traffic offences, if any 066 • He/She has no directorship in public companies ANNUAL REPORT 2016

LEADERSHIP TEAM

JAISHARAN KAUR GILL VENGGATARAO NIADU WONG OOI LING Head of In-Flight Operations Head of Network and Regulatory Head of Corporate Quality and Assurance

Age: 33 Age: 42 Age: 46 Gender: Female Gender: Male Gender: Female Nationality: Malaysian Nationality: Malaysian Nationality: Malaysian

Responsibilities: Responsibilities: Responsibilities: • Assesses new markets based on strategic fit, • Oversees the day-to-day in-flight operations financial potential, growth opportunity, risks and • Ensures core business processes necessary including catering, cleaning and laundry possible entry points for meeting business objectives are services • Develops network expansion plans for company’s established, implemented and documented long and short-term objectives • Develops the in-flight menu • Develops schedules to utilise crew manpower and • Provides support to business units in process • Negotiates contracts as well as procurement aircraft efficiently and effectively, considering development and continual improvement and vendor management commercial requirements and network connectivity • Builds and maintains relationships with local and Experience: foreign regulators as well as airports, while Experience: monitoring and negotiating bilateral agreements in • Audit and Assurance, relevant markets • Supply Chain Manager at AirAsia X, • Manages and negotiates arrival and departure slots PricewaterhouseCoopers, 1995-2000 2013-2015 at local and foreign destinations • Manager in Corporate Planning, EON Bank • Procurement Specialist as part of a Contracts Berhad, 2000-2003 Experience: and Procurement Team, ActewAGL Pty Ltd, • Vice President of Group Management • Venggatarao has more than 10 years of 2011-2012 management experience in the aviation industry, in Services and PMO, EON Bank Berhad, • Temporary Contract in the Procurement cross-functional roles across network and fleet 2003-2007 Department, Coles Group Ltd, 2011 planning • Senior Manager in Planning, Broadcast and – Started his career with SINGER Sdn Bhd as an • Temporary Contract in the Logistics internal auditor, 1996 Operation Division, Measat Broadcast Department, SMART Modular Technologies – Joined AirAsia Berhad as a Scheduling Executive, Network Systems Sdn Bhd (Astro), 2007- Malaysia, 2009-2010 2005 2013 – Moved to AirAsia X in 2006 as a Scheduling and • Test Engineer in Flash Memory Products, Network Executive • Senior Manager in GST PMO, DRB-HICOM SMART Modular Technologies Malaysia, – Promoted to Manager of Network and Scheduling Group, 2014-2016 2006-2008 in 2010, while also overseeing the charter and leasing business – Appointed Head of Network Management in 2013 Qualifications and Professional Membership: Qualifications and Professional Membership: and subsequently Head of Network and Regulatory in 2015 • Bachelor of Business (Accounting), Monash • Degree in Electronics Engineering, RMIT University, Australia University, Australia Qualifications and Professional Membership: • Member of the Malaysian Institute of • Master of Supply Chain Management, RMIT • Diploma in Business Administration from Accountants (MIA) University, Australia Seremban’s Negeri College Awards/Recognition: Declaration: Declaration: • Best Network Performance Award (Airline • No family relationship with any other Director Category) by World Routes Award • No family relationship with any other Director • 10 Years Long-Service Award and/or major shareholder of AirAsia X and/or major shareholder of AirAsia X • No conflict of interest with AirAsia X • No conflict of interest with AirAsia X Declaration: • No conviction for any public sanction during • No conviction for any public sanction during • No family relationship with any other Director and/ the financial year ended 31 December 2016 or or major shareholder of AirAsia X the financial year ended 31 December 2016 or • No conflict of interest with AirAsia X penalty imposed by the relevant regulatory penalty imposed by the relevant regulatory • No conviction for any public sanction during the bodies and offences within the past 5 years bodies and offences within the past 5 years financial year ended 31 December 2016 or penalty other than traffic offences, if any imposed by the relevant regulatory bodies and other than traffic offences, if any offences within the past 5 years other than traffic • He/She has no directorship in public • He/She has no directorship in public offences, if any companies companies • He/She has no directorship in public companies 067 AIRASIA X BERHAD Profiles of the Leadership Team

EDDIE TAN AZAHAR OTHMAN HANIF IDROSE MOHAMED Line Operations Manager Ramp Manager Investor Relations Manager

Age: 44 Age: 59 Age: 29 Gender: Male Gender: Male Gender: Male Nationality: Malaysian Nationality: Malaysian Nationality: Malaysian

