AIRASIA X BERHAD BUSINESS MODEL

AIRCRAFT CONFIGURATION INNOVATIVE FUEL PEOPLE MANAGEMENT High seat density – 377 seats per No UNIONs aircraft (12% more than Aircraft weight optimisation: High productivity – multi-tasking, manufacturer’s configuration). • Inflight service and meal inventory interchangeable roles Two-class – 12 Premium Class Seats • No heavy wiring for inflight Highly experienced, hands-on (flat beds) & 365 Economy Class entertainment equipment management team Seats on all aircraft. • Customised water levels and monitoring • Paperless cockpit (in progress) ATTRACTIVEATT FARES YOUNG & EFFICIENT FaresFares at least 330%0% lowerlow than FSCs. AIRCRAFT TYPE Flight operations optimisation:

Average aircraft age of five years • Fuel-efficient speeds • Fuel tankering All Airbus A330 (2015 onwards) • Pilot flying techniques and Aircraft can be interchanged monitoring Long-term engine programme

ECONOMIES OF SCALE – HIGH AIRCRAFT UTILISATION PROVIDES GOOD COST AND OPERATIONAL SAVINGS EXCELLENCE Discount on aircraft and engine purchase Aircraft utilisation of 14.5 hours per day Fleet flexibility due to good 75-90 minutes turnaround time relationship with Airbus

LOW DISTRIBUTION COST Strong bargaining power with vendors 70% sales via Internet Manpower merger with AirAsia Group Leverage on AirAsia brand, technology infrastructure and network. Fuel contracts negotiated together

084 with AirAsia Group for better pricing.

@AFIKLMEM afiklmem.com

CONNECT YOUR A350 TO OUR MRO-AIRLINE ADAPTIVENESS®

AFI KLM E&M is the only MRO to form part of an airline group that has ordered A380s, 787s and A350s. On the strength of this unique expertise, AFI KLM E&M has been shaping its industrial development program ever since the A350’s maiden flight. As a result, your own A350 can now reap the benefits of AFI KLM E&M ADAPTIVENESS®. ADAPTIVENESS® is our response to the changing MRO business environment. It means partnering with you and providing vital support through change and daily challenges, in a spirit of continuous improvement. If you seek efficient MRO solutions for your A350 leading to optimized MTBRs and overall performance, talk to us about ADAPTIVENESS®.

ADAPTIVENESS 088 (RM million,unlessotherwisestated) For theYearEnded31December Five-Year Financial&OperationalHighlights AIRASIA XBERHAD BTAmri . . 3.5 26.6 0 (6.0) 11.6 170 6.6 1.3 (8.4) (2.1) 14.7 (143) (55.3) (13.9) 7.9 (8.2) 2.5 15.7 (73.8) 37 (2.2) 1 632 (7.1) 57 1.4 4,182 704 107 2.7 5.9 (37) 3,736 (350) 813 1,236 (114) 5 311 4,002 (176) (519) (13) 297 (446) 581 342 (483) 3,063 2,428 127 (88) 31 152 (LBIT)/EBIT margin (53) 392 (605) EBITDA margin 2,937 1,156 339 EBITDAR margin ROCE (EBIT/(Netdebt+equity)) 3,217 263 34 (212) 156 (1,309) 49 189 Return onshareholders’equity 2,308 Return ontotalassets 154 308 (60) 3,304 Consolidated financialperformance(%) 174 38 (37) 1,967 Net cashflow Net cashgeneratedfrom/(usedin)financingactivities 2,297 Net cashgeneratedfrom/(usedin)investingactivities Net cashgeneratedfrom/(usedin)operatingactivities 1,925 Cash flowstatement(inRM’mil) Shareholders’ equity Net debt(totalborrowing–deposits,cash&bank Total assets Deposits, cashandbankbalances Balance Sheet(inRM’mil) Net (loss)/profit (Loss)/Profit beforetax (LBIT)/EBIT EBITDA EBITDAR Total operatingexpenses Revenue Income Statement(inRM’mil) vrg ulpie19611417075.7 13,033 27 127.0 13,662 3,456 26 131.4 3.53 4,761 10,240 13.75 3,657 129.6 2.40 8,187 4,927 3.37 3.94 19 12.91 9.38 2,660 5,002 2.11 3.66 3.80 2,311 11 11.98 6.92 5,306 3.83 3.74 1.99 11.56 6.28 4,848,974 3.88 1.90 5,150,574 5.86 (11.4) 386,480 Number ofemployeesatyear endforAirAsiaX 3,613,537 3,072,981 (17.7) Average fuelprice (14.6) 4,230,952 Fuel consumed(’000barrels) Sectors flown 3,161,456 (3.8) Average stagelength(km) (20.6) Size offleetatyearend 2,580,946 Cost perASK–excludingfuel(USc) Cost perASK–excludingfuel(sen) 1.7 (9.2) Cost perASK(USc) Cost perASK(sen) Revenue perASK(USc) 1.9 Capacity Passengers carried Consolidated operatingstatistics(AirAsiaXMalaysia) Net (loss)/profitmargin (Loss)/Profit beforetaxmargin vrg ae(M 5 2 6 493 13.13 75 469 23,388 17,552 131.8 11.97 82 25,374 20,817 525 139.4 12.06 19,309 14.1 82 15,857 555 145 12.00 16,231 13,601 12.6 84 142.4 13.2 14.2 Revenue perASK(sen) Ancillary revenueperpax(RM) Average fare(RM) Average aircraftutilisation(hoursperday) ASK (million) RPK (million) Load factor(%) aacs ,1 ,3 ,5 1,118 1,452 1,733 1,218 balances) aasa1302012,380 2,011 1,300 Malaysia 2012 2013 2014 2015 2016 2016 2015 2014 2013 2012 2,204 (1.2) 4,688,077 4,688,077 5,935,111 5,935,111 29,343 29,343 15,743 15,743 23,188 23,188 137.10 137.10 4,490 4,490 4,007 4,007 4,944 4,944 3,778 3,778 4,418 4,418 1,244 1,244 1,057 1,057 2,621 2,621 13.68 (194) 12.87 61.0 61.0 540 540 19.9 19.9 260 260 15.9 15.9 422 422 398 398 9.07 285 285 738 738 3.30 210 210 31.1 31.1 341 341 128 128 9.9 9.9 2.19 4.7 4.7 6.5 6.5 13.5 5.2 5.2 30 30 3.11 7.1 7.1 79 79 (19) 2015: RM1,118mil RM738 NET DEBT 2015 :RM3,063mil RM4,007 REVENUE Key PerformanceIndicators 2015: RM132 2015: RM493 RM137 RM540 PER PAX ANCILLARY REVENUE AVERAGE BASE FARE 4% 2015: 13.13 sen RASK (RM) 13.68 mil mil 10% 4% sen RM210 RM260 NET PROFIT NET OPERATING PROFIT 2015: 2015: 2015: RM0.75bil RM1.49 MARKET CAPITALISATION 28 e 9.07 sen 12.87 sen RM(350) mil RM(102) mil 05 37 e 2015:9.38 sen 2015: 13.75 sen 31% -34% 6 -3% -6% AK(M CASK-EX FUEL(RM) CASK (RM) mil bil mil +> +> 2015: RM813mil EBITDAR 2015: RM4,182mil RM4,490 RM1,244 TOTAL ASSETS 100% 100% mil mil 100% 2015: 23,388 2015: 15.0 2015: 75% 79% 29,343 14.5 LOAD FACTOR ASK (mil) UTILISATION HOURS 53% 7% ANNUAL REPORT 2016 -3% 25% 4 ppts 089 090 Segmental Analysis Simplified GroupStatementofFinancialPosition& AIRASIA XBERHAD

RM’000 REVENUE

0.3% 6.3% ot saAsrlsaOthers Australasia Asia North 1.1% 2.5% 24.7% 1.5% 3.0% 588,609 649,458 9.4% 929,634 2016 2.1% 1,368,063 1,483,461 3.0% 11.0% 2,049,862 21.6% 0.1% 34.9% 6.8% 0.7% 1.3% 0.6% 7.4% 5.8% 2015 2.5%

RM’000 PROFIT BEFORETAX/(LOSS BEFORETAX)

ASSETS ot saAsrlsaOthers Australasia Asia North -297,086 13.0% 40.1% -126,582 -22,807 Non-current assets for sale Deposits, cashandbankbalances Tax recoverable Derivative financialinstruments Amount duefrom anassociate Amount duefrom ajointventure Amount duefrom related parties Receivables andprepayments Inventories Other depositsandprepayments Deposits onaircraft purchases Deferred taxassets Property, plantandequipment -13,133 90,074 183,152

RM’000 EBITDAR ot saAsrlsaOthers Australasia Asia North 15.9% 19.6% 0.6% 1 218,566 232,401 252,646 14.6% 25.8% 342,300 342,210 2016 13.9% 2.4% 16.1% 2.8% 669,777 20.3% -14.4% 20.3% 1.4% 1.1% 34.2% & SHAREHOLDERS’ 10.5% 2015 LIABILITIES 1 EBITDAR represents earnings before finance cost, taxation, depreciation, EBITDARrepresents earningsbefore finance cost,taxation,depreciation, EQUITY amortisation, and aircraftrentalexpenses 062015 2016 14.9% -2.5% 21.8% -20.5% 1.5% Other payables andaccruals Amount dueto related parties Trade andotherpayables Derivative financialinstruments Sales inadvance Borrowings Other reserves Accumulated losses Currency translation reserve Warrant reserve Share premium Share capital ANNUAL REPORT 2016

091

Group QuarterlyFinancialPerformance eeu 7 8 8 1,170 982 883 971 Revenue Income Statement(RM’mil) BTA 4 6 0 347 109 301 51 261 20 341 105 Operating Profit/(Loss) EBITDAR rft(os eoeTx29()1 39 110 12 44 (9) 11 219 96 Profit/(Loss) BeforeTax Net OperatingProfit/(Loss) aain(9 0()(20) (1) 10 (39) Taxation rft(os fe a 7 119 11 1 179 Profit/(Loss) AfterTax ai P sn . . . 0.5 0.3 0.0 4.3 Basic EPS(sen) eoi,Cs n akBlne 3,6 2217 6,9 422,021 367,092 282,157 239,963 Deposit, CashandBankBalances Balance Sheet(RM’000) oa ses41461 ,7,0 42542 4,490,290 4,265,402 4,170,000 4,194,611 Total Assets oa orwns12736 ,2,7 11057 1,160,326 1,120,567 1,127,579 1,247,336 Total Borrowings hrhles qiy88339145 5,3 1,056,885 959,138 941,465 838,353 Shareholders’ Equity e et10733 4,2 7345 738,305 753,475 845,422 1,007,373 Net Debt e ern x .009 .90.70 0.79 0.90 1.20 Net Gearing(x) 1Q 2Q 2016 3Q ANNUAL REPORT 2016 4Q

093 094 Investor Relations AIRASIA XBERHAD shareholders. valuable feedbackfrombothcurrentandprospective strategy andfinancialperformancereceived throughout 2016.ManagementsharedtheGroup’s met morethan100analystsandfundmanagers organised bylocalandforeignresearchhouses.We meetings aswelllargegrouppresentations Locally, AirAsiaXalsoparticipatedinsmallgroup Singapore. America, theUnitedKingdom,HongKongand participating insixroadshowstheUnitedStatesof out toawiderinvestoraudienceinternationallyby With theaforementionedobjectives,AirAsiaXreached peers aswellfixed-incomeinvestors. also targetprospectiveinvestorswithexposureinour long-term fundsfocusedontheaviationsector.We preferably withanAsianand/orAseanfocus,and base bytargetingmoreemergingmarketfunds continued itsstrategyofdiversifyingshareholder programme. In2016,AirAsiaXInvestorRelations investors throughaplannedinvestorrelations business activities,wecontinuouslyengagewithour abreast ofourstrategies,performanceandkey To ensurethattheinvestmentcommunityiskept stakeholders’ needs. provide thenecessaryinformationtobetterserveour providers andleaderswithinAirAsiaXallowedusto Investor Relationsteamandvariousinformation economic landscape.Effectiveteamworkbetweenthe information asaresultofthemorechallenging investment communityformoredetailedandspecific during theyeartoaddressrisingdemandfrom We continuedtoimprovethequalityofourdisclosures investment communityatlarge. honest relationshipwithourshareholdersandthe organisation, wehaveadutytomaintainanopenand AirAsia Xrecognisesthat,asaresponsible a pressrelease. statements totheexchange,ananalystpresentationand Malaysia. Thebriefingpackincludesthefinancial immediately aftertheannouncementismadetoBursa and ismadeavailableonthecorporatewebsite a briefingpackwhichisemailedtoourdistributionlist equal accesstotheresultsannouncements,weprovide and analystsareprovidedwithcomprehensive by theInvestorRelationsteam.Toensurethatinvestors Group CEOtogetherwiththeCEO,CFOandattended teleconferencing. Thesesessionsarechairedbythe analysts andfundmanagers/investorsvia disclosures toBursaSecurities,briefingsareheldfor Subsequent tothereleaseofourquarterlyearnings ANALYST BRIEFINGSFORQUARTERLY ANNUAL GENERALMEETING RESULTS ANNOUNCEMENTS passed bytheshareholders. proposed resolutionswereduly Board andLeadershipTeam.Allthe questions andprovidefeedbacktothe AGM, shareholderswereabletoraise 2016 inSepang,Malaysia.Duringthe Meeting (AGM)washeldon31May AirAsia X’s10thAnnualGeneral Our substantialshareholdersare: investor-related Groupdisclosures. remained up-to-datewiththelatest continued toensurethatthewebsite The InvestorRelationsteam and disclosurestoBursaSecurities. structure information,pressreleases results, investorpresentations,capital the Group’sannualreports,financial and overseas.Thewebsitecontains queries andfeedback,bothlocally investor informationandreceiving important channelfordistributing www.airasiax.com continuedtobean The AirAsiaXcorporatewebsiteat INVESTOR RELATIONS shareholder basewith AirAsia Xhasadiversified WEBSITE Julius Baer&Co.Ltd Tune GroupSdnBhd AirAsia Berhad team at stakeholders aswellprovide anavenuethroughwhichtheymaycommunicate withthe Relations function,weseekconstructiveideasthrough ongoingengagementwith stakeholder groupthroughdirectcommunication.To furtherenhanceourInvestor we constantlymeettheirrequirementswhilefurther improvingourrelationshipwiththis AirAsia Xhighlyvaluesfeedbackfromtheinvesting community. Thishelpstoensurethat aax_shareholder@airasia.com 37,142 (Singapore) ANALYST COVERAGE oRsac os Analyst ResearchHouse No 0Afnwn AaronKeeJennFoong AffinHwang 10 2Mra tne DanielLau MorganStanley 12 1KnnaAdrianNg Kenanga 11 ulcIvs NurFarahSyifaa' MohamadFu'ad PublicInvest 4 abn MohshinAziz Maybank 6 IFTayYowKen MIDF 9 lineB MarvinKhor AllianceDBS 8 H ShekharJaiswal RHB 3 IBRaymondYap CIMB 5 rdtSis MuzhafarMukhtar CreditSuisse 2 aqai AzitaAzrene Macquarie 7 ouaAhmadMaghfur Nomura 1 hc oehracutfrholdingoftheGroup Meanwhile, ourforeignshareholdingasat31December 2016stoodat15.47% which togetheraccountfor SHAREHOLDER BASE FEEDBACK across theglobeasat31December2016. institutional andprivate/retailshareholders 14.29% 13.76% 33.12% 5.07% ANNUAL REPORT 2016

095 096 As at31December2016 INVESTOR RELATIONSEVENTS Investor Relations AIRASIA XBERHAD September November December February October August ot aeDtisVneType Venue Details Date Month April June July May 7SpebrCnlmrt etn ihMD ul upr aasaMeeting KualaLumpur,Malaysia ConglomerateMeetingwithMIDA 07 September 3SpebrCei useNnDa odhwKaaLmu,Mlyi Non-DealRoadshow KualaLumpur,Malaysia CreditSuisseNon-Deal Roadshow 23 September 02 December Goldman Sachs 3rd Annual ASEAN Investor Goldman Sachs3rdAnnualASEANInvestor 02 December 22 November Announcement of the unaudited results for Announcementoftheunauditedresultsfor 22 November 01 coe H o-elRaso igpr Non-Deal Roadshow Singapore RHBNon-DealRoadshow 10-11 October 26 February Announcement of the unaudited results for Announcementoftheunauditedresultsfor 26 February 0OtbrRBNnDa odhwHn ogNon-Deal Roadshow HongKong RHBNon-DealRoadshow 20 October September 23 August Announcement of the unaudited results for Announcementoftheunauditedresultsfor 23 August 41 ueF lblCneec igpr Talk/Speaker Singapore FCGlobalConference 14-15 June 08 June Recipient of Bronze at the Astrid Awards RecipientofBronzeattheAstridAwards 08 June 9ArlRgoa utai saFrmDri,AsrlaTalk/Speaker Darwin,Australia RegionalAustraliaAsiaForum 29 April 8Jn hlegn h vainSau u et,AsrlaTalk/Speaker Perth,Australia ChallengingtheAviationStatusQuo 28 June 0Jl Nmr o-elRaso hcg,UANon-Deal Roadshow Chicago,USA NomuraNon-DealRoadshow 20 July 24 May Announcement of the unaudited results for Announcementoftheunauditedresultsfor 24 May 9Jl ouaNnDa odhwLno,EgadNon-DealRoadshow London,England NomuraNon-DealRoadshow 19 July 1My1t nulGnrlMeigSpn,Mlyi AGM Sepang,Malaysia 10thAnnualGeneralMeeting 31 May 1Jl Nmr o-elRaso e ok S Non-Deal Roadshow NewYork,USA NomuraNon-DealRoadshow 21 July 24-27 24-27 ol ot taeySmi hnd,CiaTalk/Speaker Relations Forum Chengdu,China World RouteStrategySummit 2Q16 3Q16 Destinations) –Non-TraditionalCategory Report 2014:AwesomeTeam,Amazing under theCorporateAnnualReport(Annual 1Q16 4Q15 andFY15 igpr Forum Singapore Analysts'Briefing Kuala Lumpur,Malaysia eag aasaAnalysts'Briefing Sepang, Malaysia e ok S Others New York,USA Analysts'Briefing Kuala Lumpur,Malaysia ul upr aasaAnalysts'Briefing Kuala Lumpur,Malaysia under theNon-Bumiputera column. Provident Fund,KumpulanWangSimpananPekerjaand WangAmanahPencenshouldbeclassified the Employees ofthis submission,sharesheldbyKhazanahNasionalBerhad, MinisterofFinanceInc,BankNegaraMalaysia, For purposes agencies, suchasLembaga TabungHaji,PermodalanNasionalBerhadandState EconomicDevelopmentCorporations. Bumiputera shareholdings include sharesheldthroughinstitutionschannelling fundsofindividualBumiputeraandtrust Share PricePerformance Lowest Lowest Highest Highest Volume Volume 06JnFbMrArMyJnJlAgSpOtNvDec Nov Oct Sep Aug Jul Jun May Apr Mar Feb Jan 2016 R)01502502 .8 .2 .503503 .803 .50.355 0.35 0.39 0.38 0.37 0.365 0.35 0.325 0.285 0.25 0.225 0.175 (RM) R)02 .603503504503504 .9 .1 .4 .4 0.4 0.445 0.445 0.415 0.495 0.41 0.395 0.415 0.395 0.325 0.26 0.25 (RM) ’0)444349361306911562135543601540113806384631587677268,273 726,757 351,548 318,416 1,368,086 574,011 386,051 1,325,584 1,165,652 1,330,609 409,336 434,453 (’000) Lowest Price a 1 e 1 a 1 p 1 May ‘16 Apr‘16 Mar‘16 Feb ‘16 Jan ‘16 032013 2014 2015 2016 Others 70.32% Individuals 29.68% Based on31Dec2016information 2013 2014 2015 2016 Shareholder since IPO 0.175 ihs rc Volume Traded Highest Price 94110.66% 16.77% 9.52% 15.47% 29,481 33,272 36,525 37,142 January 2016–December 2016 u 1 u 1 u 1 e 1 c 1 o 1 Dec‘16 Nov ‘16 Oct‘16 Sep‘16 Aug ‘16 Jul‘16 Jun ‘16 Lowest Price Highest Price Foreign Shareholding Foreign 15.47% Non-Bumiputera 44.59% Bumiputera 39.94% Based on31Dec2016information 0.495 ANNUAL REPORT 2016

097 098 Market Capitalisation Market Capitalisation AIRASIA XBERHAD 0321 052016 2015 2014 2013 OETPIELOWESTPRICE LOWEST PRICE HIGHEST PRICE .9 0.34 0.175 0.495 OO USADN HRSMATURITY DATE NO OFOUTSTANDINGSHARES VRG RDN OUELISTINGDATE AVERAGE TRADINGVOLUME AKTCPTLSTO ISSUESIZE MARKET CAPITALISATION ,4,4,7 8June 2020 4,148,148,177 RIAYSAE WARRANTS ORDINARY SHARES M.9i 889mil RM1.49bil aktCptlsto Share Price Market Capitalisation 5i 11June2015 35mil 0 a 06 (04Jan2016) (05 Jan 2016) 1 u 06 (20May2016) (18 Aug2016) HIGHEST PRICE 0.045 EXERCISE PRICE RM0.46 06R03 RM1.49bil RM0.75bil RM1.60bil RM0.36 RM0.18 RM2.44bil RM0.68 2016 RM1.03 2015 2014 2013 Year Share Price Year End Closing Capitalisation Market www.bird.in AIRASIA X BERHAD 2016 FINANCIAL CALENDAR

FEBRUARY MAY

DATE DATE 26 FEBRUARY 24 MAY 31 MAY DETAILS DETAILS ANNOUNCEMENT OF 10TH ANNUAL ANNOUNCEMENT OF THE UNAUDITED THE UNAUDITED GENERAL MEETING RESULTS FOR 4Q15 RESULTS FOR 1Q16 VENUE VENUE KUALA LUMPUR, MALAYSIA KUALA LUMPUR, SEPANG, MALAYSIA MALAYSIA TYPE TYPE ANALYSTS’ BRIEFING ANALYSTS’ BRIEFING AGM