Responsibilities: Responsibilities: Responsibilities: • Oversees and manages all overseas stations • Ensures that ramp services, loading and • Responsible for the communication of including the set up of new stations unloading of aircraft, transport services, information and insight between the company • Manages ground handling related contracts weight and balance, ground equipment and and the investment community to ensure full • Ensures accurate and timely execution of all mishandled load, are carried out according to appreciation of the company’s business activities, strategy and prospects and allows processes and procedures to maintain the company procedures and established highest level of quality the market to make an informed judgement standards • Coordinates shareholder meetings, • Represents the department at meetings with conferences and investor roadshows, Experience: airport authorities and other in-house releasing financial data, leading financial • Eddie has more than 25 years of departments in matters involving ramp analyst briefings, publishing reports as well as management experience handling operations handling leading the production of the company’s in the aviation industry Annual Report and Annual General Meeting – Started his career with Singapore Airlines Experience: Experience: Limited as a Passenger Services Agent, • Azahar has 39 years of experience in the 1992 • Started career at Telekom Malaysia Berhad aviation industry – Moved to All Nippon Airways Co, Limited (TM) as Assistant Manager of Investor – Joined Malaysia Airlines as a traffic clerk, as Traffic and Flight Operations Officer, Relations in November 2011 1995 1978 • Subsequently promoted to Manager of – Joined AirAsia as a Station Manager, – Promoted to Customer Service Officer of Investor Relations of TM in April 2015 Kuching, 2005 Malaysia Airlines, 1988 • Joined AirAsia Berhad as Investor Relations – Transferred to Kuala Lumpur Hub (LCCT) – Moved to KL Airport Services (KLAS) as Manager in January 2016 Flight Operation Officer, 1999 • Joined AirAsia X Berhad to spearhead as a Station Manager, 2006 Investor Relations department in July 2016 – Served AirAsia X as Station Manager, Kuala – Promoted to Passenger Handling Supervisor, 2001 Lumpur, 2010 Qualifications and Professional Membership: – Appointed as Line Operations Manager, – Assigned as Aircraft Handling Supervisor, 2014 later in 2001 • Bachelor of Commerce (Accounting, Banking – Duty Manager Flight Operation, 2001-2009 & Finance), Monash University, Australia Qualifications and Professional Membership: – Promoted to Head of Aircraft Handling and • Master of Applied Finance, Monash University, Australia Flight Operation, 2009 • Tertiary studies – Beaufort College, Western • Member of the Malaysian Investor Relations – Joined AirAsia X as Ramp Duty Manager, Australia Association (MIRA) February 2013 • Member of the Malaysia Australia Business Awards/Recognition: Council (MABC) Qualifications and Professional Membership: • 10 Years Long-Service Award with AirAsia Awards/Recognition: Group • Malaysia Certificate of Education • TM Group CEO Merit Award 2013 Declaration: Declaration: Declaration: • No family relationship with any other Director • No family relationship with any other Director • No family relationship with any other Director and/or major shareholder of AirAsia X and/or major shareholder of AirAsia X and/or major shareholder of AirAsia X • No conflict of interest with AirAsia X • No conflict of interest with AirAsia X • No conflict of interest with AirAsia X • No conviction for any public sanction during • No conviction for any public sanction during • No conviction for any public sanction during the financial year ended 31 December 2016 or the financial year ended 31 December 2016 or the financial year ended 31 December 2016 or penalty imposed by the relevant regulatory penalty imposed by the relevant regulatory penalty imposed by the relevant regulatory bodies and offences within the past 5 years bodies and offences within the past 5 years bodies and offences within the past 5 years other than traffic offences, if any other than traffic offences, if any other than traffic offences, if any

068 • He/She has no directorship in public companies • He/She has no directorship in public companies • He/She has no directorship in public companies

AIRASIA X BERHAD

AirAsia X Thailand

CAPTAIN PITTINUN INTARASAK Head of Flight Operations

KRIRKWOOT BOONSORN Head of Engineering

PHAIRAT PORNPATHANANANGOON Chief Financial Officer 0 7 0 ANNUAL REPORT 2016

LEADERSHIP TEAM

TEAM

NITIROTE KITCHAROEN Head of Group Operations

MATANA THIENTHONG Head of Commercial

NADDA BURANASIRI Chief Executive Officer 071 AIRASIA X BERHAD

AirAsia X Indonesia

TEAM

RIFAI TABERI Director of Maintenance & Engineering

CAPTAIN SULISTYO NUGROHO HANUNG Acting Chief Executive Officer/ Director of Flight Operations