AUGUST NOVEMBER

DATE DATE 23 AUGUST 22 NOVEMBER

DETAILS DETAILS ANNOUNCEMENT OF THE UNAUDITED ANNOUNCEMENT OF THE UNAUDITED RESULTS FOR 2Q16 RESULTS FOR 3Q16

VENUE VENUE KUALA LUMPUR, MALAYSIA SEPANG, MALAYSIA

TYPE TYPE ANALYSTS’ BRIEFING ANALYSTS’ BRIEFING 100 ANNUAL REPORT 2016 2017 QUARTERLY RESULTS ANNOUNCEMENTS

EVENT EVENT 1Q17 2Q17

RESULTS RESULTS ANNOUNCEMENT ANNOUNCEMENT

TENTATIVE DATE TENTATIVE DATE 23 MAY 2017 24 AUGUST 2017

EVENT EVENT 3Q17 4Q17

RESULTS RESULTS ANNOUNCEMENT ANNOUNCEMENT

TENTATIVE DATE TENTATIVE DATE 23 NOVEMBER 2017 FEBRUARY 2018 101 102 existing routes. permitting anyincreaseinfrequencyof their countries,withJapanalsonot carriers fromstartingnewroutesto Korea placingrestrictionsonThai The redflagledtobothJapanand regulatory environmentinJune2015. flagging ofthecountry’saviation Aviation Organization(ICAO)’sred temporarily followingInternationalCivil Korea –havehadtobeputonhold these markets–especiallyJapanand vice versa.However,planstobuild destinations amongThais,aswell and China–whicharepopular Asian market–particularlyJapan,Korea had aclearideaofservingtheNorth From thebeginning,AirAsiaXThailand 77% to84%. returned toitsinitialhighfrom84% 2016. Itspassengerloadfactorhas 0.92 millionin2015and1.37 increase –from0.25millionin2014,to number ofguestscarriedsteadily Korea andChina;isseeingthe four populardestinationsinJapan, of sixAirbusA330aircraft;itserves June 2014,ithasgrowntohaveafleet status. Sincebecomingoperationalin country, andisenjoyingitsfirstmover long-haul low-costcarrier(LCC)inthe Our associateinThailandisthefirst STEADILY BUILDINGMOMENTUM AIRASIA XTHAILAND: Business Review AIRASIA XBERHAD year. of TravelAwardsinearlyJanuarythis Airline inChinaatthe2016NewPower by itsbeingnamedtheMostInfluential this domain,afactthatwasrecognised China. AirAsiainparticularisstrong and independenttravellers(FITs)in airlines totargetthenewclassoffree being madebytravelagenciesand to globaltourism.However,effortsare becoming onethelargestcontributors groups fromthenationthatisfast China affectedthenumberoftour clampdown onzero-dollartoursfrom Additionally, thegovernment loss ofKingBhumibolAdulyadej. affected bythenationmourning In thefourthquartertourismwas during thelowseasonmonths. season’ campaigntostimulatetravel brand buildingandastrategic‘lite Tehran inIranandMuscatOman, flights totheMiddleEastnamely introducing forashortperiodoftime guests carriedby48.9%asaresultof It alsomanagedtogrowthenumberof the bestfacilitiesandservice. in thecountrybutalsoofferingamong just moreaffordablethanotherairlines building itsownbrandforbeingnot low-cost airlinesintheworld,itis Cabin andPremiumSeatsamongall reputation forhavingthebestPremium Leveraging onAirAsiaXGroup’s guests havegreattravelexperiences. Allstars aregoingallouttoensure greater efficiencies,whileits640 and streamlineitsoperationstocreate the industrylulltofurtherstrengthen Meanwhile, AirAsiaXThailandisusing destinations. many newtrailstosomeexciting we canseeAirAsiaXThailandblazing be toofarincoming.Andonceitdoes, from rapidexpansion.Thatdaymaynot there willbelittletostopourassociate And, oncetheICAOredflagislifted, demand andinfrastructurearethere. aviation hub.Inotherwords,the become theworld’sbusiestlow-cost Thailandoperates–has AirAsia X International Airportfromwhich – andespeciallyDonMueang after HongKong.Additionally,Bangkok International placesBangkoksecond, Destinations Ranking2017,Euromonitor associate. InitsTop100City prospects arecertainlybrightforour Looking furtherintothefuture, to dothesameforothers. particular, whilemaintainingtheoption routes, targetingBangkok–Incheonin increase thefrequencyofcertainexisting efficiencies, theairlinealsoplansto prices. Withgreateroperational continuing environmentoflowfuel efforts willbecomplementedbythe its costmanagementinitiatives.These aircraft maintenanceplanningtoadd aircraft utilisationandenhanceits focus intentlyonachievinggreater Going forward,AirAsiaXThailandwill AirAsia XThailand EXPRESS WING Callsign : ICAO :TAX XJ : IATA ANNUAL REPORT 2016

AIRASIA X INDONESIA: BUILDING THE BALI CONNECTION

The aviation industry in Indonesia has As part of plans to consolidate the two Meanwhile, prospects for long-haul LCC been through some challenging times airlines, their route networks have been operations look bright. Long-haul flights over the last few years, but with the rationalised; and, in September 2016, (ie flights of more than four hours) recent upgrade of its Federal Aviation AirAsia X Indonesia temporarily account for approximately one-third of Administration (FAA) rating from suspended its long-haul operations, international capacity in Indonesia and Category 2 to Category 1, local carriers affecting three routes, namely Bali to is among the fastest growing aviation now have open access to any Melbourne and Sydney, and Jakarta to markets in the country. Just in 2016, international market, which is excellent Jeddah. In 4Q16, the two AirAsia X roughly 4.9 million of its visitors (41% of news for our associate, AirAsia X Indonesia aircraft were wet leased to the total) were long-haul tourists, Indonesia. Malaysia AirAsia (MAA) while network primarily from Australia, China, Hong restructuring at improving operational Kong, Taiwan, Jeddah, Japan, South Without restrictions to countries such as efficiencies at AirAsia X Indonesia took Korea and India. At the same time, a Korea and Japan, AirAsia X Indonesia place. growing Indonesian middle class means has been inspired with a new strategy to increased appetite among Indonesians create an aviation corridor that connects Integration of the two airlines would, to travel farther and wider to see the North Asia and the Indian subcontinent indeed, create some positive synergies world. Yet travel is still price-sensitive, to Australasia. This strategy rests on as IAA is already well-established as and a large number of the new wave of interconnecting guests on AirAsia (and one of the strongest Indonesian airlines Indonesian travellers will appreciate the especially Indonesia AirAsia)’s short-haul in the international market, accounting affordable prices offered by AirAsia X network into and out of Bali to take for no less than 27.4% of international Indonesia as opposed to full-service them to destinations beyond Asean. passenger traffic coming into Indonesia; carriers. And, in 2016, many changes were and AirAsia X Indonesia is to date the effected to realise this dream. only long-haul low-cost carrier (LCC) in For its part, AirAsia X Indonesia has the country. outlined its journey to start creating Most pertinently, the management is skybridges linking North Asia-India- exploring the possibility of consolidating Moreover, the two airlines enjoy a good Australasia. To begin with, it aims to the operations of both AirAsia X relationship with relevant government resume long-haul routes from Bali Indonesia and our short-haul sister agencies in Indonesia, supporting connecting with destinations in India and airline Indonesia AirAsia (IAA). This various humanitarian causes as well as Japan, markets where it will enjoy an would have the triple benefits of: 1) campaigns run by the Ministry of edge over competition from local allowing for more effective coordination Tourism. In 2016, AirAsia X Indonesia support – such as distribution/payment of short and long-haul flights with Bali provided aircraft to aid in the channels and dedicated marketing teams as the main transit hub; 2) better repatriation of Indonesian victims of a – provided by AirAsia India and the positioning for AirAsia X Indonesia to fraudulent travel syndicate from Manila soon-to-be operational AirAsia Japan. meet the minimum aircraft requirements and, later, to transport medical staff, imposed by Indonesia’s Ministry of relief workers and necessities including Towards the later part of the year, after Transportation; and 3) enhancing the medical equipment and water to Banda the India and North Asia links are ability of IAA to meet the ministry’s Aceh following an earthquake in matured and domestic feeders positive equity ruling. December. To promote tourism, developed, there are plans to re-enter AirAsia X Indonesia unveiled a the Australian market. Wonderful Indonesia logo on the livery of one of its A330 aircraft in May as Reflecting the industry, AirAsia X part of the ministry’s eponymous Indonesia has had its fair share of campaign. Both AirAsia X Indonesia and challenges since its establishment. IAA are committed to playing their However, with the organisational parts to help the ministry achieve its changes taking place, a more goal of attracting some 20 million accommodative operating environment foreign tourists by 2019, up from 12 (for route expansion), and the ever- million in 2016. strong dedication of its Allstars, we believe 2017 has all the makings of a fresh, more positive beginning.

AirAsia X Indonesia IATA : XT ICAO : IDX Callsign : RED PHOENIX 103 MANAGING OIL PRICE RISK OUR PRIORITY

OUR CORE BUSINESS

Proud to be AirAsia X’s long-standing partner

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Terms and Conditions apply. 1. “Fresh funds” means funds in Ringgit Malaysia which do not originate from any account held with either Standard Chartered Bank Malaysia Berhad or Standard Chartered Saadiq Berhad. The deposit must be paid into your Privilege Savings Account to qualify. 2. Not applicable for Gold CashBack, JustOne Gold, JustOne Platinum MasterCard®, Platinum MasterCard® and WorldMiles World MasterCard® credit card. 3. Invest category can be with Standard Chartered Bank Malaysia Berhad or Standard Chartered Saadiq Berhad and covers any unit trust funds (UT), bonds, Investment Suite/Haiqal Plan or Premium Currency Investment where the Eligible Customer: pays a sales charge of at least 2.5% (in the case of UT); or pays a spread of at least 2% (in the case of bonds); or invests into Investment Suite or Haiqal Suite. Please check with our branch or your Relationship Manager for the specific UT and bonds which qualify. 4. Insure category can be Standard Chartered Bank Malaysia Berhad or Standard Chartered Saadiq Berhad and means subscribing to any regular premium conventional Bancassurance or Takaful products. The above are merely excerpts only. For full Terms and Conditions, please visit sc.com/my Campaign will run from 1 December 2016 till 31 December 2017. The Privilege Savings Account is eligible for protection by PIDM. Standard Chartered Bank Malaysia Berhad (115793-P) YOUR NEW AIRPORT RETREAT IS HERE. AIRASIA PREMIUM RED LOUNGE

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* Pre-book only available to all AirAsia X (D7) passengers departing from klia2 Sty A new route to Taipei, Taiwan is launched. 08 AUGUST AirAsia X celebrates the 42nd ASEAN Day at the Low Cost Carrier Terminal (LCCT) in Sepang. 20 OCTOBER A new route is launched to Chengdu, China. 24 JUNE With the administration fee abolished, passengers now pay only for their seats and airport tax. 26 JUNE AirAsia X sponsors the Oakland Raiders, three-time National Football League (NFL) Super Bowl champion. 01 JULY 02 APRIL Transport Minister Dato’ Sri Ong Tee Keat sends off AirAsia X’s first flight to Tianjin, China. 28 APRIL AirAsia X and AirAsia partner Scicom (MSC) Berhad to establish a world-class, state-of-the-art global contact centre. 16 JUNE AirAsia X orders 10 A350- 900 aircraft with an option for another five. 13 JANUARY The Supersize baggage policy is introduced. 17 FEBRUARY Passengers can make use of a web-based self check-in facility. 11 MARCH AirAsia X celebrates its inaugural flight to Stansted, London. AIRASIA X’s AIRASIA 13 NOVEMBER AirAsia’s inaugural flight from Kuala Lumpur to Melbourne, Australia takes off. 13 MARCH More than 100,000 seats have been sold, valued at approximately RM100 million. 27 MARCH An order is placed for another 10 Airbus A330- 300 aircraft, bringing the airline’s total order to 25 A330-300 aircraft. 31 OCTOBER AirAsia X takes delivery of its first brand-new Airbus A330-300 aircraft in Toulouse, France. 02 NOVEMBER AirAsia X celebrates its first anniversary with a second Australian destination, Perth. 04 FEBRUARY The Kuala Lumpur – Hangzhou, China route is launched.

The first flight to Australia’s Gold Coast is launched, with pioneering assigned seating and pre-booked meals. 14 JUNE AirAsia X places an order for 15 Airbus A330-300 aircraft. 10 AUGUST AirAsia X announces a 20% investment by Sir Richard Branson’s Virgin Group. 02 OCTOBER AirAsia X receives its Air Operator’s Certificate and Air Service License from the Department of Civil Aviation Malaysia. 02 NOVEMBER 05 JANUARY Tan Sri Dr. Tony Fernandes and Datuk Kamarudin Bin Meranun announce the launch of AirAsia X. 2007 2008 2009 REVISIT REVISIT IN OCCASIONS MOMENTOUS AIRASIA X BERHAD X AIRASIA Milestones Corporate 108 PREMIUM RED LOUNGE Sty Japan. A newrouteislaunchedto Tokyo-Haneda, 09 DECEMBER destination. Seoul, SouthKoreabecomesAirAsiaX’s12th 02 NOVEMBER and Tehran,Iran. New routesarelaunchedtoDelhi,India 04 AUGUST India. AirAsia XlaunchesnewroutetoMumbai, 06 MAY the 2010MotoGPWorldChampionship. AirAsia XandputaMalaysianteamin 08 APRIL flatbeds. AirAsia XintoducesitspopularPremium 05 APRIL Silverstone. of the2010AirAsiaBritishGrandPrixat AirAsia Xandarethetitlesponsors 10 FEBRUARY LCCT andselectedregionalairports. Self check-inkiosksareintroducedatthe 20 JANUARY 002011 2010 le the LCCT. The Fly-Thruserviceislaunchedat 17 JANUARY Everest on21May. with asuccessfulascentof Mount their highestpeak,culminating Taiwan andNewZealand, to scale the UK,France,Iran,Japan, Korea, AirAsia X’snetwork,namely China, flown toeightdestinationswithin Adventurer KhooSweeChowis 07 APRIL Christchurch, NewZealand. AirAsia Xlaunchesanewrouteto 01 APRIL France. the firstflighttoParisOrly, Valentine’s Dayiscelebratedwith 14 FEBRUARY Alexandria. Egyptian citiesofCairoand AirAsia Xrescueflightsfromthe 2,380 Malaysiansarereturnedon 3-7 FEBRUARY via OptionTown. Premium Classforanominalfee Passengers canupgradeto 27 JANUARY campaign. long “ToJapanwithLove” AirAsia XjoinstheGroup’syear- 10 MAY Japan. International AirportinOsaka, AirAsia XtouchesdownatKansai 30 NOVEMBER with theexceptionofSydney. route restrictionsonAirAsiaX, The MalaysianGovernmentlifts 28 JUNE solution. an In-FlightEntertainment(IFE) Sdn Bhd)forthedevelopmentof Bhd (formerlyknownasTuneBox (MOU) issignedwithRokkiSdn A MemorandumofUnderstanding 22 JUNE – KualaLumpurflights. prepare KoreandishesforSeoul Celebrity ChefShingunisto 26 MAY ANNUAL REPORT 2016

109 110 Corporate Milestones AIRASIA XBERHAD their ownexclusive flight. Sydney toKualaLumpuron her familyandfriendsfrom – andgetstoflywith300 of the airline’sfifthanniversary contest –heldtocelebrate X’s FriendsyFacebook An AustralianwinsAirAsia 02 NOVEMBER A330-300 aircraft. for theleaseofsixAirbus Finance Corporation(ILFC) with theInternationalLease A letterofintentissigned 09 AUGUST option. flights asapre-booked 10.1 ismadeavailableonall The SamsungGalaxyTab 23 JULY Kuala Lumpur. a newdestinationfrom Kathmandu, Nepalbecomes 10 JULY from TianjintoBeijing,China. AirAsia Xtransfersitsservice 22 JUNE launched. Airport, Sydney,Australiais Kingsford SmithInternational The long-awaitedrouteto 02 APRIL launched. (ESO) viaOptionTownis The EmptySeatOption 09 FEBRUARY network consolidation. New Delhiaspartofits London, Paris,Mumbaiand suspension offlightsto AirAsia Xannouncesthe 12 JANUARY 022013 2012 (IPO) prospectus. Initial PublicOffering AirAsia Xlaunchesits 10 JUNE Perth toKualaLumpur. board flightD7237from attendant andserveson dresses asaflight Sir RichardBranson 12 MAY France. aircraft inToulouse, 10th AirbusA330-300 AirAsia Xreceivesits 23 APRIL General Elections. with Malaysia’s13th campaign inconjunction ‘Fly HometoVote’ AirAsia Xlaunchesthe 10 APRIL VIP treatmenttoguests. is launched,providing The RedCarpetservice 26 FEBRUARY off. Shanghai, Chinatakes AirAsia X’sfirstflightto 19 FEBRUARY takes off. Jeddah, SaudiArabia AirAsia X’sfirstflightto 16 FEBRUARY Zone. the launchofQuiet peace andquietwith guests wholiketheir AirAsia Xcatersto 01 FEBRUARY 15 JULY Bursa Malaysia. the MainMarketof (Stock Code:5238)on trading underAAX AirAsia Xcommences 10 JULY to termsandconditions. first threeyears,subject their IPOsharesforthe investors whomaintain Programme forretail Shareholders’ Benefit AirAsia Xlaunchesa 13 JUNE billion. Airbus, valuedatUSD6 aircraft issealedwith of 25AirbusA330-300 aircraft typefirmorder The singlelargest 18 DECEMBER Thailand. the MinistryofTransport Operator’s Licensefrom receives theAir AirAsia XThailand 14 OCTOBER Malaysians. home atotalof1,110 after havingbrought rescue missioninCairo, AirAsia Xcompletesits 29 AUGUST Korea afterSeoul. destination inSouth Busan, itssecond AirAsia Xarrivesin from Busan,bothinKorea. affordable farestoJejuIsland Busan offeringcustomers Marketing AgreementwithAir AirAsia XsignsaCommercial 25 MAY Berhad beginoperationsinklia2. AirAsia Xtogetherwith 9 MAY its fleet. for thesupplyofCF6engines AirAsia XsignsanMOUwithGE 28 APRIL new CEO. appoints NaddaBuranasiriasits Operator’s Certificateand AirAsia XThailandobtainsitsAir 4 FEBRUARY social media contest. winning entrybyDenzelYap ina 21st aircraft-thenamebeing the called XcintillatingPhoenix, forits AirAsia Xunveilsanewlivery, 15 AUGUST Awards inLondon. Cabin bySkytraxWorldAirline Low-Cost Airline–Premium Class SeatandWorld’sBest Best Low-CostAirline–Premium AirAsia XisnamedtheWorld’s valued atUSD13.8billion. MOU forAirbusA330neoaircraft AirAsia XandAirbussignan 15 JULY connect bothcities. only airlinefromKualaLumpurto to Xi’an,Chinamarkingitasthe AirAsia Xsendsoffitsfirstflight 2 JULY factor. Seoul, Koreawitha100%load inaugural flightfromBangkokto AirAsia XThailandlaunchesits 17 JUNE klia2. AirAsia Xhelps tospreadChristmascheer at 19 DECEMBER A330neo aircraft. AirAsia Xplacesafirmorder for55Airbus 15 DECEMBER Ji Sunglivery. global ambassadorwiththeunveilingofaPark global footballiconParkJiSungasitsnew AirAsia X,togetherwithAirAsia,announces 10 DECEMBER Foundation Malaysia. concert organisedbytheAlzheimer’sDisease Symphony Orchestrainsupportofacharity Shanghai toKualaLumpurforthe AirAsia Xsponsors87returnflightsfrom 03 DECEMBER Rolls-Royce’s 1,500thTrent700engine. aircraft, calledRhythmicExperience,poweredby AirAsia Xwelcomesits22ndAirbusA330-300 28 NOVEMBER Championship heldintheGoldCoast. the 2014AustralianAllStarCheer&Dance Malaysia’s elitecheerleadingteam,tocompetein AirAsia XsupportstheAwesomeAllStars, 25 NOVEMBER AirAsia XcommencesflightstoNarita,Tokyo. 21 NOVEMBER to donatebrasvillagewomeninNepal. AirAsia XsupportsNeubodi’s‘UpliftCharityTrail’ 19 NOVEMBER Awards. by ExpatriateLifestyle’sTheBestofMalaysia AirAsia XispresentedwithanExcellenceaward 30 OCTOBER Battalion (MALBATT)850-2toLebanon. AirAsia XfliesthefirstbatchofMalaysian 04 SEPTEMBER Certificate. AirAsia XIndonesiaobtainsitsAirOperator’s 28 AUGUST 042015 2014 Indonesia. Melbourne, AustraliatoBali, Indonesia’s directflightfrom (CASA) approvesAirAsiaX Civil AviationSafetyAuthority 05 MARCH Shian asChiefFinancialOfficer. AirAsia XappointsCheokHuei 25 FEBRUARY Chongqing, China. flight fromKualaLumpurto AirAsia Xlaunchesitsinaugural 13 FEBRUARY Benyamin IsmailasActingCEO. Meranun asGroupCEOand changes withDatukKamarudin AirAsia Xannouncesleadership 30 JANUARY third consecutive year. Cabin &PremiumSeatfor the Best Low-CostAirlinePremium AirAsia XisnamedtheWorld’s 16 JUNE Key SupplierAgreement. AirAsia XandFlightCentresigna 02 JUNE Melbourne. inaugural flightfromBalito AirAsia XIndonesialaunchesits 18 MAY Registration. Operational SafetyAudit(IOSA) AirAsia XreceivestheIATA 12 MAY agencies inaidofreliefefforts. Nepal forNGOsandhumanitarian AirAsia Xoffersfreeflightsto 29 APRIL Perdana UTMEverest2015. climbers takingpartintheMisi AirAsia Xsupportsyoung 28 MARCH as itsCEO. AirAsia XnamesBenyaminIsmail 01 SEPTEMBER to Seoul. offer attractionticketsonflights collaborate withLotteWorldto Malaysia andAirAsiaXThailand 27 AUGUST new globalambassador. ‘Hitman’ DavidFosterastheir AirAsia Xandreveal 12 AUGUST Rumah KasihSayang. brings cheertoorphansat AirAsia X’sleadershipteam 11 JULY TV series. Challenge ontheMasterChef Asia winning recipesfromtheAirAsia exclusive inflightdishesbased on AirAsia Xandintroduce 20 NOVEMBER new routetotheIndiancapital. New Dehliwiththelaunchofa AirAsia Xbids 19 NOVEMBER Sydney, Australia. inaugural flightfromBalito AirAsia XIndonesiacelebratesits 17 OCTOBER Sapporo, Japan. flight fromKualaLumpurto AirAsia Xlaunchesitsinaugural 01 OCTOBER Shanghai, China. inaugural flightfromBangkokto AirAsia XThailandcelebratesits 28 SEPTEMBER peacekeeping missions. fly Malaysianheroeson AirAsia Xandcontinueto 08 SEPTEMBER ANNUAL REPORT 2016 namaste (hello) to (hello)to

111 112 21 June and22June,respectively. 21 June to Tehran,IranfromKuala LumpurandBangkokstartingfrom AirAsia andXThailand announcethriceweeklyflights 14 MAY June toOctober. special travelpackagestotheNisekoregionofHokkaido from AirAsia XentersintoapartnershipwithMYecolodge tooffer 20 APRIL carrying apassengerloadexceeding95%. Auckland viaAustralia’sGoldCoast,withtheinaugural flight AirAsia XcommencesdailyflightsconnectingKuala Lumpurto 23 MARCH gift hamperstotheseniorcitizens. Folks HomeinKualaLumpurwheretheydistributeangpowand employees ofAirAsiaXspendthemorningatAmpangOld In conjunctionwithChineseNewYear,themanagementand 13 FEBRUARY 90%. lands intheIndiancapital,carryingapassengerloadofover AirAsia X’smaidenflightfromKualaLumpurtoNewDelhi 4 FEBRUARY 2016 CorporateEvents AIRASIA XBERHAD off recyclables. off recyclables. organisations andinspiringthepublictodrop participation ofover20environmental part ofthe#GREEN24movement,attracting community eventinBangsar,KualaLumpuras AirAsia X,togetherwithAirAsia,holdsa 30 JANUARY as RM499. Australia’s GoldCoast,withpricesfromaslow to NewZealandfromKualaLumpurvia AirAsia Xannouncesthelaunchofdailyflights 12 JANUARY livery. livery. the aircraftitselfboasting the Hollywoodblockbustermovieonboard,and Apocalypse Lumpur toPertharetreatedan Passengers onboardflightD7232fromKuala 21 MAY flight from Bangkok to Tehran. flight fromBangkoktoTehran. AirAsia XThailandlaunchesitsinaugural 22 JUNE Kuala Lumpur–Tehranflights. AirAsia Xsuccessfullylaunchesthriceweekly 21 JUNE A330-300 aircraftintoitsfleetinklia2. AirAsia Xwelcomestwobrand-newAirbus 2 JUNE themed journey, with characters from themedjourney,withcharactersfrom X-Men: Apocalypse X-Men: X-Men:

flights in October. flights inOctober. Indian Ocean’sislandofMauritius,tocommencewiththriceweekly AirAsia Xannouncesanewroute,connectingKualaLumpurwiththe 25 MAY ANNUAL REPORT 2016

113 114 2016 CorporateEvents AIRASIA XBERHAD wireless internet,lounge,workstationsandshowers. 24-hour serviceandfacilitiessuchasabuffetspread, klia2, offeringanelevatedtravellingexperiencewith AirAsia opensitsPremiumRedLoungetoguestsat 2 SEPTEMBER celebrate itswinningstreakattheSkytraxAwards. AirAsia XannouncesspecialTravelGreat8faresto 17 JULY Farnborough InternationalAirshow. at the2016SkytraxWorldAirlineAwardsheld Premium Seatawardsforthefourthconsecutiveyear Premium CabinandWorld’sBestLow-CostAirline AirAsia XwinstheWorld’sBestLow-CostAirline 12 JULY the air base in Subang in the evening. the airbaseinSubangevening. personnel fromtheRoyalBruneiArmedForcesland in a year.About210officers,rankandfilestaff under theUnitedNationsInterimForceinLebanon for Battalion (MALBATT)850-3whohadbeenserving AirAsia XfliesbackthelastbatchofMalaysian 27 SEPTEMBER cabin crew. which themaincharactersareanAirAsiapilotand Airport sponsorship ofKoreandrama Together withAirAsia,AirAsiaXannouncesits 23 SEPTEMBER as welltreatingthechildrentoascrumptiousmeal. Selangor, playinggames,givingoutgiftsand Persatuan PenjagaanKanak-KanakCacatKlang afternoon with75specialneedschildrenatthe The managementandabout20Allstarsspendan 2 AUGUST by Korean Broadcasting System (KBS), in byKoreanBroadcastingSystem(KBS),in

On the Way to the On theWayto duit raya duit raya in 2007. Coast, Australia–itsfirstdestination, launched dedicated toguestsandAllstars, intheGold AirAsia Xunveilsaspecial 9thbirthdaylivery 3 NOVEMBER RM99* onewayanddailyflightgiveaways. promotional seatswithbasefaresstartingfrom string ofanniversaryspecialsincluding AirAsia Xcelebratesitsninthbirthdaywitha 31 OCTOBER ambassador. Sebastian isnamedAirAsiaX’slatest Australian singerand 19 OCTOBER X Factor judge Guy judgeGuy special giftsattheboardinggates. be serenadedbyAllstarsandtoreceiveChristmastreats,snacks Hundreds oftravellersdepartingfromklia2arepleasantlysurprisedto 23 DECEMBER the PutraWorldTradeCentre. be heldon17and18Decemberat games –theComicFiesta2016to and fansofanimation,comics comic artists,illustrators,cosplayers annual conventionamongMalaysia’s sponsor ofthemostanticipated AirAsia Xannouncesitisthemain 14 DECEMBER in Hong Kong. in HongKong. of thePayloadAwardsAsia2016held Choice andCustomercategories Carrier oftheYearinbothIndustry AirAsia CargoisnamedLowCost 6 OCTOBER continent. airline’s firstforayintotheAfrican a 100%passengerload,markingthe International AirportinPortLouiswith at SirSeewoosagurRamgoolam AirAsia X’sfirstflighttoMauritiuslands 4 OCTOBER RedQ, locatednexttoklia2. new corporatebase,called officially moveintotheGroup’s AirAsia XandAllstars 7 NOVEMBER ANNUAL REPORT 2016

115

PROUD TO BE PARTNERING WITH AIRASIA X BERHAD MEDIA HIGHLIGHTS

PRESS CLIPPINGS JAN / FEB / MAR FIRST QUARTER

PRESS CLIPPINGS APR / MAY / JUN SECOND QUARTER 118 ANNUAL REPORT 2016

PRESS CLIPPINGS JUL / AUG / SEP THIRD QUARTER

PRESS CLIPPINGS OCT / NOV / DEC FOURTH QUARTER 119 AIRASIA X BERHAD Media Highlights

TELEVISION

DATUK KAMARUDIN MERANUN (GCEO)

The Story of Datuk Kamarudin. ‘The Story’ is where AirAsia X is confident of staying in the black. After two consecutive quarters in extraordinary individuals are gathered to tell us their the black, AirAsia X Group CEO Datuk Kamarudin Meranun believes that the story, about how they started, the challenges they faced, carrier’s turnaround is sustainable. and ultimately become who they are today.

BENYAMIN ISMAIL (CEO)

AirAsia X CEO Benyamin Ismail discusses In Conversation with Benyamin Ismail, the fleet plan for 2017 including the AirAsia X CEO, by The Hindu Business Line. possibility of bringing in a new aircraft type to support the resumption of flights to AirAsia X CEO Benyamin Ismail hopes that the Europe. He also discusses the performance airline’s new route to Auckland can break even of new routes launched in 2016 and the in three to six months. He also talks about airline’s plan for launching services to the possibly adding one to two new routes to US, starting with Honolulu in June 2017. He China this year, impact of the currency on the also shares his views on other network company, how his first year as CEO has gone opportunities, partnerships, the A330neo and when exactly AAX will break even. The and increased passenger service charges at flights to Auckland from Kuala Lumpur via Klia 2. Australia’s Gold Coast will begin on 22 March.

AirAsia X Swings to Profit in 3Q. Benyamin Ismail, CEO at AirAsia X, discusses the ARIK DE (CHIEF COMMERCIAL HEAD) turnaround in the company’s 3Q earnings, if he can carry the momentum into 2017, where he sees expansion and his hedges on oil. He speaks to Bloomberg’s Rishaad Salamat on Bloomberg Markets.

AirAsia X is launching several new destinations in 2016 and adding capacity to several existing destinations. AirAsia X Head of Commercial Arik De discusses how some of the new markets are performing, including Auckland and Tehran. He also talks about the possibility of further growth in Australia, the launch of anticipated services to the US, the group’s fleet plan, partnership options and the outlook for its two overseas affiliates. 120 ANNUAL REPORT 2016

SOCIAL MEDIA 121 AIRASIA X BERHAD 2008 • Budgie World Low Cost Airline Award for World’s Best New Airlines • CAPA New Airline of the Year Award

• World’s Best Low-Cost Airline by Skytrax, together with AirAsia Berhad • CAPA New Airline of the Year Award joint winner with AirAsia Berhad 2009

• World’s Best Low-Cost Airline by Skytrax for the second consecutive year, with AirAsia Berhad 2010

• World’s first long-haul low-cost carrier to receive second place in the Transportation and Advertising category of the Asahi Advertising Award by The Asahi Shimbun • Best Network Performance at the inaugural World Routes Awards • Ranked second Best Low-Cost Airline in Asia by Skytrax, after AirAsia Berhad • Best Budget Airline 2011 from Smart Traveller • Air Cargo Industry Customer Care Award 2011, together with AirAsia Berhad 2011 Achiev 2012

• Airbus Top Operational Excellence Award 2010-2011 for being the world’s best A330-300 operator (small fleet category) • Ranked second Best Low-Cost Airline in Asia by Skytrax, after AirAsia Berhad • Best Low Cost Airline in the Travel Top 50 issue Wish (The Australian) • Rising Star Carrier of the Year at Payload Asia Awards 2012, together with AirAsia Berhad • Best New Route Launch (for Haneda) at the World Low Cost Airlines Congress Budgies Awards • Air Cargo Industry Customer Care Award from Air Cargo Week with AirAsia Berhad • Ranked fourth best Inflight Meals by the inaugural Skyscanner Asia Pacific Food Awards (long-haul

122 category) ANNUAL REPORT 2016

• World’s Best Low-Cost Airline – Premium Class Seat and World’s Best Low-Cost Airline – Premium Cabin by Skytrax World Airline Awards • Uber Social WITovation Award at the Web In Travel (WIT) Conference • Best Investor Relations for IPO Award by IR 2013 Magazine & Conference South East Asia

• World’s Best Low-Cost Airline – Premium Class Seat and World’s Best Low- Cost Airline – Premium Cabin by Skytrax World Airline Awards • Best Investor Relations for an IPO Award by Malaysia Investor Relations Association (MIRA) • Excellence Award by Expatriate Lifestyle’s The Best of Malaysia Awards 2014 2015 • World’s Best Low-Cost Airline – Premium Seat and Premium Cabin by Skytrax • Asia’s Leading Cabin Crew by World Travel Awards • Ranked second Best Low-Cost Airline in Asia by Skytrax • Ranked second Best Low-Cost Airline hevements in Australia/Pacific by Skytrax 2016 • World’s Best Low-Cost Airline – Premium Class Seat and Premium Cabin by Skytrax • AirAsia Cargo named Low-Cost Carrier of the Year – Industry Choice and Customer Choice at Payload Awards Asia 2016 • Ranked third World’s Best “Long-Haul” Low-Cost Airline by Skytrax • Ranked second Best Low-Cost Airline in Asia by Skytrax • Ranked second Best Low-Cost Airline in Australia/ Pacific by Skytrax 123

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Gold Coast hinterland SUSTAINABILITY REPORT

When we say ‘NOW EVERYONE CAN FLY XTRA LONG’ we do not just mean longer in terms of distance, but also in terms of years down the road from where we are today. AirAsia X is in for the long haul, and are committed to ensuring our business is sustainable so we can make available affordable flights to our communities for the longest foreseeable future. those whoflywithusandforus. to providemaximumassurance strengthening oursafetyframework we investcontinuouslyinto safety requiresongoingeffort,hence the maintenanceofahighlevel of ourflightoperations.Webelieve are inplacewhichguideeveryaspect the policiesaswellproceduresthat guests andAllstars.Thisisreflectedin highest priorityonthesafetyofour Most importantly,weplacethe out. strategies fromthetimewestarted driving muchofourcost-saving our businessmodel,andhasbeen as possible.This,infact,isintegralto in amannerthatisasenergyefficient an airlinewehaveadutytooperate environment. Weacknowledgethatas to protectandpreservethe – whilealsomakingaconsciouseffort have abase,ourguestsandAllstars the communitiesinAseanwherewe with ourkeystakeholders–namely strong relationshipsbasedontrust environmental scorecards.Webuild supported byhealthysocialand To dothis,weensureourgrowthis ties COMMUNITY our green ENVIRONMENT keeping our in AirAsiaX TALENT celebrating for betterguestexperience INNOVATION at work SAFETY ANNUAL REPORT 2016

127 128 W services. uphold thehighestsafety standards inlinewithourcustomerpromisetoprovide safe,enjoyable,reliableandaffordablefligh performance since2015,aswehavehadnoaccident duringthistwo-yeartimeframe.Movingforward,wewillcontinueto One ofoursafetygoalsistoachievezeroaccidents andzero‘high-risk’incidents.Inthisrespect,wearepleasedbyour mitigation actionswereundertaken. compared to76reportspermonthin2015.These wereinvestigatedbyourSafetyDepartment,followingwhich efforts, oursafetyreportingperformanceimproved significantly in2016withanaverageof146reportspermonthas we runregularSMStrainingforAllstarsanddisseminate safetyinformationviapromotionalactivities.Asaresultofthese Safety Promotion,whichtogetherhelptocreatearobust safetyculturewithintheorganisation.Tocomplementsystem, The risk-basedSMScomprisesfourmaincomponents, namelySafetyPolicy,RiskManagement,Assuranceand organisation downtofrontlinepersonnel. Sustainability Report AIRASIA XBERHAD SMS and their dedication to the continuous improvement of our safety performance has cascaded throughout the SMS andtheirdedicationtothecontinuousimprovement ofoursafetyperformancehascascadedthroughoutthe Organization (ICAO)’sSafetyManagementSystem(SMS).Ourtopmanagementareinvolvedinimplementing the e haveadoptedaholisticandsystematicapproachtosafetymanagement,guidedbytheInternationalCivil Aviation SAFETY at work t ensuring allourSPIsaremet. achievable mitigationstrategies while operations, anddevelopspractical and to identifythegapsinourcabin functions, CabinSafetyDivisionstrives overseeing theSMS.Inallofits Safety Investigations,whilealso Inspections andIncident/Accident division nowconductsInternalAudits& effectiveness ofcabinoperations,the enhancing theefficiencyand Division sinceSeptember2016.Further the structureofourCabinSafety some modificationshavebeenmadeto X’s globalCabinSafetyframework, line withICAOstandardsandAirAsia regulations andcompanypolicies.In compliance withcivilaviation Checks andbalancesarekeyto CABIN SAFETY recommended practices. with internationalstandardsand and proposecorrectiveactionsinline discuss andidentifysuchdeviations, pilots whomeetmonthlytoreview, Monitoring Team(FMT)comprisingline independent FlightDataAnalysis measures aretaken.Wehavean necessary, correctiveand/orpreventive data isfurtheranalysedand,where Procedure (SOP)isidentified,theflight provided intheStandardOperating team. Whenadeviationfromthelimits recorded andmanagedbyourSafety flight andsystemsperformanceis Malaysian airport.Dataontheaircraft’s flight datauponlandinginany data transferwhichdirectlytransmits retrofitted withwirelessgroundlink (ASRs). AllAirAsiaXaircraftare obtained fromAirSafetyReports of SafetyPerformanceIndicators(SPIs) Flight safetyismonitoredthroughaset FLIGHT SAFETY safety standardsandperformance. recognition asaglobalbenchmarkfor operators, reinforcingIOSA’s lower thanthatamongnon-IOSA between 2011and2015was3.3times accident rateamongIOSAcarriers IOSA registeredairline.Thetotal international safetystandardsasan underlining ourcompliancewith (IOSA) renewalinFebruary2016, second IATAOperationalSafetyAudit AirAsia Xsuccessfullycompletedour IOSA procedures. been takentoenhanceour emergency improvement, andrelevantstepshave it wasnotedthatthereisroomfor stated inoursetprocedures.However, appropriate decisionsandtasksas their rolesandareabletoexecutethe deputies haveagoodunderstandingof that ourkeypersonnelandtheir throughout theorganisation.Itrevealed and involvedvariouskeypersonnel emergency –smokeoutofengines hour exercisesimulatedanaircraft familiar withitsprocedures.Thethree- the ERPandensurekeypersonnelare Emergency OperationsCentre,totest out atourheadquarters(RedQ)’s In 2016,ExerciseFireballwascarried business asusualsoonpracticable. continuation ofoperationsorreturnto emergency operations,andsafe orderly transitionfromnormalto Top Exercisetoensureasafeand tested bi-annuallythroughanERPTable procedures andplanscontainedare has beenendorsedbyDCAM.The meets strictinternationalstandardsand Our EmergencyResponsePlan(ERP) AirAsia offices. and firstaidinspectionsthroughoutall team carriesoutbi-annualfiresafety (DCAM). Toenhanceofficesafety,the Department ofCivilAviationMalaysia inspections carriedoutjointlywiththe in theweeklyairportpavement in place.GroundSafetyalsoparticipates appropriate mitigationmeasuresareput investigated, followingwhich having mediumseverityormoreare Board Meetings.Allriskscategorisedas presentation attheSafetyReview continuously andanalysesitmonthlyfor Ground Safetycollectsdata GROUND SAFETY such falsealarmsbyDecember2016. helped todecreasetheincidenceof Recommendations fromthetaskforce as opposedtoanysafetyhazard. August wasactuallyduetofumigation, warnings wesawbetweenApriland sudden increaseinlavatorysmoke force wasabletodeterminethatthe data, forexample,adedicatedtask decision making.Bycarefullyanalysing safety trends,andenhanceourreal-time able tobetteranalyseandmanage more data-drivenorganisation,weare Meanwhile, asAirAsiaXbecomesa quarterly newsletter that includes safety quarterly newsletterthatincludessafety Our SafetyDepartmentalsopublishesa conducted byqualifiedSMSinstructors. is requiredtoundergoSMStraining understanding oftheSMS.EveryAllstar various activitiestopromotegreater The SafetyDepartmentcarriesout SAFETY PROMOTION line operations. sufficient controlofsafetyrisksduring engineering activitiestoensure members alsomeetquarterlytodiscuss actions. SafetyActionGroup(SAG) effective andefficientcorrective able todevelopandimplementmore a resultoftheircollaboration,wewere several safetyinvestigationsin2016.As Engineering Departmenttoconduct Safety joinedforceswithour ENGINEERING SAFETY industry. interest ofenhancedsafety ofthe and toshareourownprocesses inthe updated withindustrybest practices working groupsenablesus tokeep Investigators. Beinginvolvedinthese International SocietyofAirSafety Aviation SafetyTeam,andthe Foundation, ICAOAsiaPacificRegional Working Group,theFlightSafety Airlines FlightOperationsSafety such astheAssociationofAsiaPacific frequently engageswithsafetygroups activities, ourSafetyDepartment Apart frominternalsafetypromotional aviation industry. safety issuesandhappeningsinthe with Allstarstohighlightthelatest weekly safetynewsletterisalsoshared information andincidents.Inaddition,a ANNUAL REPORT 2016

129 130 Sustainability Report AIRASIA XBERHAD for betterguestexperience INNOVATION W them. destination, foodandotheroffersto us tochannelmoretargeted distil theirlikes,makingitpossiblefor way touseInstagramphotosoffans team, AviatofromSingapore,offersa manner withourfans.Thewinning communicate inamorepersonalised innovative waytoenableAirAsia programmers tocomeupwithan Services amongothers,challengedthe Microsoft, GoogleandAmazonWeb Innovation inAsean,co-sponsoredby Airvolution 2017:Spearheading countries intheAustralasiaregion, RedQ. Attracting20teamsfromnine Group’s firstever18-hourhackathonat on 18-19March2017wehostedthe our transformationintoadigitalairline, To inspirenewideasthatwillaccelerate Digital Team. evolution andwillbedrivenbyour part oftheGroup’sdigitalisation security checkandboarding.Thisforms check-in toself-tagging,baggagedrop, end-to-end automation,fromself experience forguestsintheairportvia creating atrulyseamlessandeffortless Going forward,wehaveavisionof world. offering byalow-costcarrierinthe and facilitiesatklia2,thefirstsuch AirAsia PremiumRedLoungeservices mobiles. Now,theyevengettoenjoy bookings online,theycanevenusetheir experience. Notonlycantheymake that enhance our guests’ that enhanceourguests’ AirAsia Groupinnovations e havebenefitedfrommany H Sloan SchoolofManagement. of Business,setuprecentlybyBankNegaraMalaysiaincollaborationwiththeMIT Scholarship tobepartofthepioneeringbatchMBAstudentsinAsiaSchool University. Inaddition,in2016,twoAirAsiaXAllstarswereawardedthe including theLeadershipinSafetyProgrammeco-designedwithCranfield opportunity tojoinleadershipdevelopmentinitiativesrunbytheAirAsiaGroup, We alsoacceleratethedevelopmentofpotentialleadersbyprovidingthem problems usingreflectivequestioningandlistening. approach, Allstarsfromvariousdepartmentsteamupingroupstosolvecomplex key skillthatsetsourAllstarsapartfromothers.AdoptingtheActionLearning division assignments.Problem-solvingisgivenmuchemphasisandhasbecomea appropriate initiatives,includingproblem-basedlearning,coachingandcross- Our PeopleDepartmentidentifiesskillsgapsintheorganisationandfillsthesewith business goals. capabilities ofourteam,focusingonthoseskillsthatarerequiredtoachieve programmes arerunthroughouttheyeartodeveloptechnicalandprofessional to helpthemrealisetheirfullpotential.Varioustraininganddevelopment with ourculture–ofteamwork,innovationandpassiontheninvestinthem make arealefforttobringonboardpeoplewhowebelievewouldhavegoodfit Our Allstarsarepillarsofthisairlineandhavebeenbehindoureverysuccess.We encourage themtoowntheircareerprogressionwithinthecompany. three keymessagesthatourleaderskeepimpartingtoAllstars ave bigdreams.Pursueyourpassion.Keepthingssimple.Thesearethe in AirAsiaX TALENT celebrating are made. considered beforeimportant decisions divergent viewpointsareaired and stimulating environmentwhere enrich ourintellectualcapital, creatinga Allstars fromdifferentbackgrounds different perspectivesbrought by ethnic diversityaswebelievethe ratio standsat38:62.Weembrace and SouthAmerica.Ourfemaletomale parts oftheworld,includingEurope the remaining16%hailfromvarious Indian, 3%non-MalayBumiputrawhile our peopleareMalay,20%Chinese,11% Allstars. Withintheorganisation,51%of and culturalbackgroundsofour2,478 airline, andthisisreflectedintheracial Our strengthisinbeinganAsean Diversity &Inclusion ANNUAL REPORT 2016

131 132 Sustainability Report AIRASIA XBERHAD W operations, andadoptingflyingpracticesthatoptimise fuelburn. modern, fuelefficientengines,followingfixedguidelines onmaintenancetoensureoptimal business modelofkeepingourcostsdown.Wemaximise efficiencybymaintainingayoungfleetwith green keeping our ENVIRONMENT only because of our environmental impact but also because fuel efficiency is integral to our only becauseofourenvironmentalimpactbutalso fuelefficiencyisintegraltoour operations asfuelefficientpossible.Wehavebeen extremelyvigilantinthisrespectnot e recognisethat,asanairline,wehavearesponsibilitytovariousstakeholderskeepour initiative toallstationswhereAirAsiaXoperates. Lumpur andBusan.Goinginto2017,wehopetoexpandthis the energy-savingmanoeuvreonflightsarrivingintoKuala long periodsforaparkingbay.In2016,AirAsiaXperformed Fuel savingsaremaximisedwhenanaircrafthastowaitfor approximately threeminutes,savingabout37.5kgoffuel. Currently, eachflightcanperformtheoneenginetaxi-infor The initiativesavesupto12.5kgoffuelperminutetaxi-ing. during taxi-intoreducefuelburn,hencecarbonemissions. commander’s discretion,crewwillshutdownoneengine Taxi-In. Thismeans,whenconditionspermit,andatthe Rolls-Royce, AirbusandDCAMtoimplementtheOneEngine Our Technical&Developmentteamhasworkedcloselywith One EngineTaxi-In eventually, electronictechnicallogs. introduce electronicflightplans,formsand, Next onourjourneytobecomingapaperlessairlineis off atreducedthrustminimisesournoiseemission. able toreducethewearandtearofourengines.Also,taking has apositiveeffectonenginemaintenancecostasweare performance calculationstooptimiseourtake-offthrust.This operations. WiththeEFBs,moreover,ourcrewareabletodo reducing theamountofpaperusedtosupportour reduction infuelburnofupto8.25kgpersector,whilealso additional fuel.Removingthemanualstranslatesintoa weight onboardtheaircraftburnsapproximately0.15kgof Bags (EFBs).Onaverage,everykilogrammeofadditional manuals onboardourplaneswithlighterElectronicFlight We havereplacedabout55kgworthofhardcopychartsand Going Digital described below. reduce ourfuelconsumption.Someoftheseinitiativesare This issupplementedbyoperationalinitiativesthatfurther emission attheparkingbay. accidentally whileaircraftarestationary)toreducenoise chocks (wedgesthatpreventthewheelsfrommoving taxi-ing, andareshutoffoncetheaircraftwheelson temperatures, areturnedononlywhenneededduring fans ontheground.Brakefans,whichreducebrake addition, ourcrewhasmadeitapracticetoalwaysusebrake reduces fuelburnandnoiseemissionontheground.In the cabinair-conditioningfromoneoftwoengines.This one packofftaxi-outandtaxi-in,whichentailsswitching On flightswithmoderatelylightloads,ourcrewwillconduct One PackOff Pattaya beach. AirAsia andthe localcommunityjoined forcestocleanup At thesametime,over800 volunteersfromAirAsiaXand by theProfessionalAssociation ofDivingInstructors(PADI). AWARE, aninternationalnon-profit organisationestablished event wassupportedbythe PattayaCityCouncilandProject debris andotherobjectsthat coulddamagethereef.The off KohSak,anisland23kmfromPattaya,tocollect marine AirAsia XandparticipatedinDivesAgainst Debris™ Thailand. On8May,some50scubadivingAllstarsfrom Thailand viaabeachandreefclean-upactivityinPattaya, This initiativewastakenastepfurtherbyourassociate in ‘marketplace’. various environmentalNGOsthattookpartinour recyclable waste,andpickuptipsonhowto‘livegreen’ from which membersofthepublicwereencouragedtobring their Allstars’ actionswithacommunityeventheldinBangsar at healthier environment.InMalaysia,wecomplementedour region carriedoutvariousactivitiestocontributetowardsa 24-hour campaigninwhichallAirAsiaassociatesacrossthe In January2016,theinitiativeescalatedintoafull-blown own offices. to startgreeningourcommunities,startingin-housewith with AirAsia,welauncheda#GREEN24initiativeatend2015 steps toreducewasteandprotecttheenvironment.Together Allstars aswellourlocalcommunitiesintakingpositive minimising climatechange.Accordingly,weareinvolvingour We believeeveryonecan,andshould,playapartin GREENING OURCOMMUNITIES ANNUAL REPORT 2016