2 LEADERSHIP TEAM 7 0

074 AIRASIA XBERHAD CEO’S MANAGEMENT DISCUSSION& ANALYSIS should accord toourvarious this opportunitytointroduce statement each year, Itry to Annual Report. As Ipenthis do sowiththecandourand Thank youforallowingme respect thatIbelievewe our Financial Year 2016 Dear Shareholders, BENYAMIN ISMAIL stakeholders. CEO W other airlines have been able to do. other airlines have beenabletodo. from thismarket, somethingnotmany impressive isfillingourreturn flights percentage-wise. Whathas been flight loadsaveraginginthe 80s flying tosixdestinationsin China,with performer. Asatend2016, wewere China market,whichwasour star We wereparticularlypleasedwiththe to 79%. increase inpassengerloadfortheyear us toseeafourpercentagepoint frequencies werewellreceived,allowing Sapporo. Ournewflightsandincreased flights toOsaka;andfiveweekly Beijing andShanghai;nineweekly and Taipei;11flightsaweektoSydney, 14 flightsaweektoMelbourne,Perth Australia, ChinaandJapan,aimingfor started torampupourfrequencies to eightdestinations.AsofApril,we and increasedthefrequencyofflights which wehadearliercededtoAirAsia; routes aswelltheChongqingroute resumed theNewDelhiandTehran launched anewroutetoAuckland; started tobuilditbackagain.We to reduceourcapacityand,in2016, in 2015wemadethestrategicdecision Operating inalessthanrationalmarket, our cashposition. our revenue,reducecostsandbuild did. Succinctly,ouraimwastoincrease were abletoachievethesuccesseswe the countlessinitiativesoutlined,we was comprehensive;butbyadheringto reality. Thisplanwasasextensiveit translate ourturnaroundstrategyinto together, asonedeterminedteam,to challenges wefacedandworked see howourAllstarstrulyembracedthe sweeter. Justasheartwarmingwasto depreciated Ringgit,theyfelteven midst ofasoftglobaleconomyand any standards;tohavecomeinthe These achievementsareimpressiveby stretches backto4Q15. five consecutivequartersofprofitwhich full-year profit,onthebackofarun the firstyearpost-IPOthatwemadea year 2016willgodowninourannalsas have successfullyturnedthetide.The turnaround plan.Aftertwoyears,we implemented amulti-pronged improvement, andsubsequently opportunities andcriticalareasof spent longhourstoidentifykey CEO, togetherwithmycolleagues,we Datuk KamarudinMeranun,ourGroup under theguidanceofagreatmentorin challenge wefacedwasenormous,yet just joined AirAsia X. The just joinedAirAsiaX.The journey in2015,whenIhad e beganourtransformation year-on-year toRM642.7million. our ancillaryrevenueby35% seat fees,andmanagedtogrow increased ourbaggageand On topoftheseofferings,wealso guests atanyonetime. lounge canaccommodateupto110 pleasurable travelexperience.The facilities availableforaninfinitelymore most oftheopportunitytouse 5,000 transitguestsadaywillmakethe good numberamongourmorethan low-cost carrier(LCC),andfeelsurea first intheworldtobeofferedbya proud oftheloungewhichisone workstations andevenshowers.Wefeel internet access,aloungearea, and facilitiessuchasabuffet,wireless at klia2,presenting24-hourservices Group’s AirAsiaPremiumRedLounge September 2016,welaunchedthe wider selectionofmovies.On2 viewing experience,andintroduceda tablets whichallowforanenhanced entertainment offeringwithbetter We haverefreshedourXciteinflight such asmarket-specificinflightmenus. creativity intomoretargetedproducts ancillary business,injectingsome We havealsobeenabletogrowour have foundtherightmarketforit. one-stop route),andwebelieve This hasbeenourfirst‘tagflight’(or ended theyearwith11flightsaweek. Starting withthriceweeklyflights,we between AucklandandtheGoldCoast. serving popularweekendtraffic to fly‘theCityofSails’,butalso only demandfromMalaysianswanting gratifying, allowingustocapturenot Auckland inMarchhasbeenparticularly this front.Thelaunchofflightsto out in2015,andaredoingverywellon re-building thecapacitywehadtaken In Australia,weconcentratedon another destination:Wuhan. market, inMarch2017,welaunched connections. Tofurtherbuildthis accounting for20%ofallAirAsiaX’s also ourtopFly-Thrucontributor, while revenueincreased43%.Chinawas and fromthismarketincreased22%, In 2016,thenumberofguestscarriedto are thelargestlow-costcarrierinChina. Together withtheAirAsiaGroup,we RM642.7 million year-on-year to Ancillary revenue grew by 35% Group through the sharing of resources Group throughthesharingofresources of addedsynergieswiththeAirAsia have stoodtobenefitfromthecreation profitability. Justassignificantly,we aircraft utilisation,andmaximisingasset also beensuccessfulinincreasingour aircraft andfueltankering.Wehave minimising unnecessaryweightonour reduce ourcostoffuel,suchas some positiveresultsfromeffortsto In termsofefficiency,wehaveseen Analysis inthefollowingpages. in theManagementDiscussion& operational performancearepresented More detailsofourfinancialand cash andbankbalances. ending theyearwithRM422.0millionin continue buildingourcashposition, operating leasehenceallowedusto Thailand. These,however,wereon was channelledtoourassociatein aircraft duringtheyear,oneofwhich took deliveryoffourAirbusA330 To supportourcapacitygrowth,we full-service carriers. 50% lowerthan10oftheworld’slargest LCC. OurCASKisconsistentlyabout as theworld’slowestunitcostlong-haul year andfurtherentrenchingAirAsiaX 12.87 senin2016,dropping6%year-on- (CASK) from13.75seninthe2015to cost peravailableseatkilometre fuel price,ledtoasteadydeclineinour These efforts,togetherwiththedropin contracts andthepurchaseoffuel. components, inleasing,financing procurement ofaircraftand greater bargainingpowerinthe and certainfunctions,aswellfrom ANNUAL REPORT 2016