133 134 Sustainability Report AIRASIA XBERHAD experienced. people managewiththemassivelossestheyhad equipment, clothing,footwear,tentsandwatertohelpthe staff andreliefworkers,alongwithfourtonnesofmedical millions oflives.AirAsiaXIndonesiatransported40medical 11 Decemberwhichcausedextensivedamage,disrupting mission extendedtoBandaAcehfollowinganearthquakeon of atravelsyndicatescam.Thiswasfollowedbyrelief Indonesians whowerestrandedinthePhilippinesasaresult worked withtheMinistryofForeignAffairstorepatriate168 humanitarian missionsduringtheyear.On4September,it Our associateAirAsiaXIndonesiawasinvolvedintwo Relief MissionsinIndonesia ties our COMMUNITY F year, thefollowingactivitieswereundertaken. spreading somejoywithindividualswhoarelessfortunatethanus.This more simply, going out to marginalised pockets of society and more simply,goingouttomarginalisedpocketsofsocietyand tradition ofparticipatinginhumanitarianreliefmissionsaswellas, urther strengtheningourtieswithlocalcommunities,wehavea festive meal. and challenged children.They also presentedthemwithgifts playing gameswiththe75 physicallyandmentally Ben ledateamofabout20 Allstarsthatspentanafternoon children, on2August,inconjunction withRaya.Onceagain, Kanak-Kanak CacatKlang Selangor, ahomeforspecial This wasfollowedbyavisittothePersatuanPenjagaan before leaving. and distributed Lumpur. Theyspentthemorningengagingwith elderly visit totheresidentsofAmpangOldFolksHomein Kuala group ofAllstarsledbyourCEOBenyaminIsmailpaid a In conjunctionwiththeChineseNewYear,on13February, a Spreading FestiveJoyinKualaLumpur duit raya (Raya packets), and treated the children to a (Raya packets), andtreatedthechildren toa ang pow (red packets) as well as hampers (red packets)aswellhampers

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138 The Board has authority over the Company’s matters TheBoardhasauthorityovertheCompany’smatters Roles,responsibilitiesandpowersoftheBoard A. BOARD MATTERS practices oftheCompany undertheleadershipofBoard. The Board presents thisstatement to provide aninsightinto theCorporate Governance under review. The following sectionsdescribeAAX’s policiesandpractices. (“MMLR”) ofBursaMalaysia Securities Berhad(“BursaMalaysia”) duringtheperiod 2012 (“MCCG” or“MCCG 2012”),where applicable Main Market Listing Requirements and recommendations assetoutintheMalaysian Code onCorporate Governance as disclosedotherwise, theBoard considers thatithascomplied withtheprinciples committed to ensure goodcorporate governance isappliedthroughout thegroup. Save The Board ofDirectors Board”) (“the ofAirAsiaXBerhad(“AAX” Company”) or“the is Statement onCorporateGovernance AIRASIA XBERHAD • Reviewing the Company’s annual capital and revenue Reviewing theCompany’sannualcapitalandrevenue • Consideringemergingissues which maybematerial • Establishing,approving,reviewing,andmonitoringthe • Ensuringthatthereshallbeunrestrictedaccessto • Reviewingthestrategies,businessplansand • leadership functions: of theBoardandtodischargeitsfiduciary and thefollowingobligationstoensureeffectiveness Members Business PlantotheBoard. are responsibletopresent theAnnualBudgetand and ChiefFinancialOfficer (“CFO”)oftheCompany budgets (andanymaterial changesthereto).TheCEO ensuring propersuccessionplanisinplace. Development Departmentwillberesponsiblein senior management.ThePerformance,Talentand ensuring thereisapropersuccessionplanforits to thebusinessandaffairsofCompany during theBoardmeetings. the ACChairmanwillbriefBoardonupdates during theAuditCommittee(“AC”)meetings.Then, The riskmanagementactivitieswillbepresented management policies,processesandinfrastructure. Company’s riskappetiteandcomprehensive necessary, withtheconsentofBoard. professional expertsattheCompany’sexpenses,if Director canseekadvicefromindependent individual capacity.TheBoardorthe duties whetherasaBoardordirectorinhisher Company’s expenseinfurtheranceoftheBoard’s independent adviceorexpertatthe meetings. Chief ExecutiveOfficer(“CEO”)duringtheBoard by theGroupChiefExecutiveOfficer(“GCEO”)and plan andstrategiesoftheCompanywillbepresented significant policiesfortheCompany.Thebusiness The Company places strong emphasis on the TheCompanyplaces strongemphasisonthe Succession Planning EveryquartertheACandBoardreviews Reviewandadoptingastrategicplan The Board Charter of the Company can be downloaded TheBoardCharteroftheCompanycanbedownloaded TheBoardkeepsaformalscheduleofmatters • Reviewing the adequacy and integrity of the Reviewingtheadequacyandintegrityof • EnsuringthattheBoardhasadequateproceduresin • continuous supply of top talent. The Group People continuous supplyoftoptalent. TheGroupPeople fresh graduatesandmiddle management,toensure robust grouptalentpipeline. Thetalentpipelineincludes is aGroupTalentPolicyin placetoidentifyandbuilda spirit ofOneAirAsia.Building capabilityiscrucial;there to continuouslygroomsuccessorsacrossthegroup, in of leaders.Theorganisationstructurereflectsthedrive development ofAllstarsandgrowingthenextgeneration shared totheBoard. quarter. Anymaterialupdatesandnewinitiativeswill be meeting witheachAAXGroupofcompaniesevery progress ofinitiativesandprojects.GCEOchairsstrategy continually assesstheperformanceofGroup, of theprecedingyear.ThiswouldenableBoardto performance againstbudgetandcorrespondingquarter is tabledforreviewanddeliberationontheir Group. AdetailedreportontheairlineswithinGroup as welleachJointVentureandAssociateunderthe operational andfinancialperformanceoftheCompany Board charterwillbereviewedannually. from theCompany’swebsite,www.airasiax.com.The control oftheCompanyisfirminitshands. in theBoardChartertoensurethatdirectionand specifically reservedfortheBoard’sdecisionasdisclosed information systems. Company’s internalcontrolsystemandmanagement timely basisfromtheCompany’smanagement. place toreceivereportsperiodicallyand/orona The overall management of AAX rests with the following TheoverallmanagementofAAX restswiththefollowing TheMCCG hasrecommendedthatthepositionsof RolesandResponsibilitiesofthe Chairman,Group AlltheBoardmembersdonotholdmorethan5 TheBoardappointedTanSriRafidahAzizastheSenior ToensurethatAAXpromotescorporategovernance TheBoardcomprisedofone(1)SeniorIndependent Thereareseven(7)MemberswhoformtheBoard, BoardMembersBalanceandIndependence key seniorstaffontheirrespective areas: key managementpersonnel andassistedbyanumberof individual hasunfetteredpowersofdecision. accountabilities attheBoardlevel,suchthatnoone an appropriatebalanceofrole,responsibilitiesand separate withacleardivisionofresponsibilitiestoensure Chairman, GCEOandtheCEOofCompanyare executive memberoftheBoard.Theroles different individualsandtheChairmanbeanon- Chairman andCEOoftheCompanyshouldbeheld by Chief ExecutiveOfficerand directorships inotherpubliclistedcompaniesMalaysia. stakeholders maybeconveyed. to whomconcernsofshareholdersandother Independent Non-ExecutiveChairmanoftheCompany uphold excellentcorporategovernance. Board andreflectstheCompany’scommitmentto effective checksandbalancesinthefunctioningof the BoardtobeindependentofManagementfor defined intheMMLR.TheseDirectorsareconsideredby Directors alsofulfillsthecriteriaofindependenceas function oftheBoard.Three(3)Non-Executive are inplacetoprovidethecheckandbalance effectiveness, theIndependentNon-ExecutiveDirectors directors. directors, whicheveristhehigher,tobeindependent requires aminimumoftwo(2)oronethird(1/3)the composition mettheMMLRofBursaMalaysia,which two (2)IndependentNon-ExecutiveDirectors.This three (3)Non-IndependentNon-ExecutiveDirectorsand Executive DirectorandGroupChiefOfficer, Non-Executive Chairman,one(1)Non-Independent Report. details aregivenonpages46to55ofthisAnnual assignments. programs, coaching,cross-functionalandcross-country development initiativesincludingleadership Group TalentTeamoverseesstructuredtalententryand across ourlocationsandidentifyfutureleaders,The team inannualTalentReviewstomaptalentneeds Department workscloselywiththeseniormanagement

Boardsizeandcomposition TheLimitsofAuthoritymanual(“LOAmanual”)isin Limits of Authority The Non-Executive Directors (“NED”) are persons of high TheNon-ExecutiveDirectors(“NED”)arepersonsofhigh Thesize,balanceandcompositionoftheBoardsupport and otherCompanieswithintheGroup. driving efficienciestoimproveperformanceoftheairline the groupindrivingbrandvalue,reducingcostand Director. AsGCEO,hewillprovideoverallleadershipto Meranun istheGCEOandNon-IndependentExecutive Group ChiefExecutiveOfficer: elsewhere. working experiencesbothwithintheCompanyaswell based onhiseducationalbackgrounds,aswell operational performanceofAAX.Heishighlyqualified shareholders forthefinancialandbusiness the Company.Heispersonresponsibleto the personwhooverseesday-to-dayoperationsof performance andgovernanceoftheCompanyaswell of AAX,andisthepersonresponsibleforoverall Chief ExecutiveOfficer: Statement ofRiskManagementandInternalControl. management withintheGroupasdisclosedin place anddefinesdecisionmakinglimitsforeachlevelof to achieveitsobjectives. the Company,inordertohaveaconscientiousdecision involvement inbusinesstransactionsorrelationships with in theday-to-daymanagementofCompany;non- Directors tobeimpartialinjudgment;non-participation Report. TheBoardrequiresthatallIndependent their biographiesonpages46to55ofthisAnnual professional commitmentsoftheNEDareprovidedin time andattentionrequiredtofulfiltheirroles.Other Committees fordeliberations.Theydedicatereasonable public andprivatesectorstotheBoard backgrounds infinance,legalandregulatory aptitude andintegrity,jointlygatherthevarious stakeholders. other obligationstoitsshareholdersand governance ispracticedandthattheCompanymeetsits business objectives.Italsoensuresthatgoodcorporate tracks theprogressofmilestonestomeetits of theCompany.Itcreatesvalueforshareholdersand its rolethatdrivesthelongtermdirectionandstrategy Benyamin Bin Ismail is the CEO Benyamin BinIsmailistheCEO Datuk Kamarudin Bin Datuk KamarudinBin ANNUAL REPORT 2016

139 140 The maximum tenure of an Independent Director shall be Themaximum tenureofanIndependentDirectorshallbe Tenure of Independent Directors TheNRCalsoreviewsthecompositionofBoardand Annual Assessment of TheCompanySecretarywillensurethatallappointments Directors TheCompanyhasimplementedproceduresforthe AppointmentofDirectorsandBoardDiversity Strengthening Composition Statement onCorporateGovernance AIRASIA XBERHAD independent directorshad exceedednine(9)years. a generalmeetingasstated above.Noneofthe concrete justificationand seeks shareholders’approvalin years, providedthattheBoard recommendsthisupon Director afterservingacumulative termofnine(9) that anIndependentDirectormayremainas in accordancetorecommendation3.3oftheMCCG 2012 Independent DirectorsoftheCompany. also reviewedandassessedtheindependenceof financial yearended31December2016,theNRChad of IndependentNon-ExecutiveDirectors.Duringthe each AuditCommitteeMember,andtheindependence the performanceofeachNon-ExecutiveDirectorand and effectivenessoftheBoardCommittees, findings totheBoardforassessmentofperformance Committee membersaccordingly.TheNRCreportstheir as theperformanceofindividualBoardand performance oftheBoardandcommitteesaswell review, theBoardhadconductedassessmentson the Board’sCommitteeannually.Duringyearunder are met. obtained, aswellalllegalandregulatoryobligations are properlymade,thatallinformationnecessaryis and contributionsthecandidatecanbringtoBoard. decision ofaBoardappointmentwillbebasedonmerit in theseniormanagementofCompany.Theultimate Besides, theCompanymaintainsagoodmixofdiversity gender, ethnicity,ageandotherattributesofDirectors. skills, regionalandindustryexperience,background,race, Board includesandmakesgooduseofdifferencesin recommendation totheBoardfordecision.Ourdiverse nominee(s) andthereuponsubmittingtheir going throughtheprofileandinterviewing directorship andBoardCommitteesmembershipby experience. TheNRCwillreviewthenominee(s)for of candidateswiththenecessaryskills,knowledgeand to jointheBoardwillbe,inpart,dependentonpool part ofitsrecruitmentexercise.Selectioncandidates steps toensurethatwomencandidatesaresoughtas a BoardDiversityPolicyandthroughtheNRC,willtake the benefitsofhavingadiverseBoardandhasadopted experience. TheCompanyalsorecognisesandembraces exercise withthenecessaryskills,knowledgeand assess candidateswhensoughtaspartofitsrecruitment and RemunerationCommittee(“NRC”).TheNRCwill nomination andelectionofDirectorsviatheNomination During the financial year ended 31 December 2016, the Duringthefinancialyearended31December2016, TheBoard’sregularmeetingsareconductednolessthan Boardmeetingsforeachfinancialyeararescheduled Board Meetings TheArticlesofAssociationtheCompanyprovides Re-election of Directors Pursuant to the Articles of Association of the Company, Pursuant totheArticlesofAssociationCompany, Decisions of the Board Directors’ attendancesareassetoutbelow: Board heldatotaloffive(5)meetingsandthedetails review anddecision. proposals ormattersthatrequiretheBoard’sexpeditious convened asandwhennecessarytoconsiderurgent five (5)timesayear.SpecialBoardmeetingsmaybe respective schedules. incorporate theyear’sBoardmeetingsintotheir so thattheDirectorscanplanaccordinglyand well aheadbeforetheendofprecedingfinancialyear to beheldfollowinghisappointment. the yearshallbesubjecttore-electionatnextAGM also providesthataDirectorwhoisappointedduring themselves forre-election.TheArticlesofAssociation once ineverythree(3)years,andareeligibletooffer (“AGM”) suchthateachDirectorshallretirefromoffice retirement byrotationateveryAnnualGeneralMeeting that atleastone-thirdoftheDirectorsaresubjectto Directors. of Directorsentitledtoreceivenoticeameeting alternatively, writtenresolutionssignedbythemajority meeting shallbedecidedbyamajorityofvotesor decisions oftheBoardataphysicallyconvened i inOn5/5 5/5 5/5 4/5 5/5 3/5 Dato’ YusliBinMohamedYusoff Tan SriAsmatBinKamaludin Dato’ FamLeeEe 3/5 Lim KianOnn Datuk KamarudinBinMeranun Tan SriDr.AnthonyFrancisFernandes Tan SriRafidahAziz Name ofDirectors Number of Number of Attended meetings meetings Board Board The Company Secretary attends all Board and Board TheCompanySecretary attendsallBoardand TheCompanySecretaryisaFellowmemberofMalaysian Company Secretary PriortotheBoardMeetings,Membersofwill Directorshaveindependentaccesstotheadviceand AccesstoInformationandAdvice and Management. Committees, andbetween theNon-ExecutiveDirectors information flowswithinand totheBoardand to ensurethattherearetimely andappropriate Company Secretaryworks closelywiththeManagement meetings, totheSeniorManagementforaction.The decisions madeandpoliciessetbytheBoardat Secretary alsofacilitatestimelycommunicationof registered officeoftheCompany.TheCompany passed aremaintainedinthestatutoryrecordsat proper recordsoftheproceedingsandresolutions handled bytheSRB)andensuresthataccurate Committee meetings(saveforSRBwhich is with BursaMalaysia,SCandCCM. ensures allthetimelylodgementofstatutorydocuments Company. TheCompanySecretaryalsomonitorsand any conflictsofinterestintransactionsinvolvingthe their interestintheCompany’ssecurities,disclosureof the Directorsoftheirobligationsanddutiestodisclose Malaysia (“CCM”).TheCompanySecretaryalsoadvises Commission (“SC”)andCompaniesof guidelines issuedbyBursaMalaysia,Securities and theDirectorsarisingfromnewstatutes taken andrequirementstobeobservedbytheCompany Company Secretarygivesadviceonthemeasurestobe and ensuresthatBoardproceduresarefollowed.The Committees savefortheSafetyReviewBoard(“SRB”) who alsoservesinthatcapacitythevariousBoard the DirectorshaveaccesstoCompanySecretary Institute ofCharteredSecretariesandAdministration.All reference andinatimelymanner. which areuploadedontopersonaliPadsforeasy allows DirectorstoaccessvariousCompanydocuments distributing hardcopydocuments.TheGoogleDrive the GoogleDrivetomeetingdocumentsinsteadof environment whichrequiresgrantingdigitalaccessvia Secretary. TheCompanyencouragespaperless may requirefromtheManagementorCompany the Directorstoreviewandseekclarificationsthatthey the BoardMeetings.Thisistoallowsufficienttimefor Management digitallycontainingitemsfordiscussionat signed andrecommendedbytherelevantKey/Senior receive theagendaandasetofBoardpapersduly expenses indischargingitsdutiesfortheCompany. independent professionaladviceattheCompany’s to theirrespectivejurisdiction.TheBoardmayseek may seekadvicefromManagementonissuespertaining ensure effectivefunctioningoftheBoard.TheDirectors dedicated supportservicesoftheCompanySecretaryto The appointment and removal of the Company Secretary TheappointmentandremovaloftheCompanySecretary TheCompanySecretarywilldisseminatetotheDirectors TheCompanySecretaryalsoservesnoticetoDirectors All the Board members were updated by the Company AlltheBoardmemberswereupdatedbyCompany Fortheyearunderreview,Directorshadcontinually TheBoardisalsoawarethatcontinuoustrainingforthe DirectorsareregularlyupdatedontheGroup’s TheCompanySecretaryundertakestheroleas Directors’ Training must beapprovedbytheBoard. from fortheirongoingDirectors’training. seminars andtrainingprogrammesforthemtochoose Securities oftheMMLR. accordance withChapter14onDealingsinListed on theclosedperiodsfortradinginAAX’sshares, matters. standards, regulatoryrequirementsandtaxrelated auditors onthechangestofinancialreporting requirements. TheACwerealsoupdatedbytheexternal and relevantguidelinesontheregulatorystatutory Secretary onchangestotheMMLR,CompaniesAct,2016 experience. with theaimofenhancingtheirskills,knowledgeand kept abreastwiththedevelopmentinmarketplace matters thataidthemindischargingtheirduties. attend appropriateexternalprogrammesonsubject effectively. TheBoardencouragestheDirectorsto Directors isvitaltoassistthemindischargingtheirduties to makeeffectivedecisions. Company’s operationswhichcouldassisttheDirectors Company’s operatingcentretohaveaninsightonthe newly appointedones,areencouragedtovisitthe environment inwhichtheyoperate.Directors,especially businesses andthecompetitiveregulatory MAP. MMLR. AlltheDirectorshadattendedandcompleted appointed Directors,pursuanttotheBursaMalaysia’s Mandatory AccreditationProgramme(“MAP”)fornewly seminars andtrainingrequirements,whichincludethe coordinator tomanageandco-ordinatetheDirectors’ ANNUAL REPORT 2016

141 142 Amongtheothertrainingprogrammes,seminars,conferencesandbriefingsattendedduringyearwereasfollows: Statement onCorporateGovernance AIRASIA XBERHAD TheBoard,throughtheNRC,willundertake assessmentofthetrainingneeds each Director. Yusoff Dato’ YusliBinMohamed Kamaludin Tan SriAsmatBin 2016InvestmentStrategySeminarorganisedbyHuaZhong • Programmes Dato’ FamLeeEe Fernandes Tan SriDr.AnthonyFrancis Meranun Datuk KamarudinBin Tan SriRafidahAziz Name • Launch of the AGM Guide & CG Breakfast Series: “How To Leverage on AGMs for LaunchoftheAGMGuide&CG BreakfastSeries:“HowToLeverageonAGMsfor • CGBreakfastSerieswithDirectors: “TheCybersecurityThreatsandHowBoard • IndependentDirectorsProgramme; TheEssenceofIndependence,BursaMalaysia • TheInterplaybetweenCG,NFI andInvestmentDecision–WhatBoardsofListed • CorporateGovernanceBreakfast Series:FutureofAuditorReporting-TheGame • LaunchoftheAGMGuide&CG BreakfastSeries:“HowToLeverageonAGMsfor • TalkbytheMayorofHiroshimaentitled“FromtoourWorldWithout • CompaniesBill2015,ZaidIbrahim&CoandUMWH • LearningfromLeadersSessionwithGroupChairman,UMWHoldingsBerhad • BriefingSessionontheTPPA,MITI • BriefingSessionontheTrans-PacificPartnershipAgreement(“TPPA”),Ministryof • BursaMalaysia’sSustainabilityForum2017“TheVelocityofGlobalChangeand • CGBreakfastSerieswithDirectors–AntiCorruptionandIntegrity-Foundationof • CGBreakfastSerieswithDirectors:TheCybersecurityThreatandHowBoardShould • AnnualMeetingofMalaysia-ChinaJointBusinessCouncilinBeijing • CaseStudyWorkshopforIndependentDirectors“Rethinking-IndependentDirector: A • • 2 Fortune&TimeGlobalForum,VaticanCity • NSStateGovernmentConference,Seremban • RussianBusinessForum,Moscow • YoungASEANMindsSummerChapter,KualaLumpur • PrudentialCorpAsiaConference,Copenhagen • 9,ABC-ASEANJapanPublic-PrivateDialogue,Bangkok • DeloitteWorldMeeting,Tokyo • WorldEconomicForumSummitonASEAN,KualaLumpur • F&N&ThaiBeverageASEANMarketingConference,Bangkok • ChiefEditorForum,Jakarta • MATRADEServiceExportForum,KualaLumpur • MOHECEOTalk,KualaLumpur • RajaratnamSchoolofInternationalStudiesTalk,Singapore • USASEANBusinessCouncilConference,SanFrancisco • ForbesGlobalCEOConference–Emergingmarkets • TanSriRafidahAzizisaspeakeratvariousconferencesandsymposiums • Parks” organisedbyMalaysia-ChinaBusinessCouncil(“MCBC”) Better EngagementwithShareholders”,BursaMalaysia Should MitigatetheRisks”,BursaMalaysia Companies NeedtoKnow,BursaMalaysia Changer forBoardroom,BursaMalaysia Better EngagementwithShareholders”,BursaMalaysia Nuclear Weapons-BeyondHumanAtrocities”,UniversityofMalaya (“UMWH”) International TradeandIndustry(“MITI”) Sustainability –TheNewBusinessModel”organisedbyBursaMalaysia Corporate SustainabilityorganisedbyBursaMalaysia Mitigate theRisksorganisedbyBursaMalaysia New Frontier”organisedbyBursaMalaysia nd Investment Promotion Conference for Malaysia and China “Two Countries, Twin InvestmentPromotionConferenceforMalaysiaandChina“TwoCountries,Twin To assist the Board in discharging its duties, the Board ToassisttheBoardindischargingitsduties, Board Committees The main activities of the NRC in 2016 included the Themainactivities of theNRCin2016included Theprimaryroles,responsibilitiesandpowersofthe TheNRCcomprisesofone(1)Chairmanwhoisthe ii. Nomination and Remuneration Committee Furtherinformationonthecomposition,summary TheACcomprisesoftwo(2)IndependentNon- i. Audit Committee MCCG 2012. MMLR, andconsistentwiththerecommendationsof with theCorporateGovernanceandBursaMalaysia’s compositions andtermsofreferenceareinaccordance has establishedanumberofBoardCommitteeswhose • To review annually and recommend to the Board Toreview annuallyandrecommendtotheBoard • Annual reviewofcomposition,functionsand • Annualassessmentofeffectiveness oftheBoard • Annualreviewofsizeandcomposition ofBoard, • following: www.airasiax.com. which isavailableontheCompany’swebsite NRC inaccordancewithitstermsofreference Report. Members aresetoutonpage45ofthisAnnual Non-Independent Non-ExecutiveDirector,the Independent Non-ExecutiveDirectorandone(1) Senior IndependentNon-ExecutiveChairman;one(1) Annual Report. the ACaresetoutonpages151to152ofthis terms ofreferenceandotherinformationrelatingto ReviewingandinformingtheBoardof • InformingtheBoardofanysalientmattersraised • with thefollowing: with itstermsofreferencearetoassisttheBoard responsibilities andpowersoftheACinaccordance page 45ofthisAnnualReport.Theprimaryroles, Non-Executive Director,theMembersaresetouton Executive Directorsandone(1)Non-Independent Group’s growth andprofitability. commensurate withtheircontributionsto the GCEO, CEOtoensurethat rewards the overallremunerationpolicy forDirectors, performance oftheBoard Committees. effectiveness ofeachindividualDirector. as awholeandannualassessmentof and skillsofDirectors. Board balanceandindependenceofDirectors processes anditsreports. includes theriskmanagementframework, effectiveness ofriskmanagementinplace,which notice ordirection. at theACmeetingswhichrequireBoard’s The SRB also provides the platform to achieve the TheSRBalsoprovidestheplatform toachieve the TheSRBiseminently strategic,dealswithhigh-level TheSRBcomprisesoftheSeniorIndependent Safety ReviewBoard iii. TheCompanymaintainstransparentproceduresin TheBoard,throughtheNRC,hadcarriedouta Duringthefinancialyearended31December2016, TheNRCmeetsasandwhenrequired,atleast ToensurethelevelofremunerationforNon- • Toreviewannuallytheservicecontractand • mitigation strategies. assessment of theeffectivenessandefficiency ofthe objectives ofresourceallocation andneutral dictate otherwise. infrequently, unlessexceptional circumstances organisational performance monitoring,andmeets issues inrelationtopolicies,resourceallocationand approval ordecision. meetings andwhichrequiretheBoard’snotation, meetings, ofanysalientmattersraisedattheSRB SRB wouldreporttotheDirectorsatBoard page 45ofthisAnnualReport.TheChairmanthe from theCompany.Themembersaresetouton a teamofoperation’ssafetyandsecurityspecialist Executive Director,GCEO,CEOandissupportedby Non-Executive Chairman,aNon-IndependentNon- abstained fromdiscussingtheirownremuneration. a whole.AlltheindividualDirectorsconcerned non-executive DirectorsisamatterfortheBoardas The determinationofremunerationpackages determining theremunerationpolicyforDirectors. core competencies. appropriate mixofknowledge,skills,attributesand composition oftheBoardisadequatewith Committees andissatisfiedthatthesize review onthecompositionofBoardand attended byallthemembers. the NRCheldatotaloftwo(2)meetingsand decision. which requiretheBoard’snotation,approvalor salient mattersraisedattheNRCmeetingsand report totheDirectorsatBoardmeetings,ofany twice ayearandtheChairmanofNRCwould the Board. and contributionstotheeffectivefunctioningof undertaken intheBoardandCommittees are linkedtotheirlevelofresponsibilities Executive DirectorsandIndependent comparability wouldalsobeconsidered. total remunerationpackagewithmarket reflecting theircontributionsfortheyear.Their remuneration and/orrewardpaymentsifany, recommend totheBoardspecificadjustmentsin performance oftheGCEOandCEO ANNUAL REPORT 2016