075 AIRASIA X BERHAD CEO’s Management Discussion & Analysis

OVERVIEW OF GROUP’S BUSINESS AND GROUP’S EARNINGS OPERATIONS Revenue AirAsia X Group provides long-haul low-cost air Revenue from scheduled transportation services focusing on the Australasia and North flights increased by 50.5% Asia markets. This core business is supported by the from RM1.68 billion in FY2015 provision of freight and charter services. to RM2.53 billion in FY2016. This was due mainly to a The financial year ended 31 December 2016 (FY2016) was 29.7% increase in the number historic for AirAsia X, during which turnaround efforts that of guests carried, from had begun two years previously began to be reflected in 3,613,537 guests in FY2015 to increasingly efficient operations, accompanied by a Revenue from scheduled flights increased by 4,688,077 guests. We were spectacular financial performance. This was particularly able to accommodate more significant given it was achieved within a challenging macro- guests as a result of environment that included prolonged weakening of the 50.5% enhancing our seat capacity, Ringgit, heightened competition and slower economic growth from RM1.68 billion in which grew 22.4% from in China. This prompted us to reassess our strategies in order FY2015 to RM2.53 billion 4,848,974 seats in 2015 to to strengthen our fundamentals and place AirAsia X on a in FY2016. 5,935,111 seats. Seat capacity stronger financial footing for sustainable growth. was matched by demand, as the Group’s load factor Our proactive approach enabled us to close the year with a improved by four percentage record-breaking revenue of RM4.0 billion and first-ever net points year-on-year from 75% profit after tax of RM210.3 million since our initial public to 79%. Along with a more offering (IPO) in mid-2013. Group’s load factor improved by four rational market, meanwhile, percentage points year- the average base fare also on-year from increased, by 9.5%, from Key metrics RM493 to RM540. to FY2016 FY2015 75% The overall increase in revenue was also supported by Revenue (RM’000) 4,006,534 3,062,553 ancillary services, which saw a EBITDAR (RM’000) 1,244,478 813,422 79% significant 34.9% jump in revenue from RM476.4 million Net Profit (RM’000) 210,314 (349,616) in FY2015 to RM642.7 million. Total Assets (RM’000) 4,490,290 4,182,297 Average ancillary revenue per passenger also increased, by 4.7 Return on Total Assets (%) (8.4) 3.8%, from RM132 to RM137. Return on Shareholders’ Equity Income from Aircraft Operating Lease grew by (%) 19.9 (55.3) Meanwhile, as a result of a conscious decision to reduce our Charter activities, revenue 60.6% from Charter flights decreased from RM274.0 million to by 39.6% year-on-year from RM440.1 million RM421.7 million to RM254.7 REVIEW OF FINANCIAL RESULTS AND million. This loss was partially FINANCIAL CONDITION compensated for by Freight and Cargo, and Aircraft AirAsia X Group reported a profit before tax (PBT) of Operating Lease. The former RM260.1 million for FY2016, a vast improvement from the saw a 25.5% increase in recorded loss before tax of RM446.5 million in FY2015, and a revenue from RM107.5 million record result since the airline’s inception in 2007. to RM134.9 million due to higher tonnage transported; while income from the latter grew by 60.6% from RM274.0 Profit before tax : Loss before tax : million to RM440.1 million as a result of additional aircraft RM260.1 RM446.5 being leased. million million 6 7 0 ANNUAL REPORT 2016

Expenditure

Aircraft Operating Lease expenses increased by 19.8% from RM706.1 million in FY2015 to RM846.0 million due to the increase in number of operating leased aircraft Profit & Loss FY2016 FY2015 YoY and also the Ringgit’s Summary RM million RM million % depreciation against the US Aircraft Fuel expenses Dollar. up by Revenue 4,006.5 3,062.6 30.8 Total Operating Maintenance and Overhaul Expenses 3,777.6 3,216.9 17.4 expenses also increased, by 9.8% 24.7%, from RM496.8 million from RM1.02 billion in EBITDAR 1,244.5 813.4 53.0 to RM619.3 million, reflecting 2015 to RM1.12 billion an expanded fleet size as well Operating Profit/ 284.9 as the Ringgit’s depreciation. (Loss) (37.4) >100 Net Operating Profit/ In addition, as a result of the (Loss) 259.8 (101.8) >100 overall increase in number of sectors flown, User Charges Profit/(Loss) Before payable to the airports Tax 260.1 (446.5) >100 Aircraft Operating Lease increased by 16.9% from expenses increased by Taxation (49.8) 96.9 (100) RM395.1 million to RM461.7 million year-on-year. Profit/(Loss) After 19.8% Tax 210.3 (349.6) >100 Aircraft Fuel expenses from RM706.1 million Basic EPS (sen) 5.1 (10.4) >100 remained relatively stable, at in FY2015 to RM846.0 RM1.12 billion as compared to million RM1.02 billion in 2015. This was despite a 27.8% hike in fuel consumption from 3,455,760 barrels to 4,418,063 barrels in line with an increased number of sectors FY2016 FY2015 YoY flown, given the 19.7% Maintenance and Revenue RM‘000 RM‘000 % Overhaul expenses decrease in fuel price from increased by Scheduled Flights 2,532,543 1,682,740 50.5 USD76/bbl in 2015 to USD61/ bbl in 2016. Charter Flights 254,720 421,662 (39.6) 24.7% Fuel Surcharge – 98,861 (100.0) The Group also saw a from RM496.8 million to decrease in depreciation costs RM619.3 million Freight and Cargo 134,913 107,508 25.5 by 21.6% from RM144.8 million 642,715 to RM113.5 million as there was Ancillary Revenue 476,407 34.9 no depreciation charge on Aircraft Operating non-current assets held for Lease Income 440,134 274,014 60.6 sale. Management Fees 1,509 1,361 10.9