143 144 Statement onCorporateGovernance AIRASIA XBERHAD The primary roles, responsibilities and powers of the Theprimaryroles,responsibilitiesandpowersofthe • Periodically review regulations, standards and Periodicallyreview regulations,standardsand • Functioning assteeringcommitteeandoversight • Providing strategicdirectionstodepartmental • Ensuringthatappropriateresources areallocated • Monitoringtheeffectivenessof thesafety • Monitoringtheeffectivenessof theorganisation’s • Definingsafetyperformanceindicatorsandset • Reviewingsafetyperformanceandoutcomes; • Monitoringsafetyperformanceagainstthe • Reviewingactionsrecommendedbyincident/ • Reviewingactivitiesthatrequireformal • Monitoringthatanynecessarycorrectiveactionis • Makingrecommendations or decisionsconcerning • Monitoringandreviewingpolicy,objectives • MonitoringtheeffectivenessofSafety • Reviewingorganisationalcontrolandcontinual • Reviewingtheprogressandsafetytrendsin • ProvidingtotheBoardoversightandinput • assist theBoardwithfollowing: SRB inaccordancewithitstermsofreferenceareto information is available. exemptions for ensuringthemostcurrent for FlightDataMonitoring Team;and Safety ActionGroup(“SAG”) whereapplicable; required byregulatorycompliance; to achievesafetyperformancebeyondthat supervision ofsubcontractedoperations; management asanothercorebusinessprocess; declared corporatepriorityofsafety safety managementprocesseswhichsupportthe safety performancegoalsfortheorganisation; organisation’s safetypolicyandobjectives; managers; and implementedbyrelevantdepartmental accident investigationsaremonitored,tracked application ofriskmanagementtechniques; taken inatimelymanner; safety policyandobjectives; procedures aspartofdevelopmentSMS; Management System(“SMS”)implementationplan; and identificationoftrainingneeds; and procedures,aswellallocationofresources authorities, responsibilities,policies,processes organisational structure,reportinglines, system, includingbutnotlimitedto improvement andtheneedforchangesto improvement byassessingopportunitiesfor identified hazardsareappropriatelyresolved. Security andQualityAssurance,ensuringall relation toFlight,Cabin,Ground,Engineering, AAX’s operations. the managementofsafetyissueswithin The primary roles, responsibilities of the ESOS Theprimaryroles,responsibilities oftheESOS ESOSCommitteecomprisesoftheGCEO,CEO Employees’ ShareOptionScheme(“ESOS”) iv. OutputfromSRBwouldtypicallyincludedecisions Inputtothemanagementreviewprocess(SRB) Directors are indemnified under a Directors’ and Directorsareindemnifiedunder a Directors’and Indemnification of Directors • Determining the participation eligibility, option Determiningtheparticipation eligibility,option • AdministeringtheESOSof Companyin • assist theBoardwithfollowings: Committee inaccordancewithitsBy-Lawsareto Report. Members aresetoutonpage45ofthisAnnual and theGroupHeadofPeopleDepartment, Committee • Resources needs. Safetyandsecurityrequirements; • Improvementoftheprocessesthroughout • and actionsrelatedto: • Security matters. Regulatoryviolations;and • Feedbackandrecommendationsformanagement • Follow-upactionsfrompreviousmanagement • Resultsfromimplementationorrehearsalofan • Statusofcorrectiveandpreventiveactions; • Processperformanceandorganisational • Changesinregulatorypolicyandcivilaviation • Incidentsandnear-missreports; • • Operational feedback; Findingsfromoperationalinspectionsand • Resultsofaudits; • would typicallyinclude: trust proven against them. any negligence, fraud,breachofdutyor breachof The Directors shallnotbeindemnified where thereis while holdingofficeasDirectors oftheCompany. incurred bytheminthedischarge oftheirduties Officers’ LiabilityInsurance againstanyliability other mattersasmayberequired. offers andshareallocationstoattendsuch and accordance withtheobjectivesandregulations; management system; system improvement; reviews; Emergency ResponsePlan(“ERP”); conformity; legislation; investigations; The remuneration package comprises the following Theremunerationpackagecomprisesthefollowing Thereisacleardistinctionbetweentheremuneration DIRECTORSAND/ORCEOREMUNERATION B. elements: Executive DirectorandtheTopManagement. structure oftheNon-ExecutiveDirectorsand . Servicecontract 3. Othercustomarybenefits(suchastravelcoupons, 2. Benefits-in-kind ThefeespayabletotheNon-ExecutiveDirectorsfor Fee 1. Details of the Directors’ remuneration are set out in DetailsoftheDirectors’remunerationaresetoutin Therearecurrentlynoshareoptionsforthe 4. Directors’ share options TheGCEOandCEOhaveathree-yearservice etc.) aremadeavailableasappropriate. responsibilities ontheBoardCommittees. board feeandtheirrespectiveadditional their servicestotheBoardarebasedonabasic band disclosureinthesaidNote5. appropriately andadequatelyaddressedbythe respect oftheDirectors’remunerationare accountability aspectsofCorporateGovernancein Board isoftheviewthattransparencyand prescribed forindividualdisclosurepackages,the 187 ofthisAnnualReport.WhilsttheCodehas Note 5oftheAuditedFinancialStatementsonpage Directors. contract withAAX,subjecttofurtherreview. Any investor relations enquiries or information on the Anyinvestorrelations enquiriesorinformationonthe InconjunctionwithAAX’sInitialPublicOffering(“IPO”), FinancialResults,KeyOperatingStatisticsand SeniormanagementthatissupportedbytheIRTeam, Severalcommunicationchannelsareinplaceto TheCompanyisdedicatedinmaintaininggood InvestorRelations(“IR”) EFFECTIVECOMMUNICATIONWITH C. The GCEO or the CEO will do a brief presentation on the TheGCEOortheCEOwilldoabrief presentationonthe TheAGMisanother avenueforshareholderstointeract AGM SHAREHOLDERS ANDINVESTORS Company maybedirectedtotheIRTeam. 6.00 pm(Malaysiantime)MondaystoFridays. 603 87754680duringoperatinghoursfrom9.00amto [email protected] orCustomerSupportLine shareholders canreachtheteamthrough eligibility criteriaorgeneralenquiryonthisprogramme, For anyenquiriesrelatingtothebenefitsavailability; available ontheCompany’swebsiteatwww.airasiax.com. The termsandconditionsofthisbenefitaremade extended foranotherthree(3)yearsandwasapproved. 2016, theBoardhasproposedthatprogrammebe first anniversaryoftheIPO.DuringAGMinyear This programmeisrunningforthree(3)yearsfromthe the Shareholders’BenefitProgrammewasimplemented. website atwww.bursamalaysia.com. announcement onthewebsiteorviaBursaMalaysia’s Shareholders mayalsoobtaintheCompany’s download attheCompany’swebsitewww.airasiax.com. Presentations onaquarterlybasisareavailablefor institutional investorsandfundmanagers. briefings locallyandgloballywithfinancialanalysts, consist ofroadshows,conferences,quarterlyinvestor participate activelyininvestorrelationsactivitiesthat Malaysia andAnnualGeneralMeetings. Operating StatisticsandAnnouncementsthroughBursa Annual Report,FinancialAnnouncementsandKey the performanceofCompany.Theseinclude disseminate informationtoshareholdersandinvestorson communications withshareholdersandinvestors. shareholders’ interaction. base, theAGMisanother important forumfor the sizeandgeographical diversity ofourshareholders’ by theshareholdersandviews duringthemeeting.Given present, ifpossibleatthe AGM torespondanyquery Chairman andeachBoard Committees’Chairmanwillbe Company’s financialperformanceandtheoutlook.The Report atleast21daysbeforethemeetingisheld. time togetherwithane-copyoftheCompany’sAnnual Shareholders willbenotifiedofthemeetingdateand with theseniormanagementofCompany. ANNUAL REPORT 2016

145 146 The Board is responsible for the Company’s internal TheBoardisresponsible fortheCompany’sinternal TheBoard’sgovernancepoliciesincludeaprocessfor AuditCommitteeandInternalControl TheBoardisalsorequiredbytheCompaniesAct,1965 TheBoardaimstoensurethetimelyreleaseof TheBoardaimstoensurethatthequarterlyreports, Financial ACCOUNTABILITYAND AUDIT Reporting D. AAXcontinuestofulfilitsdutyondisclosureobligation CorporateDisclosurePolicyandProcedures InlinewiththeMCCGCodeandMMLR,AAXhastaken Poll Voting Statement onCorporateGovernance AIRASIA XBERHAD effectiveness accordingly. the Companyandforregularlyreviewingits identifying, evaluatingandmanagingtherisksfaced by control system,whichcomprisesaprocessfor on pages151to152ofthisAnnualReport. the ACanditssummarytermsofreferenceispresented overseeing thefinancialreportingprocess.Areport on effectiveness oftheinternalcontrolsystemand the Board,throughACtoreviewregularly regulations. applicable accountingstandardsandrules are complete,accurateandinconformancewith statements withallmaterialdisclosuressuchthatthey to preparetheGroup’sannualauditedfinancial performance oftheCompany. provide thetransparencyandlatestdisclosureson announcements onquarterlyfinancialreportsthat Bursa Malaysia. business informationinaccordancewiththeMMLRof accurate recordingandreportingoffinancial operations intheAnnualReportreflectfull,fairand annual auditedfinancialstatementsandreviewof and timelymannerviaBursaMalaysiaannouncement. information willbedisseminatedinanaccurate,aclear Guidelines. Alldisclosureofmaterialcorporate and regulationofBursaMalaysia’sCorporateGovernance required upontheCompanyaccordingtoguidelines one (1)independentscrutineerforpollvoting. of anygeneralmeetingandalsoappointingatleast by mandatingpollvotingforallresolutionsetoutnotice necessary effortsinexecutingandpromotingpollvoting The Statement on Risk Management and Internal Control TheStatementonRiskManagementandInternalControl TheBoardconfirmsthatthisprocesswasinplaceduring The external auditor’s remuneration including Non-Audit Theexternalauditor’sremunerationincludingNon-Audit AnExternalAuditorIndependencePolicywas TheBoard,throughtheAC,hasmaintainedappropriate, RelationshipwiththeExternalAuditors The Company is committed in ensuring that it aligns its TheCompanyiscommitted inensuringthatitalignsits E. SUSTAINABILITY REPORT is setoutinpages148to150ofthisAnnualReport. material misstatementorloss. provide reasonableandnotabsoluteassuranceagainst failure toachievebusinessobjectivesandcanonly designed tomanage,ratherthaneliminate,theriskof safeguarding theCompany’sassets.Thesystemis can, overtime,increaseshareholders’valuewhilst a systemwhichisappropriatetothebusinessand these financialstatements.Theprimaryaimistooperate the yearunderreviewanduptodateofapproval year ended31December2016isasfollows: Fees fortheCompanyandGroupfinancial the suitabilityandindependenceofexternalauditors. established aimedatestablishingaprocesstomonitor attention. Audit Committeeonmattersthatmayrequiretheir time totime,theexternalauditorsinformandupdate their professionaladviceonotherrelatedmatters.From audit findings,financialstatementsaswelltoseek are heldtofurtherdiscusstheCompany’sauditplans, least twiceayear.Meetingswiththeexternalauditors presence ofmanagement,whenevernecessary,andat auditors. TheACmeetstheexternalauditorswithout formal andtransparentrelationshipwiththeexternal out inpages126to134ofthisAnnualReport. sustainability objectives.Thereportis set workplace, marketplaceandenvironmentwith strategies onmattersrelatingtothecommunity, oa 8 466 483 Total o-ui es7 73 73 Non-audit fees er40393 410 year Statutory auditfees–current (RM’000) FY2016 Group (RM’000) Company FY2016 The Company formalised the following SOPs that will TheCompanyformalisedthefollowingSOPsthatwill STANDARDOPERATINGPROCEDURES F. Company’s website. compliance. ThefollowingSOPsarepublishedonthe business operationoftheCompanyandensureits facilitate thesafetyandoperationaleffectivenessin All details pertaining to the name and position of Alldetailspertainingtothenameandpositionof AllconcernsshouldbeaddressedtoHeadof Inordertoimprovetheoverallorganisational ii. Whistleblowing Programme TheCompanyhasestablishedaSustainabilityPolicy i. Sustainability Policy (“SOPS”) throughout theinvestigationproceedings. the whistleblowerwillbekeptstrictlyconfidential ToreporttoManagementtheresultsof • Tocompileallreportsreceivedandsubmittothe • and subsequently: reported andrecommendtheappropriateaction, Internal Auditwhowillthenassessallconcerns values. deemed tobecontrarytheCompany’scommon cases wheretheCompany’sbusinessconductis stakeholders cancommunicatetheirconcernsin as aformalcommunicationchannelwhereall has establishedaWhistleblowingPolicywhichacts Company intheeyesofpublic, effectiveness andtoupholdtheintegrityof Environment. domains –Community,Workplace,Marketplaceand strategy onsustainabilitywithfocusfourmain for theprovisionofguidanceonCompany’s investigation forfurtheraction. Chairman oftheBoard,AC;and This statement is made in accordance with a resolution Thisstatementismadeinaccordancewitharesolution In order to engage efficiently, responsibly and Inordertoengageefficiently,responsiblyand iv. Code of Business Conduct AllmattersshouldbeaddressedtoHeadofInternal Inordertopreventlossordamagesduefraud, iii. Anti-Fraud Policy of theBoardDirectorsAAXdated28March2017. society. passengers, employees,businesspartnersand competitive environmenttowardsshareholders, and alsoaimstomaintainalongtermpositioninthe Company seeksthehighstandardofperformance profitable inthecommercialaviationbusiness, ToreporttoManagementandAuditCommittee • Tocompileallinvestigationsandevidencebefore • subsequently: and recommendfortighterinternalcontrol, Audit, whowilltheninvestigateforfurtheraction stakeholders, legalactionmaybetakenifrequired. safeguard theinterestofCompanyand as theCompanyhaszerotoleranceinthisarea.To the CompanyhasestablishedanAnti-FraudPolicy, of theresultsandcorrectiveaction. and recommending appropriateactiontobetaken; ANNUAL REPORT 2016

147 148 Board. financial year.Thesystemissubjecttoregularreview bythe risk managementoftheCompanywasinplaceduring the The Boardconfirmsthatthesystemofinternalcontrol and management, financial,operationalandcompliance controls. or loss.Thesystemofinternalcontrolcovers,interalia, risks not absoluteassuranceagainstmaterialerror,misstatement objectives. Accordingly,thesystemprovidesreasonable and rather thaneliminaterisksoffailuretoachievecorporate of internalcontrol,suchasystemisdesignedtomitigate irregularities. Inviewofthelimitationsinherentinany system reasonable assuranceagainstmaterialerrors,misstatementor Company’s riskwithinacceptableprofile,andprovides The systemofinternalcontrolisdesignedtomanagethe improves AAX’soperationalcontrols. implementation ofremedialactionsidentifiedriskswhich framework, andtheyarealsoresponsibleonthe and managingriskinlinewiththeapprovedmanagement Business unitsandfunctionsareaccountableforidentifying globally acceptedriskmanagementstandards. and monitorprincipalrisksinplaceisconformancewith that systematicriskmanagementprocesstoidentify,evaluate adequately implementedwithinAAX.TheACalsoensures the riskmanagementandinternalcontrolpracticesare The Board,throughtheAuditCommittee(“AC”)ensuresthat Company’s assets. regulations, tosafeguardshareholders’interestsandthe financial reportingandcompliancewithapplicablelaws the effectivenessandefficiencyofoperations,reliability systems thatwouldprovidereasonableassuranceinensuring for maintainingsoundinternalcontrolandriskmanagement The BoardoftheCompanyacknowledgesitsresponsibility GOVERNANCE OFRISKMANAGEMENT financial year”). risk management&internal control for thefinancialyear ended31December 2016(“the for Directors ofListed Issuer. The Board ispleasedto issue thefollowing statement of Paragraph 15.26(b) andStatement onRiskManagement&Internal Control: Guidelines assets” andguidedby theBursaMalaysia’s MainMarket Listing Requirements and internal control system to safeguard shareholders’ investment andtheCompany’s which “...requires listed companies to maintainasoundriskmanagementframework committed into complying withtheMalaysian Code onCorporate Governance 2012 The Board ofDirectors (“Board”) ofAirAsiaXBerhad(“AAX” ortheCompany) remains Statement ofRiskManagement&InternalControl AIRASIA XBERHAD personnel of the Company. annual riskre-assessment andawareness sessionwiththekey risks totheAC,reviewof risk managementframework, financial yearincludesquarterly reportingofkeyenterprise Key riskmanagementactivities undertakenduringthe Diagram 1setsoutAAX’s risk managementprocess. accountability aswellreportingguidelinesareadopted. clear riskmanagementprocess,linesofresponsibility and comprehensive riskmanagementframeworkthatincludes procedures andoperationsthroughouttheCompany. A strong riskmanagementcultureandensureevent-ready As such,AAX’sRiskManagementfunctionaimstofoster a value. growth oftheCompanyandmaximisationshareholder risks mustbeeffectivelymanagedtoensurethelong-term pandemics. Nevertheless,werecognisethefactthatthese government regulation,taxes,terrorism,adverseweather,and although manyremainoutsideourcontrolsuchas remains onmitigatingtheserisksatalllevelsinthebusiness, AAX exposedtoanumberofprincipalrisks.Thefocus environment, togetherwithoperationalcomplexity,leaves The highlyregulatedandcommerciallycompetitive Risk Management INTERNAL MONITORING & AUDIT REPORTING IDENTIFICATION RISK MITIGATION ASSESSMENT RISK RISK The Company undertakes a comprehensive budgeting TheCompanyundertakesacomprehensivebudgeting • Budget TheCompanyappointsemployeesofthenecessary • People Department AAXhasawell-definedorganisationalstructurethatis • Organisational Structure Theinternalcontrolmechanismisembeddedinthe • Control Environment assist theBoardtomaintainaproperinternalcontrolsystem: The followingkeyinternalcontrolstructuresareinplaceto Internal Control Yearly Budget. Board participatesinthereviewandapprovalof which performanceismonitoredonanongoingbasis. The process eachyear,toestablishgoalsandtargetsagainst Company’s strategicplan. align thestrategyofhumancapitaldevelopmentto by GroupTalent,providesaframeworkthattranslatesand of humancapital.Thus,formalappraisalprocessoverseen is toenhancetheoperationalefficiencyandproductivity business growthinanenvironmentofintensecompetition Company alsobelievesthatthekeystrategytomaintain qualities ofprofessionalintegrityintheirconduct.The operations aresufficientlyskilledandexerttherequired competencies toensurethatthepersonneldrivingkey throughout AAX. procedures havebeenlaiddownandcommunicated responsibility, approval,authorisation,andcontrol Departmental Head.Clearlinesofaccountabilityand strategic operatingfunctionisheadedbyaresponsible aligned toitsbusinessandoperationalrequirements.Each manuals regularlyorwhenitisdeemednecessary. by theHeadsofDepartmentstoreviewandupdate operations. Continuouseffortsarealsobeingundertaken of bestpracticeandeffectivecontrolvarioustasksin respectively. Thesemanualsassistinensuringcontinuity Operations ManualsandGround and groundoperationsaredocumentedinFlight The workprocessesandproceduresforflightoperations levels intheCompanyespeciallyforoperationalactivities. various workprocessesandproceduresatappropriate The Internal Audit Department (“IAD”) was established in TheInternalAuditDepartment(“IAD”)wasestablishedin • Internal Audit Department TheAChasbeenestablishedbytheBoardsinceyear • Audit Committee TheCompanyundertakesadequateinsurancesandensure • Insurance and Physical Safeguards AAXdocumenteditsLimitsofAuthority(“LOA”)which • Limits of Authority Executive OfficerofAAX. directly totheACandadministrativelyChief preserve itsindependence,theHeadofIADreports as approvedbytheACinyear2014.Inorderto Company areclearlystatedintheInternalAuditCharter assurance andconsultancyactivitiesprovidedtothe and responsibilityofIADaswellthenature control andgovernanceprocesses.Thepurpose,authority improving theeffectivenessofriskmanagement,internal systematic anddisciplinedapproachinevaluating accomplish itscontrolobjectivesbyintroducinga IAD strivestoprovidethemeansforCompany effectively withintheacceptablelimitsandexpectations. internal controlsareinplace,adequateandfunctioning provide assurancetoManagementandtheBoardthatall function toassisttheACindischargingtheirdutiesand 2013. TheIADofAAXactsasanindependentappraisal Report. AC Reportisdisclosedinpages151to152ofthisAnnual Board, majorityofwhomareindependentdirectors.The 2013. TheACcomprisesofthree(3)membersthe GeneralInsuranceProgram. • AviationWar,Hi-jackingandOtherPerilsExcess • AircraftHullandSparesDeductible; • AviationHullandSparesWarAlliedPerils(Primary • AviationHullandSparesAllRisksLiability; • program comprisesofthefollowing: will resultinmateriallosses.AAXAviationInsurance the assetsaresufficientlycoveredagainstanymishapthat physical safeguardonassetsareinplacetoensurethat was approvedbytheBoardinNovember2016. and approvedbytheBoard.ThelatestversionofLOA and anyamendmentsmadetotheLOAmustbetabled and includestheBoard.TheLOAisreviewedregularly Approving authoritiescovervariouslevelsofmanagement making operationalandcommercialbusinessdecisions. clearly definesthelevelofauthorityandresponsibilityin Liability (ExcessAVN52);and and Excess); ANNUAL REPORT 2016