Other operating expenses 4,006,534 3,062,553 30.8 increased by 82.9% from RM137.4 million in 2015 to RM251.3 million, primarily due to foreign exchange gains recognised in 2015. Furthermore, the Group had in 2016 written off fixed assets valued at RM27.5 million, and further impaired receivables of RM11.6 million. 077 078 payables andaccruals other payables(+RM29.2million),andnon-current the increaseinsalesadvance(+RM43.7million),tradeand balances (-RM20.4million).However,thiswascushionedby financial instruments(-RM115.2million)andintercompany borrowings duringtheyear(-RM212.6million),derivative to RM3.4billion.Thiswasmostlyduetherepaymentof Total Groupliabilitiesdecreasedby3.3%fromRM3.6billion (-RM2.6 million). tax assets(-RM50.0million)andtradeotherreceivables Malaysian Ringgithaddepreciatedinvalue being denominatedinforeigncurrenciesatatimewhenthe achieved inspiteof92.9%theGroup’sfinancialliabilities 2016. Theincreaseindeposits,cashandbankbalanceswas balance ofRM310.8millionin2015toRM422.0 The Grouphasstrengtheneditscashpositionnotably,froma GROUP’S FINANCIALPOSITION CEO’s ManagementDiscussion&Analysis AIRASIA XBERHAD property, plantandequipment million). However,thiswaspartiallyoffsetbythedecreasein million), anddeposits,cashbankbalances(+RM111.2 (+RM122.1 million),derivativefinancialinstruments(+RM134.7 inventories (+RM10.2million),intercompanybalances non-current depositsandprepayments(+RM97.6million), RM4.2 billiontoRM4.5billion.Thiswasdueanincreasein The valueoftheGroup’stotalassetsincreasedby7.4%from hedges. was primarilyattributabletofairvaluechangesonfuel RM214.2 million.Thefairvaluechangeoncashflowhedges million andfairvaluemovementsoncashflowhedgesof largely duetonetprofitsrecognisedin2016ofRM210.3 balance ofRM631.8millionin2015toRM1.06billion2016, Meanwhile, shareholders’equityhasalsostrengthenedfroma Balance Sheet Balance Sheet Deposit, Cash & Bank Deposit, Cash&Bank Total Assets Total Borrowings Shareholders’ Equity Net Debt Net Gearing(x) Summary Balances . %3.3% 7.4% RM4.5 billion from RM4.2billionto total assets increased by The value of theGroup’s iii (+RM214.4million). 4,490,290 1,056,885 1,160,326 738,305 RM‘000 422,021 FY2016 ii (-RM121.5 million), deferred (-RM121.5million),deferred 0.70 RM3.4 billion from RM3.6billionto decreased by Total Group liabilities ,2,8 (18.8) 1,429,087 ,8,9 7.4 4,182,297 i . RM‘000 ,1,9 (34.0) 1,118,298 1,8 35.8 310,789 3,0 67.3 631,807 FY2015 .7(60.5) 1.77 YoY % objectives increatingvalueoverthecomingyears. position thatenablestheexecutionofourstrategic The Groupremainsprudentinmaintainingasoundfinancial 0.70x in2016 effectively reducedtheGroup’snetgearingfrom1.77xto ordinary shareswithfreedetachablewarrantsin2015.This planned subsequenttotherenounceablerightsissueofnew The Group’sborrowingsdecreasedby18.8%in2016,aswas RESOURCES CAPITAL STRUCTUREAND iv iii ii i RevenuefromtheOtherssegment declinedinFY2016to • TheAustralasiasegmentremainedresilientin2016, • NorthAsiahasbeenthemainrevenuegenerator, • identified asNorthAsia,AustralasiaandOthers. reportable operatingsegmentsoftheGrouphavebeen As perourquarterlyannouncementstoBursaMalaysia,the REVIEW OFOPERATINGACTIVITIES Refer to Note 31(a)(iii) of the financial statement for the currency exposure RefertoNote31(a)(iii) ofthefinancialstatementforcurrencyexposure Property, plant and equipment referred to here includes non-current assets Property,plantandequipmentreferredtohereincludesnon-current assets Non-current other payables and accruals comprise mainly of aircraft Non-current otherpayablesandaccruals comprisemainlyofaircraft Net Gearing is calculated as net debt (total borrowings less deposits, cash & Net Gearingiscalculatedasnetdebt (total borrowingslessdeposits,cash & bank balances)over shareholders’equity. of financialassetsandliabilities. held forsale. maintenance provision. 18.8% decreased by The Group’s borrowings flights. leasing businessinordertofocusmoreonscheduled with management’sstrategytorealignthecharterand RM588.6 millionfromRM649.5inFY2015line tax ofRM126.6millioninFY2015. before taxofRM13.3millionascomparedtoloss Improved showinginFY2016hasresultedalower loss management andintroductionoftheAucklandroute. year-on-year, mainlyduetodisciplinedcapacity accounting for34%oftotalrevenue.Revenuegrew47% routes tomeethealthydemand. continuous capacityinjectionaswellintroductionofnew from thissegmentgrew38%year-on-yearonthebackof accounting for51%oftotalrevenueinFY2016.Revenue iv . in 2016 1.77 decreased from The Group’s netgearing 0.70 x to x in 2016 business. Financial andoperationalrisks aredescribedinmoredetail onpage80ofthisannual report. risks notpresentlyknown to management,orcurrentlydeemedbelessmaterial, mayalsohaveanadverseeffectonthe do notcomprisealltherisks associatedwithourbusinessandarenotsetout inanyparticularorderofpriority.Additional separately, orincombination, onouroperationalperformance,earnings,cash flows orfinancialcondition.Therisksidentifie Statement ofRiskManagement &InternalControl,page148.Therisksdescribed belowcouldhaveamaterialadverseeffect performance, futureprospects orreputation.Ourprocessforidentifyingandmanaging riskissetoutinmoredetailthe We haveperformedarobust andsystematicreviewofthoserisksthatwebelieve couldseriouslyaffectthecompany’s any negativeoutcomes. are notonlyefficientbutalsocarryacceptablelevels ofrisktosafeguardthecompany’sassetsandmitigateimpact being inbusiness,itistheresponsibilityofeveryAllstar topractisegoodriskmanagementbyhavinginternalcontrolswhich AirAsia Xfacesmanyuncertaintieswhichareinherent inthebusinessofascheduledairoperator.Astakingrisksispart ANTICIPATED ORKNOWNRISKS PROFIT BEFORE TAX/(LOSS BEFORE TAX) EBITDAR REVENUE 1 (5.0%) EBITDAR represents earnings before finance cost, taxation, depreciation, EBITDARrepresentsearningsbeforefinancecost,taxation,depreciation, amortisation, andaircraftrentalexpenses 27.5% 34.1% 34.6% 18.7% 14.7% 2016 2016 2016 ot saAsrlsaOthers Australasia North Asia 1