149 150 Our Code of Conduct (“the Code”) governs the OurCodeofConduct(“theCode”)governsthe CodeofConduct • TheHeadofIADcurrentlysitsasanobserverinthe Throughout2016,twenty(20)auditworkshadbeen Asanintegralpartofthemanagementprocess,IAD Statement ofRiskManagement&InternalControl AIRASIA XBERHAD Dutyanddeclaration. • Good practicesandcontrols. • Confidentiality anddisclosureofinformation. • Conflict ofinterest. • How wework. • Theenvironmentinsideandoutside ofworkplace. • conduct whichincludesamongstothers: highlights AAX’sexpectationsontheirprofessional expected toadhereinthecourseoftheirwork.It out thestandardsandethicsthatallemployeesare The variouspoliciesandguidelineswithintheCode spell responsibilities totheCompanyinperformingtheirduties. professional conductofouremployeesandoutlines their internal control,wherenecessary. input andopiniononmattersdiscussedwithregardsto necessary areasoftheCompany.Hewouldprovidehis to thefinancial,commercial,operationsandother Company discussesanddeliberatesonissuespertaining Leadership Meetingwheretheseniormanagementof control intheCompany. effectiveness andefficiencyofthesysteminternal the AC.Theauditcoverageencompassesevaluationof audit workwascarriedoutbythirdpartyappointed Plan 2016,(10)asperad-hocauditworksandone(1) carried outi.e.nine(9)auditworksasperapprovedAudit AssistManagementinestablishingaproperrisk 7. Evaluateproceduresinplacetosafeguardcompany 6. Recommendappropriate controlstoovercome 5. Provideassuranceoncompliancetostatutory 4. Analyseandexaminethatoperationalactivitiesare 3. Researchandgatherinformationthatiscompetent, 2. Identifyallauditableactivitiesandrelevantrisk 1. AAX canbesummarisedasfollows: review. Thekeyinternalauditactivitiesthataddvalueto appraisals, counselandinformationontheactivitiesunder furnishes theManagementwithindependentanalysis, control system. program andensuringtheadequacyofinternal monitoring theeffectivenessofriskmanagement management framework,assessingriskand assets; and deficiencies andtoenhancecompanyoperations; requirements, laws,companypoliciesandguidelines; carried outeffectively; factual andcomplete; factors, andtoassesstheirsignificance; The statement of risk management and internal control of Thestatementofriskmanagementandinternalcontrol • Associate and Joint-Venture Companies AWhistleBlowerPolicywasapprovedbytheBoardin • Whistle Blower Policy TheCodeisdesignedtomaintaindisciplineandorderin Board ofDirectorsdated28 March2017. This statementisinaccordance withtheresolutionof employees andtheCompany’s assets. investment, theinterestofcustomers,regulatorsand sound andadequatetosafeguardtheshareholders’ internal controlsysteminplacefortheyearunderreview is The Boardisoftheviewthatriskmanagement and aspects. is operatingadequatelyandeffectively,inallmaterial of AAXthattheriskmanagementandinternalcontrol system The BoardhasreceivedanassurancefromtheCEO andCFO CONCLUSION management andinternalcontrolsystemsoftheGroup. opinion ontheadequacyandeffectivenessofrisk RPG 5doesnotrequiretheExternalAuditorstoforman (Revised) issuedbytheMalaysianInstituteofAccountants. accordance withRecommendedPracticeGuide(“RPG”)5 Control. Theirlimitedassurancereviewwasperformedin reviewed thisStatementonRiskManagementandInternal Requirements ofBursaMalaysia,theExternalAuditorshave As requiredbyParagraph15.23oftheMainMarketListing AUDITORS REVIEW OFTHESTATEMENTBYEXTERNAL from thisStatement. the associateandjoint-venturecompaniesareexcluded standing andreputation. or unethicalbehaviourthatwouldjeopardiseitsgood and ethicalvalues.AAXwillnottolerateanyirresponsible Company’s bestinterestsandtomaintainhighprinciples investigations. AAXexpectsitsemployeestoactinthe investigation andtherespectiveoutcomesofsuch disclosures. Italsocoverstheproceduresfordisclosure, reprisals asadirectconsequenceonmakingsuch includes protectionforthewhistle-blowersfromany Company’s CodeofConduct.TheWhistleBlowerPolicy suspected fraudordishonesty,aviolationofthe report instancesonunethicalbehaviour,actualor year. ThePolicyprovidesaplatformforemployeesto the year2013andintroducedtoallstaffwithinsame actions thatcanbetakenagainstthem. deemed tohavebreachedtheCodeanddisciplinary out thecircumstancesinwhichsuchemployeeswouldbe the workplaceamongemployeesatalllevels.Italsosets The Head of Internal Audit of AAX attended the AC meetings to TheHeadofInternal AuditofAAXattendedtheACmeetingsto A total of five (5) meetings were held during the financial year and the Atotaloffive(5)meetingswereheldduringthefinancial year andthe ACTIVITIESOFACFORTHEFINANCIAL YEAR B. ThedutiesandresponsibilitiesoftheACaresetoutinitsTerms of TheACmeetstherequirementsofparagraph15.09(1)(c) theMMLR, TheACisestablishedbytheBoardofDirectors(“Board”)and COMPOSITIONOFACANDATTENDANCEMEETINGS A. AC by our Board. regulatory matters, andsuchothermatters thatmay bespecificallydelegated to the of internal control, external andinternal auditprocess, compliance withlegaland financial reporting process andmonitoring themanagementofriskandsystem responsibilities. The AC iscommitted to itsrole inensuringtheintegrity oftheGroup’s The AC assists ourBoard infulfillingitsresponsibilities withrespect to itsoversight Board for inclusioninthisAnnualReport. This Report hasbeenreviewed by theAudit Committee (“AC”) andapproved by the Audit CommitteeReport issues arisingfromtherelevant auditreports. invited toprovideexplanation totheAConspecificcontrollapsesand issues. Whererequired,the Managementoftheauditsubjectswasalso facilitate deliberationsaswell astoprovideclarificationonaudit Financial Officer(CFO)were invitedtoattendallACmeetings management Team,theChiefExecutiveOfficer(CEO) andChief present auditandinvestigationreports.Representing thesenior details oftheattendanceACmembersareasfollows: (http://airasiax.listedcompany.com/home.html). Reference whichispublishedonAirAsiaXcorporatewebsite qualified accountant. which stipulatesthatatleastonememberoftheACmustbea the BoardandisnotChairmanofBoard. of themareanalternatedirector.TheChairmanACisappointedby independent non-executivedirectorsincludingtheChairmanandnone comprises ofthree(3)non-executivemembers,majoritywhomare 31 DECEMBER 2016(“THEFINANCIALYEAR”) Lim KianOnn Kamaludin Tan SriAsmatBin Yusoff Dato’ YusliBinMohamed aeDirectorship Name Non-Executive Director Non-Independent Non-Executive Director Independent Non-Executive Director Independent Number of Number of meetings meetings attended 5/5 5/5 5/5 In discharging its duties and Indischargingitsdutiesand Financial Reporting External Audit below: the ACduringfinancialyearissetout A summaryoftheactivitiesperformedby MMLR, CGCodeandotherbestpractices. Board andalignedtotheprovisionsof AC Charter,whichwasapprovedbythe responsibilities, theACisguidedby • Met with the external auditors without Met withtheexternalauditorswithout • Deliberated andreportedtheresultsof • TheACwasalsoupdatedby the • TheACreviewedtheexternal • Reviewedanddeliberatedonthe • to present. discuss anymatters thattheymaywish the presenceofmanagement to to theBoard. the annualauditforrecommendation and statutoryrequirements. relevant guidelinesontheregulatory external auditorsonchangestothe requirements. progress inmeetingthenewreporting the Companyandhasmonitored Standards andhowtheywillimpact Malaysian FinancialReporting process. Reviewedupdatesonthe the effectivenessofoverallaudit performance andindependence the audit,externalauditor’s and consideredindetailtheresultsof remuneration, termsofengagement recommended totheBoardtheir auditors’s overallworkplanand consideration andapproval. prior tosubmissiontheBoardfor annual auditedfinancialstatements quarterly financialannouncementsand ANNUAL REPORT 2016

151 152 Related Party Transactions Risk Management Internal Audit Audit CommitteeReport AIRASIA XBERHAD • Provided assistance to the appointed external auditor Providedassistancetotheappointedexternalauditor • Reviewedtheresultsofoperationalauditreports. • Reviewedthequarterlyauditfindingstatusreports • DeliberatedandapprovedtheAuditCharterfor • Deliberatedontheinvestigationreportsandafter • DeliberatedandapprovedtheInternalAuditPlanfor • • Reviewed related party transactions entered into by Reviewedrelatedpartytransactionsenteredintoby • DiscussedtheBusinessContinuityManagement • ReviewedtheStatementofRiskManagementand • Reviewedandapprovedtheprogressreportonrisk • Reviewedthekeyriskprofileandregisterof • quarterly review. in alloversightoftheoperationalauditsoneach control lapsesareaddressedandresolvedpromptly. timeline takenbytheManagementtoensure and deliberatedontherectificationactions Internal AuditDepartment. control environmentandpreventrecurrence. Management toimplementcontrolsstrengthenthe having understoodthecaseindetails,directed discharge itsfunctionseffectively. the auditresourcesaresufficienttoenableAudit comprehensive coverageofauditaswelltoensure the financialyeartoensureadequatescopeand established proceduresinadherencetotheMMLR. the Companyanditsaffiliatesinconformityto activities fortheCompany. implemented byManagement. management practicesandinternalcontrols Internal Control,whichsummarisedtherisk management activities. Company. TheresponsibilitiesofIAinclude: TheIAreportsfunctionallytoACandadministratively AAXhasanin-houseIAtoassisttheBoardoversee INTERNALAUDIT(IA)FUNCTION C. AC reviews and approves the IA’s human resource ACreviewsandapprovestheIA’shumanresource Managementistoensurethatcorrectiveactionsare • Table to the management on any areas that require Tabletothemanagementonanyareasthatrequire • Reviewtheadequacyofriskmanagement, • Implementriskbasedaudittoestablishthestrategic • Undertakeregularandsystematicreviewsofthe • Reviewthesystemsofinternalcontrols. • the CEO. of theAC. having itsplansandreportsdirectlyunderthepurview its impartiality,proficiencyanddueprofessionalcareby internal controlandgovernancesystem.TheIAmaintains that Managementhasinplaceasoundriskmanagement, 2016 wereRM725,942(2015:RM484,197). Total operationalcostsoftheIAdepartmentforyear resourced withcompetentandproficientinternalauditor. requirements toensurethatthefunctionisadequately execution. highlighted andsubmittedtotheACforreview as wellkeycontrolissuesandrecommendationsare reports whichprovidetheresultsofauditconducted, implemented withintherequiredtimeframe.Theaudit attention andfurtheractions. improvement andauditrecommendationsfor amongst others. requirement, governanceandmanagementefficiency, compliance tobothinternalandstatutory strength andeffectivenessoftheinternalcontrols, areas orunitstobeaudited. and annualauditplan,themainfactortodetermine operate efficientlyandeffectively. reasonable assurancethatthesystemscontinueto systems ofinternalcontrols,soastoprovide The RRPT Mandate is valid until the conclusion of the forthcoming Eleventh AGM of the Company to be held on 23 May TheRRPTMandateisvaliduntiltheconclusionofforthcoming EleventhAGMoftheCompanytobeheldon23May AttheAnnualGeneralMeeting(“AGM”)heldon31May2016,Companyhadobtainedashareholders’mandateto RECURRENTRELATEDPARTYTRANSACTIONSOFAREVENUEORTRADINGNATURE 4. TherewerenomaterialcontractsenteredintobytheCompanyanditssubsidiariesinvolvingdirectorsmajor MATERIALCONTRACTSINVOLVINGDIRECTORS'ANDMAJORSHAREHOLDERS'INTERESTS 3. TheESOSistheonlyshareschemeofCompanyinexistenceduringfinancialyearended31December2016 2. ESOS Therewerenocorporateproposalsduringthefinancialyearended31December2016. UTILISATIONOFPROCEEDSFROMCORPORATEPROPOSAL 1. The informationsetoutbelowisdisclosedincompliancewiththeMMLRofBursaMalaysia:- Additional ComplianceInformation 31 December 2016areasfollows: 31 December the recurrentrelatedpartytransactionsofarevenueortradingnatureenteredintoduringfinancial year ended paragraph 10.09(2)(b)and3.1.5ofPracticeNote12theListingRequirementsBursaSecurities, detailsof provided intheCirculartoShareholdersdated28April2017senttogetherwithAnnualReport.Pursuant to shareholders, willbevaliduntiltheconclusionofCompany’snextAGM.DetailsRRPTMandate beingsoughtis forthcoming EleventhAGM.TherenewaloftheexistingRRPTMandateandnewMandate,ifapproved bythe 2017. TheCompanyproposestoseekarenewaloftheexistingRRPTMandateandnew atits trading nature. allow theCompanyand/oritssubsidiariestoenterintorecurrentrelatedpartytransactions(“RRPTs”)ofarevenueor shareholders' intereststillsubsistingattheendoffinancialyearended31December2016. approved bytheshareholderson12October2012.TheinformationofESOSispage163and208. No. 1. AirAsia Berhad AirAsiaBerhad 1. ate NatureofRRPT Parties Transacting 284669-W) (Company No.: (“AirAsia”) low-cost, long-haulairservices. trade nameandliveryinrespectofour to operateairservicesunderthe“AIRASIA” Rights grantedbyAirAsiatoourCompany Datuk KamarudinMeranun Tan SriDr.TonyFernandes Tune Group AirAsia Interested MajorShareholders Dato’ Fam Datuk KamarudinMeranun Tan SriDr.TonyFernandes Interested Directors Related Parties Actual value Actualvalue Related Parties Class andrelationshipofthe ANNUAL REPORT 2016 RM8,530,000

153 154 Additional ComplianceInformation AIRASIA XBERHAD No. 3. AirAsia Provision of charter services to Beirut, Provisionofcharter servicestoBeirut, AirAsia 3. 2. AirAsia Provision of the following range of services Provisionofthefollowingrangeservices AirAsia 2. ate NatureofRRPT Parties Transacting Company. procured byAirAsiabutarecarriedour ad-hoc basis,wherebythepassengersare for along-hauldestinationtoAirAsiaonan contingent. Thecarriedpassengerservices Lubnan byourCompanyfortheMalbatt n Innovation,CommercialandTechnology (n) Flight AttendantDepartment (m) (l) Corporate Quality OperationsControlCentre (k) (j) Legal (i) Engineering GroupInflightAncillary (h) (g) Ground Operations ITInternalAudits (f) Manpowercost(affiliateofcompaniesin (e) (d) Cargo QualityAssurance–Creditcardfraud (c) (b) Treasury (a) Commercial by AirAsiatoourcompany: – Involves all services related to Involvesallservicesrelatedto – China) unit – Fuel hedging – Fuel procurement – Ancillary – Marketing Webteam:Manage,plan,buildand – BrandingandCreative – – Direct channel – Sales support Salesanddistribution – information technology develop airasia.comwebsite Creativeincludesgraphicdesigns • Managecommunicationimagery, • Protectionofbrandtoensure • supporting brandingactivities branding youth marketing)andcommercial sponsorships (e.g.sportsand proper publicperceptionisbuilt Datuk KamarudinMeranun Tan SriDr.TonyFernandes Tune Group AirAsia Interested MajorShareholders Dato’ Fam Datuk KamarudinMeranun Tan SriDr.TonyFernandes Interested Directors Datuk KamarudinMeranun Tan SriDr.TonyFernandes Tune Group AirAsia Interested MajorShareholders Dato’ Fam Datuk KamarudinMeranun Tan SriDr.TonyFernandes Interested Directors Related Parties Actual value Actualvalue Related Parties Class andrelationshipofthe RM15,048,000 RM279,000 No. 4. Asian Contact AsianContact 4. 6. Rokki Sdn. Bhd. RokkiSdn.Bhd. 6. 5. CaterhamJet CaterhamJet 5. 7. Rokki Avionics RokkiAvionics 7. 1075353-A) (Company No.: Sdn Bhd 935105-W) (Company No.: (“Rokki”) 1696997) (Company No.: (“CJG”) Global Ltd No.: 837261-V) NatureofRRPT Bhd (Company Centres Sdn Parties Transacting solution. entertainment andconnectivity(“IFEC”) Sale andmaintenanceofanin-flight Rokki. hardware, software,contentandupdatesby Supply ofin-flightentertainmentsystem, financiers. meetings withouraircraftsupplieror authorities, includingflightstoEuropefor as meetingswithcivilaviationandairport governmental orministerialmeetingsaswell Examples ofsuchtravelrequirementsinclude managing theirtravelrequirements. Such servicesallowformoreflexibilityin future plans. and implementourgrowthstrategies activities ofourCompanytoexplore,assess for corporateandstrategicdevelopment members ofourBoardandkeymanagement travel servicestobeprovidedbyCJGfor Annual paymentinrespectofcharteredair Company. Provision ofcallcentreservicestoour Datuk KamarudinMeranun Tan SriDr.TonyFernandes Tune Group Interested MajorShareholders Datuk KamarudinMeranun Tan SriDr.TonyFernandes Interested Directors Datuk KamarudinMeranun Tan SriDr.TonyFernandes Tune Group AirAsia Interested MajorShareholders Dato’ Fam Datuk KamarudinMeranun Tan SriDr.TonyFernandes Interested Directors Datuk KamarudinMeranun Tan SriDr.TonyFernandes Tune Group AirAsia Interested MajorShareholders Datuk KamarudinMeranun Tan SriDr.TonyFernandes Interested Directors Datuk KamarudinMeranun Tan SriDr.TonyFernandes Tune Group AirAsia Interested MajorShareholders Datuk KamarudinMeranun Tan SriDr.TonyFernandes Interested Directors Related Parties Actual value Actualvalue Related Parties Class andrelationshipofthe ANNUAL REPORT 2016 RM6,606,000 RM3,827,000 NIL NIL 155 156 Additional ComplianceInformation AIRASIA XBERHAD No. 10. Think BIG ThinkBIG 10. 12. AirAsia Global AirAsiaGlobal 12. 1 TuneInsurance 11. 9. Asian Aviation AsianAviation 9. 8. Tune Insurance TuneInsurance 8. 1045172-A) (Company. No.: (“AGSS”) Sdn Bhd Shared Services 924656-U) (Company No.: (“Think BIG”) Digital SdnBhd 947910-D) (Company No.: Bhd (“AACOE”) Excellence Sdn Centre of ate NatureofRRPT Parties Transacting 30686-K) (Company No.: Insurance”) (“Tune Malaysia Berhad (d) Sourcing and procurement operation Sourcingandprocurementoperation (d) Informationandtechnology operation (c) Peopledepartmentsupportoperation (b) Financeandaccountingsupport (a) AGSS toourCompany: Provision ofthefollowingsharedservicesby Program. program brandedastheBIGLoyalty which operatesandmanagesaloyalty Purchase ofloyaltypointsfromThinkBIG, effects, flightdelayandon-timeguarantee. loss ordamagetobaggageandpersonal inconvenience suchasflightcancellationor and mortalremainsrepatriation,travel evacuation, emergencymedicalevacuation others, personalaccident,medicaland coverage forlossesarisingfrom,amongst Insure, atravelprotectionplanwhichprovides Tune InsurancefortheprovisionofAirAsia our Company’sroleasacorporateagentof premiums collectedonitsbehalfpursuantto Payment toTuneInsuranceofinsurance non-pilot trainingservicesbyAACOE. Provision ofcommercialtrainingservicesand and on-timeguarantee. baggage andpersonaleffects,flightdelay flight cancellationorlossdamageto repatriation, travelinconveniencesuchas medical evacuationandmortalremains accident, medicalandevacuation,emergency losses arisingfrom,amongstothers,personal protection planwhichprovidescoveragefor provision ofAirAsiaInsure,atravel a corporateagentofTuneInsuranceforthe Insurance pursuanttoourCompany’sroleas insurance premiumsreceivedbyTune Receipt ofcommissionincome25%onall support services. support services;and services; operation services; Datuk KamarudinMeranun Tan SriDr.TonyFernandes Tune Group AirAsia Interested MajorShareholders Dato’ Fam Datuk KamarudinMeranun Tan SriDr.TonyFernandes Interested Directors Datuk KamarudinMeranun Tan SriDr.TonyFernandes Tune Group AirAsia Interested MajorShareholders Dato’ Fam Datuk KamarudinMeranun Tan SriDr.TonyFernandes Interested Directors Datuk KamarudinMeranun Tan SriDr.TonyFernandes Tune Group AirAsia Interested MajorShareholders Datuk KamarudinMeranun Tan SriDr.TonyFernandes Interested Directors Datuk KamarudinMeranun Tan SriDr.TonyFernandes Tune Group AirAsia Interested MajorShareholders Datuk KamarudinMeranun Tan SriDr.TonyFernandes Interested Directors Datuk KamarudinMeranun Tan SriDr.TonyFernandes Tune Group AirAsia Interested MajorShareholders Lim KianOnn Dato’ Fam Datuk KamarudinMeranun Tan SriDr.TonyFernandes Interested Directors Related Parties Actual value Actualvalue Related Parties Class andrelationshipofthe RM2,600,000 RM11,032,000 RM15,681,000 RM3,920,000 RM3,239,000 Please refer to Section 7 and Section 2.3 of the Circular to Shareholders dated 29 April 2016 and 28 April 2017 Please refertoSection7and2.3oftheCircularShareholdersdated29April2016282017 Note: The shareholdings of the interested Directors and interested Major Shareholder in our Company as at the 20 March 2017 TheshareholdingsoftheinterestedDirectorsandMajorShareholder inourCompanyasatthe20March2017 transacting partiesasstated above. respectively onthedirectorshipsandshareholdings of theinteresteddirectorsandmajorshareholderin are asfollows: (2) (1) au aaui eau 3,0,3 .41,163,602,394 8.14 337,702,739 1,163,602,394 8.14 337,702,739 Datuk KamarudinMeranun Lim KianOnn Dato’ Fam Datuk KamarudinMeranun iAi 7,2,0 37 – – 13.76 570,728,502 1,163,602,394 2.11 87,303,728 AirAsia Interested MajorShareholders Tan SriDr.TonyFernandes Interested Directors ueGop 9,7,9 42 – – 14.29 1,163,602,394 592,873,892 2.11 87,303,728 Tan SriDr.TonyFernandes Tune Group No. Deemedinterest viashareholdingsofhisspouseandchildren. 14. AirAsia Provision of charter and/or wet lease of Provisionofcharterand/orwetlease AirAsia 14. 13. Act, 2016. Deemed interestedviatheirinterestsinAirAsiaandTuneGroup,being theMajorShareholdersofourCompanypursuanttoSectio ate NatureofRRPT Parties Transacting AACOE Provision of instructor training services by Provisionofinstructortrainingservicesby AACOE A330 aircraftbyAAX. AAX. o fSae o fSae % No.ofShares % No. ofShares Datuk KamarudinMeranun Tan SriDr.TonyFernandes Tune Group AirAsia Interested MajorShareholders Dato’ Fam Datuk KamarudinMeranun Tan SriDr.TonyFernandes Interested Directors Datuk KamarudinMeranun Tan SriDr.TonyFernandes Tune Group AirAsia Interested MajorShareholders Dato’ Fam Datuk KamarudinMeranun Tan SriDr.TonyFernandes Interested Directors Related Parties Actual value Actualvalue Related Parties Class andrelationshipofthe Direct 197,833,356 –– – – –– ANNUAL REPORT 2016 Indirect n 8 of the Companies n 8oftheCompanies (RM33,793,000) USD8,391,000 (2) (1) (1) (1) (1) 4.769 28.05 28.05 28.05 28.05 NIL 157 158 Code ofBusinessConduct AIRASIA XBERHAD the basisofthat assessment. and dischargeitsresponsibilities asbestitcanon management continuously to assessthepriorities inseparable. Thereforeitis the dutyof These fiveareasofresponsibility areseenas the legitimateroleofbusiness. support forfundamentalhumanrightsinlinewith countries inwhichAAXoperates,toexpress members ofsociety,toobservethelaws To conductbusinessasresponsiblecorporate To society relationships. decision toenterintoorremaininsuch effectively willbeanimportantfactorinthe doing. Theabilitytopromotetheseprinciples promote theapplicationoftheseprinciplesinso vendors, suppliersandinjointventuresto To seekmutuallybeneficialrelationshipswith To thosewithwhomitdoesbusiness the fullcommitmentofallemployees. recognised thatcommercialsuccessdependson application oftheseprincipleswithinAAX.Itis planning anddirectionoftheirwork,inthe encourage theinvolvementofemployeesin equal opportunityemployment,andto development andbestuseofhumantalent terms andconditionsofservice,topromotethe conditions ofwork,andgoodcompetitive to providetheemployeeswithgoodandsafe To respectthehumanrightsofemployees, To employees the operationsandcommercialexpertise. price, qualityandsafety,whicharesupportedby providing serviceswhichoffervalueintermsof To winandmaintainguestsbydeveloping To guests an acceptablereturn. To protectshareholders’investment,andprovide To shareholders AAX recognisesfiveareasofresponsibility: RESPONSIBILITIES environments. term positioninitsrespectivecompetitive of performanceandaimtomaintainalong- aviation business.AAXseeksahighstandard responsibly andprofitablyinthecommercial The objectiveofAAXistoengageefficiently, OBJECTIVES established proceduresandbesubjecttoaudit. accounts ofthecompanyinaccordancewith must bereflectedaccuratelyandfairlyinthe All businesstransactionsonbehalfofAAX their partintheconductofcompanybusiness. between theirprivatefinancialactivitiesand Employees mustavoidconflictsofinterest any formareunacceptablepractices. payment, solicitingandacceptanceofbribesin does business.Thedirectorindirectoffer, in itsrelationshipswithallthosewhomit all aspectsofitsbusinessandexpectthesame AAX insistsonhonesty,integrityandfairnessin BUSINESS INTEGRITY above. possible tofulfilltheresponsibilitiesoutlined strong financialfoundationitwouldnotbe low costfarestoguests.Withoutprofitsanda Standards tobeableconsistentlyprovide unit costwithoutcompromisingFlightSafety essential forAAXtomaintainlowoperational that guestsplaceonAAXservices.Itis measure bothofefficiencyandthevalue responsibilities andstayinginbusiness.Itisa Profitability isessentialtodischargingthese ECONOMIC PRINCIPLES has acontributiontomake. on mattersaffectingthecommunity,whereit also hastherighttomakeitspositionknown employees, itsguests,orshareholders.AAX any matterwhichaffectsthemselves,its responsibility tomakeitspositionknownon governments, AAXhastherightand politics. However,whendealingwith representatives ortakeanypartinparty political parties,organisationsorits objectives. AAXdoesnotmakepaymentsto operates inpursuitofitslegitimatecommercial within thelawsofcountriesinwhichit AAX actsinasociallyresponsiblemanner POLITICAL ACTIVITIES confidentiality andcost. overriding considerationsofbusiness legitimately interestedparties,subjecttoany relevant informationaboutitsactivitiesto information programmesandprovidesfull this end,AAXhascomprehensivecorporate individuals, opencommunicationisessential.To the impactonnationaleconomiesand of theactivitiesinwhichtheyareengagedand AAX recognisesthatinviewoftheimportance COMMUNICATION with it. will notpreventothersfromcompetingfreely framework ofapplicablecompetitionlaws;AAX compete fairlyandethicallywithinthe AAX supportsfreeenterprise.Itseeksto COMPETITION private initiatives. the localsociety,andscopeforuseful size ofthecompanyconcerned,nature programmes –willvarydependinguponthe through community,educationalordonations Opportunities forinvolvement-example may notbedirectlyrelatedtothebusiness. constructive interestinsocietalmatterswhich effectively aspossible.Inaddition,AAXtakesa is inperformingtheirbasicactivitiesas progress ofthecountriesinwhichtheyoperate companies canmaketothesocialandmaterial The mostimportantcontributionthat THE COMMUNITY report performance. improvement, andmeasure,appraise other criticalbusinessactivity,settargetsfor To thisendAAXmanagesthesemattersasany Standards. doing so,itwillnotcompromiseFlightSafety low operationalcost,AAXwillensurethatin Consistent withAAX’scommitmenttomaintain ENVIRONMENT HEALTH, SAFETYANDTHE or personaldataofourgueststothirdparties. AAX alsoundertakestonotsellthenameand/ by ourguests. disclosure ofsuchpersonalinformationisgiven information orwrittenconsentallowing authorised underlawtodisclosesuchpersonal related purposesunlessAAXisrequiredor was originallyrequestedandfordirectly purposes forwhichthepersonalinformation through AirAsia’swebsitewillonlybeusedto personal informationprovidedbyitsguests data protection.AAXundertakesthatthe AAX recognisestheimportanceofpersonal PERSONAL DATAPROTECTION ANNUAL REPORT 2016

159 AIRASIAFINANCIAL X BERHAD STATEMENTS

FINANCIAL STATEMENTS OTHER INFORMATION

162 Directors’ Report 234 Analysis of Shareholdings 165 Income Statements 235 List of Directors’ Shareholdings 166 Statements of Comprehensive Income 236 List of Top 30 Largest Shareholders 167 Balance Sheets 237 Analysis of Warrant Holdings 168 Consolidated Statement of Changes in Equity 238 List of Directors’ Warrant Holdings 169 Company Statement of Changes in Equity 239 List of Top 30 Largest Warrant Holders 170 Statements of Cash Flows 241 Corporate Directory 172 Notes to The Financial Statements 242 Notice of Annual General Meeting 227 Supplementary Information 246 Glossary 228 Statement by Directors • Form of Proxy 228 Statutory Declaration 229 Independent Auditors’ Report HIGHLIGHTS: 162 167 170 242

Statements of Notice of Annual Directors’ Report Balance Sheets Cash Flows General Meeting 162 as disclosedinNote5and30tothefinancial statements. the Directororwithafirmofwhichheismember, orwithacompanyinwhichhehassubstantialfinancialinterest,except benefits shownunderDirectors’Remuneration)byreason ofacontractmadebytheCompanyorrelatedcorporationwith Since theendofpreviousfinancialyear,noDirector hasreceivedorbecomeentitledtoreceiveabenefit(otherthanthe or debenturesof,theCompanyanyotherbodycorporate. with theobjectorobjectsofenablingDirectors Companytoacquirebenefitsbymeansoftheacquisitionsharesin, During andattheendoffinancialyear,noarrangements subsistedtowhichtheCompanyisaparty,beingarrangements DIRECTORS’ BENEFITS There wasnoissuanceofsharesanddebenturesduringthefinancialyear. SHARE CAPITALANDDEBENTURES All materialtransferstoorfromreservesandprovisionsduringthefinancialyearareshownin statements. RESERVES ANDPROVISIONS FINANCIAL RESULTS during thefinancialyear. subsidiaries aredescribedinNote16tothefinancialstatements.Therewasnosignificantchangenature oftheseactiv The principalactivityoftheCompanyisthatprovidinglonghaulairtransportationservices. activitiesoft PRINCIPAL ACTIVITIES Dato’ YusliBinMohamedYusoff Tan SriAsmatBinKamaludin Dato’ FamLeeEe Lim KianOnn Tan SriDr.AnthonyFrancisFernandes Datuk KamarudinBinMeranun Tan SriRafidahAziz are: The Directorsinofficeduringthefinancialyearandperiodfromendoftodater DIRECTORS financial yearended31December2016. audited financialstatementsoftheGroupandCompanyfor The Directorsherebysubmittheirreporttogetherwiththe Directors’ Report AIRASIA XBERHAD Net profitforthefinancialyear RM’000 1,1 210,444 210,314 Group Company RM’000 eport eport ities ities he he

Scheme. None oftheDirectorswere grantedanyoptionsastheyarenoteligibletoparticipate intheESOSunderBy-Lawof First granton1.7.2013 financial yearareasfollows: The numberofoptionsgrantedunderESOSduring the financialyearandnumberofoptionsoutstandingatend The salientfeaturesoftheESOSaredisclosedinNote 27ofthefinancialstatements. (10) years. of theESOSshallbefive(5)yearswithanoptionto extendforafurtherfive(5)years,subjecttomaximumdurationoften The CompanyhadimplementedanEmployees’Share OptionScheme(“ESOS”)toeligibleemployeesoftheGroup.Thetenure EMPLOYEES’ SHAREOPTIONSCHEME Details ofDirectors’remunerationaresetoutinNote5tothefinancialstatements. DIRECTORS’ REMUNERATION recommend thepaymentofanydividendforfinancialyearended31December2016. No dividendhasbeenpaidordeclaredbytheCompanysinceendofpreviousfinancialyear. TheDirectorsdonot DIVIDENDS PursuanttoSection59(11)(c)oftheCompaniesAct,2016,interestsspouseandchildrenLimKianOnninshares ** DeemedinterestbyvirtueoftheirshareholdinginterestsinAirAsiaBerhadandTuneGroupSdnBhdpursuanttoSection8t * or itsholdingcompanysubsidiariesoftheduringfinancialyearexceptasfollows: of theDirectorswhoheldofficeatendfinancialyearanysharesordebenturesinCompanyitssubsidiar According totheRegisterofDirectors’ShareholdingsrequiredbekeptunderSection59CompaniesAct,2016,none DIRECTORS’ INTERESTSINSHARES * PursuanttoSection59(11)(c)oftheCompaniesAct,2016,interestspouse (deceased)ofTanSriRafidahAzizinthe *** **** Pursuant to Section 59(11)(c)oftheCompaniesAct,2016,interestsspouseandchildrenTanSriAsmatBinKamalu a r aia zz* 0,0 100,000 40,000 – 197,833,356 – – 175,000 – – – 200,000 40,000 196,783,356 297,400 – 1,050,000 – 100,000 (196,783,356) 1,163,602,394 – (146,728,982) – – – 1,163,602,394 (146,728,982) 337,702,739 – 87,303,728 – – – 122,400 196,783,356 175,000 1,310,331,376 175,000 200,000 1,310,331,376 – – 337,702,739 Tan SriAsmatBinKamaludin**** Tan SriRafidahAziz*** 87,303,728 Lim KianOnn** Tan SriDr.AnthonyFrancisFernandes* Datuk KamarudinBinMeranun* Indirect interestsintheCompany Dato’ YusliBinMohamedYusoff Tan SriAsmatBinKamaludin Tan SriRafidahAziz Lim KianOnn Tan SriDr.AnthonyFrancisFernandes Datuk KamarudinBinMeranun Direct interestsintheCompany riaysae ,7,4 2545 3,770,663 (205,485) – At31.12.2016 Forfeited 3,976,148 Exercised At1.1.2016 – Ordinaryshares Types ofgrant treated astheinterestofLimKianOnn. shall alsobetreatedastheinterestofTanSriAsmatBinKamaludin. treated astheinterestofTanSriRafidahAziz. 1.1.2016 Number ofordinaryshares Transferred Acquired/ rnfre 31.12.2016 Transferred Disposed/ shares of the Company shall also be shares oftheCompanyshallalsobe din in the shares of the Company din inthesharesofCompany of the Company shall also be oftheCompanyshallalsobe he CompaniesAct,2016. ANNUAL REPORT 2016 ies ies

163 164 At thedateofthisreport,theredoesnotexist: to meettheirobligationsasandwhentheyfalldue. after theendoffinancialyearwhich,inopinionDirectors,willormayaffectabilityGroupComp No contingentorotherliabilityhasbecomeenforceableislikelytowithintheperiodoftwelvemonths At thedateofthisreport,Directorsarenotawareanycircumstances: A R AIA ZZ DATUKKAMARUDINBINMERANUN Kuala Lumpur Director Director TAN SRIRAFIDAHAZIZ This reportwasapproved by theBoardofDirectorson28March2017.Signed onbehalfoftheBoardDirectors: The auditors,PricewaterhouseCoopers,haveexpressed theirwillingnesstocontinueinoffice. AUDITORS Details ofauditors’remunerationaresetoutinNote 6tothefinancialstatements. AUDITORS’ REMUNERATION subsidiaries donotholdanysharesintheholdingcompany orotherrelatedcorporations. subsidiaries didnotcontainqualificationoradversecommentmadeunderFifthSchedulePartI(8)ofCompanies Act,2016.The Details ofsubsidiariesaresetoutinNote16tothefinancialstatements.Theauditreportson statementsofth SUBSIDIARIES therehasnotarisenintheintervalbetweenendoffinancialyearanddatethisreportanyitem,transactio (b) exceptasdisclosed inthefinancialstatements,resultsofGroup’sandCompany’soperationsduring (a) In theopinionofDirectors: statements whichwouldrenderanyamountstatedinthefinancialmisleading. At thedateofthisreport,Directorsarenotawareanycircumstancesotherwisedealtwithin reportorthefin anycontingentliabilityoftheGroupandCompanywhichhasarisensinceendfinancialyear. (b) anychargeontheassetsofGroupandCompanywhichhasarisensinceendfinancialyearsecures (a) whichhavearisenrenderadherencetotheexistingmethodofvaluationassetsorliabilitiesGroupand (c) whichwouldrenderthevaluesattributedtocurrentassetsinfinancialstatementsofGroupandCompanymisleading; (b) whichwouldrendertheamountswrittenoffforbaddebtsoramountofallowancedoubtfulinfinancial (a) toensurethatanycurrentassets,whichwereunlikelyberealisedintheordinarycourseofbusinessincludingvalu (b) toascertainthatproperactionhadbeentakeninrelationthewritingoffofbaddebtsandmakingallowancefor (a) Before thefinancialstatementsofGroupandCompanywereprepared,Directorstookreasonablesteps: STATUTORY INFORMATIONONTHEFINANCIALSTATEMENTS (continued) Directors’ Report AIRASIA XBERHAD Company forthefinancialyearinwhichthisreportismade. or eventofamaterialandunusualnaturelikelytoaffectsubstantiallytheresultsoperations of theGroupand year werenotsubstantiallyaffectedbyanyitem,transactionoreventofamaterialandunusualnature; and liability ofanyotherperson;or Company misleadingorinappropriate. or statements oftheGroupandCompanyinadequatetoanysubstantialextent;or which thecurrentassetsmightbeexpectedsotorealise. of currentassetsasshownintheaccountingrecordsGroupandCompanyhadbeenwrittendowntoanamount been madefordoubtfuldebts;and doubtful debtsandsatisfiedthemselvesthatallknownbadhadbeenwrittenoffadequateallowance ancial ancial any any es es n e

rft(os eoetxto 6,9 4645 6,4 (463,406) 260,242 (446,475) 260,093 Taxation Profit/(Loss) beforetaxation e rft(os o h iaca er2034(4,1)2044(366,547) 210,444 (349,616) 210,314 Net profit/(loss)forthefinancialyear te an/lse)83,3 755 578(61,473) 35,738 (7,585) 35,738 8 Other gains/(losses) hr frslso on etr 8–(756 – – (37,566) – 18 Share ofresultsajointventure hr frslso nascae1 – – 19,812 (84,131) (299,562) (49,874) 24,775 (102,371) – (35,489) (38,052) (84,131) 259,993 19,812 (299,562) 285,092 (101,762) (49,874) – 24,775 (35,489) (37,443) 259,844 9 9 284,943 9 17 Share ofresultsanassociate Foreign exchangelosses Net operatingprofit/(loss) Finance costs Finance income Operating profit/(loss) for thefinancialyearended31December2016 Income Statements Earning/(Loss) pershare(sen) Net profit/(loss)forthefinancialyearattributableto: te noe75,0 1,8 672116,881 56,772 116,881 56,000 3,061,192 7 4,005,025 3,062,553 4,006,534 4 Other income Operating expenses Revenue urn aain1 8 19 6 (169) 169 97,028 (49,967) (169) 97,028 188 (49,967) 10 10 – Deferredtaxation – Currenttaxation iue 151(10.4) (10.4) 5.1 5.1 11 11 – Diluted – Basic o-otoln neet – – (349,616) 210,314 – Non-controllinginterests – EquityholdersoftheCompany srcags(6,8)(9,5)(6,8)(395,051) (461,685) (141,013) (311,501) (395,051) (496,814) (256,464) (1,020,881) (363,580) (461,685) (706,058) (137,445) (619,331) (1,116,110) (315,821) (846,004) (251,336) (1,020,881) (496,814) (369,594) (706,058) (1,116,110) (619,331) 6 (846,004) 5 (144,807) (113,531) (144,807) (113,531) – Otheroperatingexpenses – Aircraftoperatingleaseexpenses – Usercharges – Maintenanceandoverhaul – Aircraftfuelexpenses – Depreciationofproperty,plantandequipment – Staffcosts Note RM’000 4,7)9,5 4,9)96,859 (49,798) 96,859 (49,779) 1,1 (349,616) 210,314 2016 ru Company Group RM’000 2015 RM’000 2016 ANNUAL REPORT 2016 RM’000 2015 165 166 for thefinancialyearended31December2016 Statements ofComprehensiveIncome AIRASIA XBERHAD oeg urnytasaindfeecs6 3 – (114,108) 214,212 – (114,108) 214,212 231 (480,655) (366,547) 424,656 68 210,444 (463,493) (349,616) 424,594 Total comprehensiveincome/(loss)attributableto: 210,314 Total comprehensiveincome/(loss)forthefinancialyear Other comprehensiveincome/(loss)forthefinancialyear,net Foreign currencytranslationdifferences Cash flowhedges Items thatmaybesubsequentlyreclassifiedtoprofitorloss Other comprehensiveincome/(loss) Net profit/(loss)forthefinancialyear ftx2420(1,7)2422(114,108) – 214,212 (113,877) – 214,280 (463,493) 424,594 – Non-controllinginterests – EquityholdersoftheCompany of tax RM’000 2,9 (463,493) 424,594 2016 ru Company Group RM’000 2015 RM’000 2016 RM’000 2015 ae navne752761507527671,510 715,207 671,510 715,207 19 Derivative financialinstruments Sales inadvance LESS: CURRENTLIABILITIES o-urn se edfrsl 49,8 0,1 271105,116 92,781 105,116 92,781 24 Non-current assetheldforsale a eoeal ,1 1 ,5 579 1,459 – 712 310,274 134,735 1,613 420,405 – 310,789 422,021 134,735 23 19 Deposits, cashandbankbalances Tax recoverable Derivative financialinstruments mutdefo usday2 95026,150 69,590 – – 22 Amount duefromasubsidiary mutdefo nascae2 9502,5 – – 26,150 69,590 22 Amount duefromanassociate mutdefo on etr 212865,7 1,1 55,570 112,816 55,570 112,816 22 Amount duefromajointventure urnytasainrsre1517–– (105,556) 648,877 62,222 911,821 109,140 – 1,074,017 (841,832) 62,222 622,222 911,821 (105,556) 631,807 (631,388) 622,222 62,222 911,821 127 109,140 (859,029) 1,056,885 622,222 (648,715) 62,222 911,821 28 195 622,222 27 439,935 654,370 439,935 654,370 Shareholders’ equity Other reserves 25 Accumulated losses Currency translationreserve Warrant reserve Share premium Share capital CAPITAL ANDRESERVES Other payablesandaccruals mut u rmrltdpris2 1513,0 15129,330 282,403 51,561 285,338 30,103 282,463 51,561 285,084 21 22 Amounts duefromrelatedparties Receivables andprepayments orwns2 5,8 ,0,1 5,8 1,109,610 952,088 1,109,610 952,088 26 Borrowings NON-CURRENT LIABILITIES NET CURRENTLIABILITIES netre 01,5 ,8 4113,985 14,151 3,985 14,151 20 Inventories CURRENT ASSETS orwns2 0,3 1,7 0,3 319,477 208,238 319,477 208,238 26 Borrowings neteti on etr 18 Investment inajointventure mut u osbiire 2––1482,263 1,488 – – 22 Amounts duetosubsidiaries netet nsbiire 6––** 20,018 * 20,018 – – – – 17 16 Investment inanassociate Investments insubsidiaries mut u orltdpris2 5264,6 58945,668 848,279 25,879 877,505 849,075 45,668 878,246 25,256 25 22 Amounts duetorelatedparties Trade andotherpayables * LessthanRM1,000 as at31December2016 Balance Sheets eerdtxast 3428452814284542,821 243,601 492,854 903,374 136,791 542,821 1,677,613 1,107,800 243,601 492,854 903,374 1,568,493 136,791 1,677,613 13 1,107,800 1,568,493 15 14 12 Other depositsandprepayments Deposits onaircraftpurchases Deferred taxassets Property, plantandequipment NON-CURRENT ASSETS Note ,0,3 ,6,0 ,2,5 3,387,427 3,325,956 3,367,409 3,305,938 ,0,5 ,4,4 ,0,5 1,549,545 1,606,458 1,549,545 1,606,458 ,5,8 3,0 ,7,1 648,877 1,074,017 631,807 1,056,885 ,2,4 ,0,4 ,2,1 2,002,412 1,828,317 2,000,945 1,826,947 6255 11607 6541 (1,189,005) (645,481) (1,186,057) (642,595) ,8,5 1,8 ,8,3 813,407 1,182,836 814,888 1,184,352 RM’000 ,9,7 0,7 ,9,5 708,291 1,090,055 709,772 1,091,571 2016 ru Company Group –––– 1,1 115,215 – 115,215 – RM’000 2015 RM’000 2016 ANNUAL REPORT 2016 RM’000 2015 167 168 for thefinancialyearended31December2016 Consolidated StatementofChangesinEquity AIRASIA XBERHAD Attributable to equity holders of the Company

Issued and fully paid ordinary shares of RM0.15 each

Cash flow Share Currency Non- Number Nominal Share Warrant hedge option translation Accumulated controlling Total of shares value premium reserve reserve reserve reserve losses Total interest equity Note ’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2016

4,148,148 622,222 911,821 62,222 (107,630) 2,074 127 (859,029) 631,807 – 631,807 Net profit for the financial year – ––––––210,314 210,314 – 210,314 Other comprehensive income – – – – 214,212 – 68 – 214,280 – 214,280

Total comprehensive income – – – – 214,212 – 68 210,314 424,594 – 424,594 Employee Share Option Scheme 27 – ––––484––484–484

At 31 December 2016

4,148,148 622,222 911,821 62,222 106,582 2,558 195 (648,715) 1,056,885 – 1,056,885

Attributable to equity holders of the Company

Issued and fully paid ordinary shares of RM0.15 each

Cash flow Share Currency Non- Number Nominal Share Warrant hedge option translation Accumulated controlling Total of shares value premium reserve reserve reserve reserve losses Total interest equity Note ’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2015 2,370,370 355,556 849,598 – 6,478 1,515 (104) (509,413) 703,630 – 703,630

Net loss for the financial year – ––––––(349,616) (349,616) – (349,616) Other comprehensive (loss)/ income ––––(114,108) – 231 – (113,877) – (113,877)

Total comprehensive (loss)/ income ––––(114,108) – 231 (349,616) (463,493) – (463,493) Issuance of new shares 27 1,777,778 266,666 62,223 62,222––––391,111 – 391,111 Employee Share Option Scheme 27 –––––559––559–559

At 31 December 2015 4,148,148 622,222 911,821 62,222 (107,630) 2,074 127 (859,029) 631,807 – 631,807 for thefinancialyearended31December2016 Company StatementofChangesinEquity Issued and fully paid ordinary shares of RM0.15 each Non-distributable

Cash flow Number Nominal Share Warrant hedge Share option Accumulated of shares value premium reserve reserve reserve losses Total Note ’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2016 4,148,148 622,222 911,821 62,222 (107,630) 2,074 (841,832) 648,877

Net profit for the financial year – –––––210,444 210,444 Other comprehensive income – – – – 214,212 – – 214,212

Total comprehensive income – – – – 214,212 – 210,444 424,656 Employee Share Option Scheme 27 – ––––484–484

At 31 December 2016 4,148,148 622,222 911,821 62,222 106,582 2,558 (631,388) 1,074,017

Issued and fully paid ordinary shares of RM0.15 each Non-distributable

Cash flow Number Nominal Share Warrant hedge Share option Accumulated of shares value premium reserve reserve reserve losses Total Note ’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2015 2,370,370 355,556 849,598 – 6,478 1,515 (475,285) 737,862

Net loss for the financial year ––––––(366,547) (366,547) Other comprehensive loss ––––(114,108) – – (114,108)

Total comprehensive loss ––––(114,108) – (366,547) (480,655) Issuance of new shares 27 1,777,778 266,666 62,223 62,222–––391,111 Employee Share Option Scheme 27 –––––559–559

At 31 December 2015 4,148,148 622,222 911,821 62,222 (107,630) 2,074 (841,832) 648,877 ANNUAL REPORT 2016