(RM’000) (RM’000) 70.4% 53.8% 51.2% 30.4% 31.0% (66.5%) (28.4%) 26.9% (5.1%) 2015 2015 2015 21.2% 48.4%

(RM’000) 42.1% inflight menus. market-specific products such as more targeted creativity into injecting some business, our ancillary been abletogrow We havealso ANNUAL REPORT 2016 d

079 080 CEO’s ManagementDiscussion&Analysis AIRASIA XBERHAD reputation. competitive advantage,adverselyaffectingourbusinessand data andothersensitiveinformation.Thiscouldhamperour performance andflightoperations,aswellpersonalcustomer sensitive informationrelatingtotheGroup’scommercial Any breachincybersecuritymayaffectthestorageofhighly adverse effectonourfinancialperformance. sudden and/orsignificantincreaseinjetfuelpricewouldhavean Fuel costisimpactedbyjetfuelpriceswhicharevolatile.Any measures orenforcementordersandreputationaldamage. and exposesustopotentialfines,penalties,punitivegovernment compromise ourbusinessoperationsincertainoralljurisdictions Non-compliance oflegaland/orregulatoryrequirementscould outside ofourcontrolandresultinanadversefinancialimpact. impose chargesleviedbygovernmentorregulatorswhichare could haveanoperationalimpactontheairlineindustryor Potential changesinlaw,regulationsandlegislativedecisions in eachcountrydestination. licenses andmultipleapprovalsacrossmanynationalauthorities The airlineindustryishighly-regulated,requiringoperating of revenue. common routescouldcausealossofmarketshareanderosion competitors undercuttingfarepricesandincreasingcapacityon Irrational competitionarisingfromexistingand/ornew Potential changesandnon-complianceoflegalregulatoryrequirements Increased competitionintheairlineindustry RISK DESCRIPTIONANDMITIGATION Cyber securitythreats Fuel pricevolatility Conduct forreadyreferencebyallemployees. the organisation.Inaddition,wehaveaCodeofBusiness regularly byGroupTalentreinforcingourethicalcultureacross of them.Trainingandawarenessprogrammesareconducted We ensureourAllstarsareawareofthebehavioursexpected regulatory requirements. and developments,tomonitorcompliancewithformal AirAsia Xhasanin-houselegalteamtoadviseonissues expands ourmarketshare. on theapprovedstrategicplanning,whichconsequently These costsavinginitiativesincluderouteoptimisationbased developed, followedbyregularmonitoringofperformance. strategies andcostsavinginitiativesofeachdepartmentare annual planningandbudgetingexercise–whenthebusiness The Company’sbusinessstrategyentailsacomprehensive with thecompany’sbusinessstrategy. ensure thecostofdoingbusinessismaintainedinaccordance To minimisetheimpactofcompetitioninindustry,we and continuedmigrationaway fromunsupportedsystems. and governance,reviewofdefencemeasuresagainstattacks strengthening includesenhancedinformationsecuritypolicies part ofasignificantITsecurityimprovementprogramme.The Group ICTregularlystrengthensourdata-relatedcontrols as security standards. executed toensureconformancegloballyacceptedIT security. Periodicreviewsandcomplianceassessmentsare vulnerability andpenetrationtestingprovideadditional Our systemsaresecuredwithaccesscontrols,whileregular place andconsistentlyapplied. A Board-endorsedhedgingpolicyonfuelrequirementsisin fuel pricevolatility. affiliates, whodiscusscriticalareasoffinancialrisksincluding by seniormanagementrepresentingthecompanyandour Committee Meetingsonamonthlybasis.Theseareattended Group TreasuryorganisesFinancialRiskManagement denominated inUSDollarsandothersMalaysianRinggit. pre-delivery paymentofAirbusA330-300aircrafts,aremainly obligations, forinstancefinancingofaircraftpurchaseand Japanese Yen,etc.)andborrowingactivities.Longtermdebt Dollars, Euro,AustralianDollar,IndianRupee,ChineseYuan, currencies generatedfromAirAsiaX’srevenueearning(egUS exchange ratefluctuationsbetweenMalaysianRinggitandother financial positionandcashflows.Exposurearisesdueto Fluctuation intheforeigncurrencyexchangeratesimpactour related issueeffectively. prevent amajorsafetyincident/accidentordealwith business andreputationcouldbeadverselyaffectedifwefailto affected thesafetyreputationofairlinesinregion.Our Aircraft incidents(egMH370,MH17andQZ8501)haveadversely and actsofterrorism. control ofanoperator,suchasweatherconditions,pandemics Airline safetyissubjecttomanyriskswhicharebeyondthefull impact ontheGroup. and haveanadversereputational,financialoperational Any ITsystemornetworkfailurecouldcauseamajordisruption availability tooperateasanairline. The GroupreliesheavilyonkeyITsystemsandnetwork Failure ofcriticalITsystem Foreign currencyrisk Major safetyincident The newly improved safety reporting system enables more The newlyimprovedsafetyreportingsystemenablesmore provided toallstaffthroughouttheyear. Hazard IdentificationandRiskManagement(HIRA)Trainingare Emergency ResponseTraining,BasicOSHATrainingand Safety promotioninitiativessuchasSMSAwarenessTraining, satisfy thestrategicdirectivesofSRB. Safety ActionGroup(SAG)dealswithimplementationissuesto platform todevelopourstrategicsafetydirection,whilethe Review Board(SRB)meetseveryquarterandactsasa approach tocontrolsafetyrisksinoperations.TheSafety improvement. reviewed andtestedregularlytoidentifyareasfor distinct locationswithfailoverarrangements.Thelatterare Critical systemsarehostedacrossdatacentreswhichin system failure. business continuityarrangementstomitigatetheriskofcritical We haveinplacesystemcontrols,disasterrecoveryand together withAirAsiaX’smanagementwhenrequired. the hedgingstrategyandjointlyevaluates Group Treasuryprovidesadvisoryserviceonthesuitabilityof financial riskmanagementcommitteemeetingsandAirAsia’s the AirAsiaGroupdiscussesthismatterregularlyatmonthly arrangements andsettlements.Theseniormanagementacross same foreigncurrency,orwheneverpossiblebyintragroup payables arematchedagainstreceivablesdenominatedinthe natural hedgesthatarisewhenpaymentsforforeigncurrency These exposuresaremanaged,totheextentpossible,by timely andconsistentanalysesofcaptureddata. Our SafetyManagementSystem(SMS)providesastructured ANNUAL REPORT 2016

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ancillary revenue. We believe there is potential to come up ancillary revenue. Webelievethereispotential tocomeup promote it,while pressingonwithinitiatives toincreaseour Premium RedLoungeand introduceattractiveoffersto To furtherdriverevenue,we willincreaseawarenessofthe Chengdu, Sapporo,Hangzhou… have donecountlesstimes inthepast,withGoldCoast, continue tostimulatedemandforunderservedroutes, aswe real options.Inadditiontodreamdestinations,wewill longer bewishfulthinkingforourguests.Theywill very be receivingfrom2018onwards,holidaysinEurope willno capacity newengineoption(neo)Airbusaircraftthat wewill return toEurope.Withthemorefuel-efficientandbigger to exploreafurtherrangeofoptionsintheUSaswell as 28 June2017.AndHawaiiisjustthebeginning.We would like announcement inFebruaryofflightstoHawaiistarting from We begantheyear2017onaverypositivenote,with the CEO’s ManagementDiscussion&Analysis AIRASIA XBERHAD

INTO YE

of our wonderful team here at RedQ. However, our work is not of ourwonderful teamhereatRedQ.However, ourworkisnot justifiably so. It isfantastictofeeltheenergy andenthusiasm we havein2016,moraleamong ourAllstarsishigh,and Having beenthroughadifficult fewyearsandachievedwhat initiatives. mantras, andwillcontinue todrivemanyofourstrategic journey on.Productivityandcostmanagementhave beenour deals, andcountlessotherwaysthatwewilldiscover aswe utilisation, bettertermswithvendorsthroughre-negotiated trimming asmuchwecanthroughevengreateraircraft As wedothis,willasalwayskeepasharpeyeon costs, for ouraward-winningSantanmeals. enhance ourinflightentertainment,andwhetgreater appetite would giveguestsgreaterprivacy,aswelltofurther with moreinnovativeseatoptions,suchas‘twinseats’ that A A Thank you. Company. gratitude fortheinsightand counselprovidedtothe challenging times.Toour Board members,mysincere regulators forbeingwithus throughboththegoodand particularly toourshareholders, guests,investorsand to recordmydeepestappreciationourstakeholders, On behalfofthemanagementCompany,Iwould like the nextfiveyears,butforanindefinitenumberofyears. will keepusplanningandinnovatingnotjustin2017 or even be moreroutestocarveout,traveldreamsfulfil. This current challengingoperatingenvironment.Therewill always between profitability,resilienceandefficiency,especially inthe remain ambitious,wewillneedtocreateagoodbalance done. Infact,itwillneverbeWhileouraspirations R 2017 Hawaii will be the game-changing destination Hawaii willbethegame-changingdestination we have all been waiting for, hence let me we haveallbeenwaitingfor,henceletme phrase likehowtheHawaiianswouldsay, HELE ME KAHAU’OLI HELE MEKAHAU’OLI – GOWITHJOY. ANNUAL REPORT 2016

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