169 170 for thefinancialyearended31December2016 Statements ofCashFlows AIRASIA XBERHAD a eoee –101–1,001 – 3,745 5,193 1,001 3,745 – 5,193 (13,099) 339,703 (13,246) 340,736 Net cashgeneratedfrom/(usedin)operatingactivities Tax paid Tax recovered Interest received neetpi 4,1)(243 4,1)(72,483) (47,815) (72,483) 55,349 (47,815) 383,037 55,308 384,070 Interest paid Cash generatedfromoperations (463,406) Changes inworkingcapital: 260,242 (446,475) 260,093 Adjustments: Profit/(Loss) beforetaxation CASH FLOWSFROMOPERATINGACTIVITIES ae navne4,9 7,5 367173,655 (2,623) 43,697 122,395 (10,166) 173,655 81,257 (25,671) 559 – (2,623) 43,697 (129,970) 122,407 484 (10,166) (27,033) (3,849) 81,201 – 75,076 (129,333) (141,017) (32,541) 255,118 559 (5,193) 9,055 (17,647) 40,260 – – 16,083 37,566 (3,849) 484 53,888 (141,004) 75,076 9,614 – 255,805 – (5,193) (17,398) (32,541) (2,944) – (15,963) 40,260 9,055 16,435 – – (19,582) 11,585 (101,886) Sales inadvance 9,614 – Trade andotherpayables (15,963) (35,738) Related partiesbalances – Receivables, prepaymentsandotherdeposits (2,944) Inventories (19,582) (101,886) – (35,738) Net unrealisedforeignexchangelosses 11,585 Share ofresultsajointventure Share optionexpense Fair valuegainonshareholders’benefitsscheme Fair value(gain)/lossonderivativefinancialinstruments Discounting/accretion ofinterestondeposits Interest income Discounting effectofdeposits Finance cost Impairment ofinvestmentinajointventure Impairment oftradeandotherreceivables Gain ondisposal Non-current assetsheldforsale Property, plantandequipment rt f 235–1,3 – 7,752 12,335 15,189 – 144,807 113,531 7,752 12,335 144,807 15,189 113,531 – Writeoff – Writeoff – Depreciation RM’000 1,6 7,9)4586(71,390) 415,866 (70,094) 416,069 2016 72 87 72 (711) (712) (817) (712) ru Company Group RM’000 2015 RM’000 2016 RM’000 2015 rcesfo orwns–3210–392,100 (6,181) 391,111 – 18,827 (113,749) (890,779) – (212,553) 392,100 (6,181) (193,726) (890,779) (113,749) – 391,111 18,827 (212,553) (193,726) – CASH ANDEQUIVALENTSATENDOFTHE 265,483 CASH ANDEQUIVALENTSATBEGINNINGOF 297,324 508 CURRENCY TRANSLATIONDIFFERENCES (19,092) NET INCREASEFORTHEFINANCIALYEAR 265,483 297,324 Net cashusedinfinancingactivities Deposits pledgedassecurities (19,092) Repayments ofborrowings 508 Proceeds fromborrowings Proceeds fromallotmentofshares CASH FLOWSFROMFINANCINGACTIVITIES Net cash(usedin)/generatedfrominvestingactivities Refund/(Placement) ofdepositsonaircraftpurchases Proceeds fromdisposalofproperty,plantand Proceeds fromdisposalofaircraftandenginepursuant Property, plantandequipment CASH FLOWSFROMINVESTINGACTIVITIES qimn 1 1 – 412 – (37,337) 412 (30,420) FINANCIAL YEAR 69,178 (37,337) THE FINANCIALYEAR 10,408 (30,420) 69,178 12 10,408 equipment to salesandleasebackarrangement – Additions Note 3324622373070251,832 380,790 252,347 382,406 23 RM’000 5,4 497218274,506 251,832 74,937 252,347 2,1 7,2 2,8 170,476 126,885 170,329 127,918 2016 ,4 ,8 ,7 6,850 2,073 7,081 2,141 ru Company Group RM’000 2015 RM’000 2016 ANNUAL REPORT 2016 RM’000 2015 171 172 Unless otherwise stated, the following accounting policies have been applied consistently in dealing with items that are Unless otherwisestated,thefollowingaccountingpolicieshavebeenappliedconsistentlyindealingwithitemsthatare SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES 2 ThefinancialstatementshavebeenapprovedforissueinaccordancewitharesolutionoftheBoardDirectors on SelangorDarulEhsan LapanganTerbangAntarabangsaKualaLumpur(KLIA2) 64000 RedQ,JalanPekeliling5 KLIA TheaddressoftheprincipalplacebusinessGroupandCompanyisasfollows: SelangorDarulEhsan 47301PetalingJaya JalanPJU1/39,DataranPrima MenaraPrimaTowerB B-13-15,Level13 TheaddressoftheregisteredofficeCompanyisasfollows: Therewasnosignificantchangeinthenatureoftheseactivitiesduringfinancialyear. TheprincipalactivityoftheCompanyisthatprovidinglonghaulairtransportationservices.activities 1 GENERAL INFORMATION – 31December2016 Notes toTheFinancialStatements AIRASIA XBERHAD considered materialinrelationtothefinancialstatements: 2017. 28 March the subsidiarycompaniesaredescribedinNote16tofinancialstatements. The Directors are of the view that the Group and the Company will have sufficient cash flows for the next twelve TheDirectorsareofthe viewthattheGroupandCompanywillhavesufficientcashflowsfornexttwelve Duringthefinancialyear ended31December2016,theGroupandCompany’scurrentliabilitiesexceededtheir Thepreparationoffinancialstatementsin conformitywithMFRSrequirestheuseofcertaincriticalaccounting Thefinancialstatementshavebeenpreparedunderthehistoricalcostconventionexcept asdisclosedinthissummary Thefinancial statementsoftheGroupandCompanyhavebeenpreparedinaccordancewithMalaysianFinancial (a) Basis of preparation is appropriatetopreparethefinancialstatementsof theGroupandCompanyonagoingconcernbasis. financial positionwillbeimprovedthroughfutureoperating profitsandcashflows.Thus,theDirectorsbelievethatit Company areabletorealisetheirassetsanddischarge theirliabilitiesinthenormalcourseofbusinessandthat months fromthereportingdatetomeettheircash flow requirements.TheDirectorsbelievethattheGroupand current assetsbyRM642,595,000(2015:RM1,186,057,000) andRM645,481,000(2015:RM1,189,005,000)respectively. financial statements. or areaswhereassumptionsandestimatesaresignificant tothefinancialstatementsaredisclosedinNote3 of currenteventsandactions,actualresultsmaydiffer.Theareasinvolvingahigherdegreejudgmentor complexity, Company’s accountingpolicies.AlthoughtheseestimatesandjudgmentarebasedontheDirectors’best knowledge reported financialyear.ItalsorequiresDirectorstoexercisetheirjudgmentintheprocessofapplying Group’sand and liabilitiesatthedateoffinancialstatements,reportedamountsrevenuesexpenses duringthe estimates andassumptionsthataffectthereportedamountsofassetsliabilitiesdisclosurecontingent assets of significantaccountingpolicies. Act, 1965inMalaysia. Reporting Standards(“MFRS”),InternationalFinancialandtherequirementsof Companies SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED) 2 A number of new standards and amendments to standards and interpretations are effective for financial year beginning Anumberofnewstandardsandamendmentstointerpretationsareeffectiveforfinancialyearbeginning Standardsandamendmentsthathavebeenissuedbutnotyeteffective (c) Theadoptionoftheseamendmentsdidnothaveanyimpactonthecurrentperiodorpriorandislikely TheGrouphasappliedthefollowingamendments forthefirsttimefinancialyearbeginningon1January2016: Standards,amendmentstopublishedstandardsandinterpretationsthatareeffective (b) AnentityhastheoptiontoapplyICInterpretation22retrospectivelyorprospectively. Iftherearemultiplepaymentsorreceiptsinadvance,the entityshoulddeterminethedateoftransactionfor Thedateoftransactionisthewhenpaymentorreceiptadvanceconsiderationgivesrisetonon- ICInterpretation22providesguidancehowtodetermine‘thedateoftransaction’whenasinglepayment/receipt ICInterpretation22‘ForeignCurrencyTransactionsandAdvanceConsideration’(effectivefrom1January2018) • Theamendmentsshallbeappliedretrospectively. Inaddition,inevaluatingwhetheranentitywillhavesufficienttaxableprofitsfutureperiodsagainstwhich AmendmentstoMFRS112‘IncomeTaxes-Recognition ofDeferredTaxAssetsforUnrealisedLosses’(effectivefrom • AmendmentstoMFRS107‘StatementofCashFlows–DisclosureInitiative’(effectivefrom1January2017)introduce • the Group,exceptfollowingsetoutbelow: after 1January2017.Noneoftheseisexpectedtohaveasignificanteffectontheconsolidatedfinancialstatements to affectfutureperiods. AnnualImprovementstoMFRSs2012–2014Cycle • AmendmentstoMFRS10,12&128“Investmententities–Applyingtheconsolidationexception” • AmendmentstoMFRS127“Equitymethodinseparatefinancialstatements” • AmendmentstoMFRS101‘Presentationoffinancialstatements’-Disclosureinitiative • AmendmentstoMFRS11‘Jointarrangements’-Accountingforacquisitionofinterestsinjointoperations • each paymentorreceipt. monetary assetornon-monetaryliabilitywhentheentityisnolongerexposedtoforeignexchangerisk. is made,aswellforsituationswheremultiplepayments/receiptsaremade. to recordforeigncurrencytransactions. receipt ofadvanceconsideration.MFRS121requiresanentitytousetheexchangerateat‘datetransaction’ applies whenanentityrecognisesanon-monetaryassetorliabilityarisingfromthepayment or temporary differences. temporary differenceswithfuturetaxableprofitsthatexcludestaxdeductionsresultingfromthereversal ofthose deductible temporarydifferencescanbeutilised,theamendmentsrequireanentitytocompare deductible deductible temporarydifferenceonassetcarriedatfairvalue. 1 January2017)clarifytherequirementsforrecognisingdeferredtaxassetsonunrealisedlossesarising from an additionaldisclosureonchangesinliabilitiesarisingfromfinancingactivities. ANNUAL REPORT 2016

173 174 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED) 2 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD c Standardsandamendmentsthathavebeenissuedbutnotyeteffective(continued) (c) Keyprovisionsofthenewstandardareasfollows: Anewfive-stepprocessisappliedbeforerevenuecanberecognised: Revenueisrecognisedwhenacustomerobtains controlofgoodsorservices,i.e.whenthecustomerhasability MFRS15‘Revenuefromcontractswithcustomers’(effective1January2018)replaces118‘Revenue’and • MFRS9introducesanexpectedcreditlossmodelonimpairmentthatreplacestheincurred model Forliabilities, thestandardretainsmostofMFRS139requirements.Theseincludeamortisedcostaccountingfor MFRS9retainsbutsimplifiesthemixedmeasurementmodelin139andestablishesthreeprimary MFRS9‘FinancialInstruments’(effectivefrom1January2018)willreplace139“FinancialInstruments: • Aswithanynewstandard,therearealsoincreaseddisclosures. – Therearenewspecificrulesonlicenses, warranties,non-refundableupfrontfees,andconsignmentarrangements, – Thepointatwhich revenueisabletoberecognisedmayshift:somewhichcurrentlyata – Iftheconsiderationvaries(suchasforincentives,rebates,performancefees,royalties,successofanoutcome – Anybundledgoodsorservicesthat aredistinctmustbeseparatelyrecognised,andanydiscountsorrebateson – Recognisetherevenueaseachperformance obligationissatisfied. – Allocatethetransactionpricetoeach oftheseparateperformanceobligations;and – Determinethetransactionpriceof contract; – Identifytheseparateperformanceobligations – Identifycontractswithcustomers – to directtheuseofandobtainbenefitsfromgoodsorservices. the considerationtowhichentityexpectsbeentitledinexchangeforthosegoodsorservices. recognises revenuetodepictthetransferofpromisedgoodsorservicescustomerinanamountthat reflects MFRS 111‘Constructioncontracts’andrelatedinterpretations.Thecoreprinciplein15isthat anentity have occurredbeforecreditlossesarerecognised. used inMFRS139.Theexpectedcreditlossmodelisforward-lookingandeliminatestheneedforatriggereventto mismatch. recorded inothercomprehensiveincomeratherthanthestatement,unlessthiscreatesanaccounting value optionistakenforfinancialliabilities,thepartofafairchangeduetoanentity’sowncreditrisk most financialliabilities,withbifurcationofembeddedderivatives.Themainchangeisthat,incaseswherethefair contractual cashflowsandtherepresentprincipalinterest. is notheldfortrading).Adebtinstrumentmeasuredatamortisedcostonlyiftheentityholdingittocollect profit orlosswithanirrevocableoptionatinceptiontopresentchangesinfairvalueOCI(providedtheinstrument characteristics ofthefinancialasset.Investmentsinequityinstrumentsarealwaysmeasuredatfairvaluethrough comprehensive income(“OCI”).Thebasisofclassificationdependsontheentity’sbusinessmodelandcashflow categories forfinancialassets:amortisedcost,fairvaluethroughprofitorlossandother Recognition andMeasurement”. to nameafew. point intimeattheendofacontractmayhavetobe recognisedoverthecontracttermandviceversa. etc), minimumamountsofrevenuemustberecognisediftheyarenotatsignificantriskreversal. the contractpricemustgenerallybeallocatedtoseparateelements. SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED) 2 (d) Basis of consolidation Standardsandamendmentsthathavebeenissuedbutnotyeteffective(continued) (c) Inter-companytransactions,balancesandunrealisedgainsontransactionsbetweengroupcompaniesare Theexcessoftheconsiderationtransferred, theamountofanynon-controllinginterestinacquireeand Anycontingentconsideration tobetransferredbytheGroupisrecognisedatfairvalueacquisitiondate. Ifthebusinesscombinationisachievedinstages,acquisitiondatefairvalueofacquirer’spreviouslyheld Acquisition-relatedcostsareexpensedasincurred. TheGroupappliestheacquisitionmethodtoaccountforbusinesscombinations.considerationtransferred Subsidiariesareallentities(includingstructuredentities)overwhichtheGrouphascontrol.Thecontrolsan (i) Subsidiaries Forlessors,MFRS16retainsmostoftherequirementsin117.Lessorscontinuetoclassifyallleasesaseither Theright-of-useassetisdepreciatedinaccordancewiththeprincipleMFRS116‘Property,PlantandEquipment’ MFRS16eliminatestheclassificationofleasesbylesseeaseitherfinance(onbalancesheet)oroperating UnderMFRS16,aleaseiscontract(orpartofcontract)thatconveystherighttocontroluseanidentified MFRS16‘Leases’(effectivefrom1January2019)supersedes117andtherelatedinterpretations. • operating leasesorfinanceandaccountforthemdifferently. and theleaseliabilityisaccretedovertimewithinterestexpenserecognisedinincomestatement. lease liabilityreflectingfuturepaymentsformostleases. leases (offbalancesheet).MFRS16requiresalesseetorecognise“right-of-use”oftheunderlyingassetand asset foraperiodoftimeinexchangeconsideration. adjusted toconformwiththeGroup’saccountingpolicies. eliminated. UnrealisedlossesarealsoWhere necessary,amountsreportedbysubsidiarieshavebeen acquired inthecaseofabargainpurchase,difference isrecogniseddirectlyintheincomestatement. recognised andpreviouslyheldinterestmeasuredis lessthanthefairvalueofnetassetssubsidiary assets acquiredisrecognisedasgoodwill.Ifthe total ofconsiderationtransferred,non-controllinginterest acquisition-date fairvalueofanypreviousequityinterest intheacquireeoverfairvalueofidentifiablenet for withinequity. Contingent considerationthatisclassifiedasequitynotremeasured,anditssubsequentsettlementaccounted recognised inaccordancewithMFRS139eitherprofitorlossasachangetoothercomprehensive income. Subsequent changestothefairvalueofcontingentconsiderationthatisdeemedbeanassetor liability is equity interestintheacquireeisremeasuredtofairvalueatacquisitiondatethroughprofitorloss. recognised amountsofacquiree’sidentifiablenetassets. acquisition-by-acquisition basis,eitheratfairvalueorthenon-controllinginterest’sproportionateshare ofthe fair valuesattheacquisitiondate.TheGrouprecognisesanynon-controllinginterestinacquiree onan acquired andliabilitiescontingentassumedinabusinesscombinationaremeasuredinitially attheir fair valueofanyassetorliabilityresultingfromacontingentconsiderationarrangement.Identifiable assets owners oftheacquireeandequityinterestsissuedbyGroup.Theconsiderationtransferredincludes the the acquisitionofasubsidiaryisfairvaluesassetstransferred,liabilitiesincurredto former the dateonwhichcontrolistransferredtoGroup.Theyaredeconsolidatedfromthat ceases. has theabilitytoaffectthosereturnsthroughitspoweroverentity.Subsidiariesarefullyconsolidatedfrom entity whentheGroupisexposedto,orhasrightsvariablereturnsfromitsinvolvementwithand ANNUAL REPORT 2016

175 176 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED) 2 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD (d) Basis of consolidation (continued) Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the UnrealisedgainsontransactionsbetweentheGroup anditsjointventuresareeliminatedtothe extentofthe TheGroup’sinterestin ajointventureisaccountedforinthefinancialstatementsusingequitymethodof Ajointarrangementisanofwhichtherecontractually agreedsharingofcontrolbytheGroupwith (iii) Joint arrangements Dilutiongainsandlossesarisingfrominvestmentsinassociates arerecognisedinprofitorloss. ProfitsandlossesresultingfromupstreamdownstreamtransactionsbetweentheGroup itsassociatesare TheGroupdetermines ateachreportingdatewhetherthereisanyobjectiveevidencethattheinvestmentin TheGroup’sshareofpost-acquisitionprofitorlossisrecognisedintheincomestatement, anditsshareofpost- Iftheownershipinterestinanassociateisreducedbutsignificantinfluenceretained,onlyaproportionateshare AssociatesareallentitiesoverwhichtheGrouphassignificantinfluencebutnotcontrol,generallyaccompanying (ii) Associates necessary to ensure consistencywiththe policiesadoptedbythe Group. of animpairmenttheasset transferred.Accountingpoliciesofthejointventures havebeenchangedwhere Group’s interestinthejoint ventures.Unrealisedlossesarealsoeliminatedunless thetransactionprovidesevidence its continuedownershipinterest atfairvalue. an entitylosesjointcontroloveraventurebut retainssignificantinfluence,theGroupdoesnotre-measure recognising itsshareofthoseprofitsonlyafter ofprofitsequalsthesharelossesnotrecognised.Where payments onbehalfofthejointventures.If venturesubsequentlyreportsprofits,theGroupresumes in thejointventures),Groupdoesnotrecognise furtherlosses,unlessithasincurredobligationsormade joint ventures(whichincludesanylong-terminterests that,insubstance,formpartoftheGroup’snetinvestment comprehensive income.WhentheGroup’sshareof losses inajointventureequalsorexceedsitsintereststhe adjusted thereaftertorecognisethegroup’sshareof thepost-acquisitionprofitsorlossesandmovementsinother accounting. Undertheequitymethodofaccounting, interestsinjointventuresareinitiallyrecognisedatcostand to thearrangement. joint arrangementwherebytheoperatorshaverightstoassetsandobligationsforliabilities, relating arrangement wherebythejointventurershaverightstonetassetsofarrangement.Aoperation isa a jointventuredependsupontherightsandobligationsofpartiestoarrangement.A isajoint unanimous consentofthepartiessharingcontrol.Theclassificationajointarrangementasoperation or one ormoreparties,wheredecisionsabouttherelevantactivitiesrelatingtojointarrangement require adopted bytheGroup. Accounting policiesofassociateshavebeenchangedwherenecessarytoensureconsistencywiththe policies Unrealised lossesareeliminatedunlessthetransactionprovidesevidenceofanimpairmentassettransferred. recognised intheGroup’sfinancialstatementsonlytoextentofunrelatedinvestor’sinterestsassociates. results ofassociates’intheincomestatement. the recoverableamountofassociateanditscarryingvaluerecognisesadjacentto ‘shareof associate isimpaired.Ifthisthecase,Groupcalculatesamountofimpairmentasdifference between profits onlyafteritsshareofequalsthelossesnotrecognised. of theassociate.Ifassociatesubsequentlyreportsprofits,Groupresumesrecognisingitssharethose not recognisefurtherlosses,unlessithasincurredlegalorconstructiveobligationsmadepaymentsonbehalf associate equalsorexceedsitsinterestintheassociate,includinganyotherunsecuredreceivables,Groupdoes corresponding adjustmenttothecarryingamountofinvestment.WhenGroup’ssharelossesinan acquisition movementsinothercomprehensiveincomeisrecognisedwitha appropriate. of theamountspreviouslyrecognisedinothercomprehensiveincomeisreclassifiedtoprofitorlosswhere after thedateofacquisition.TheGroup’sinvestmentinassociatesincludesgoodwillidentifiedon carrying amountisincreasedordecreasedtorecognisetheinvestor’sshareofprofitlossinvestee the equitymethodofaccounting.Undermethod,investmentisinitiallyrecognisedatcost,and a shareholdingofbetween20%and50%thevotingrights.Investmentsinassociatesareaccountedforusing SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED) 2 Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are included in the Gains and losseson disposalsare determined bycomparing proceedswith carryingamounts and areincluded inthe Ateachbalancesheetdate,theGroupandCompany assesswhetherthereisanyindication ofimpairment.Ifsuchan Depositsonaircraftpurchaseare includedaspartofthecostaircraft andaredepreciatedfromthedatethat Thecostsofupgrades toleasedassetsarecapitalisedandamortisedovertheshorterofexpectedusefullife 6or12years Anelementofthecostanacquired aircraftisattributedonacquisitiontoitsservicepotential,reflectingthe 25years Usefullifeofaircraftor remaining leaseterm Residualvalues,whereapplicable,arereviewedannuallyagainstprevailingmarketvaluesatthebalancesheetdatefor Assetsnotyetinoperationarestatedatcostanddepreciateduntiltheassetsreadyfortheirintendeduse. Certainelementsofthecostanairframeareattributedonacquisitionto6yearsintervalcheckor12 Servicepotentialof6yearsrepresentstheperiodoverwhichexpectedcostfirstmajoraircraftengine Officeequipment,furnitureandfittings Motor Aircraftfixturesandfittings vehicles –servicepotentialofenginesandairframe Aircraft –enginesandairframeexcludingservicepotential spares Aircraft Theusefullivesforthispurposeareasfollows: Significantpartsofanitemproperty,plantandpropertyaredepreciatedseparatelyovertheirestimatedusefullives Wheresignificantpartsofanitemproperty,plantandequipmentarerequiredtobereplacedat intervals,theGroup Property,plantandequipmentare statedatcostlessaccumulateddepreciationandimpairmentlosses. Property,plantandequipment (e) income statements. impairment ofnon-financial assets. write downismadeifthe carryingamountexceedstherecoverableamount. SeeaccountingpolicyNote2(h)on indication exists,ananalysis isperformedtoassesswhetherthecarryingamount oftheassetisfullyrecoverable.A the aircraftisreadyforitsintendeduse. the upgradesorremaininglifeofaircraft. aircraft cost,isamortisedovertheshorterofperiod tothenextchecksorremaininglifeofaircraft. maintenance conditionofitsenginesandairframe. This cost,whichcanequatetoasubstantialelementofthetotal 10% oftheircost). year ended31December2016,theestimatedresidualvalueforaircraftairframesandenginesis10%oftheir cost(2015: equivalent agedassets,anddepreciationratesareadjustedaccordinglyonaprospectivebasis.Forthecurrent financial Useful livesofassetsarereviewedandadjustedifappropriate,atthebalancesheetdate. heavy maintenanceortheremaininglifeofaircraft. check, reflectingitsmaintenanceconditions.Thiscostisamortisedovertheshorterofperiodtonext scheduled the subsequent6years. overhaul isdepreciated.Subsequenttotheengineoverhaul,actualcostincurredcapitalisedanddepreciated over straight-line methodtowrite-offthecostofassetstheirresidualvaluesoverestimatedusefullives. in accordancewiththeprincipleMFRS116“Property,PlantandEquipment”.Depreciationiscalculatedusing recognised asexpensesinprofitorlossduringtheperiodwhichtheyareincurred. be measuredreliably.Thecarryingamountofthereplacedpartisderecognised.Allotherrepairsandmaintenanceare probable thatfutureeconomicbenefitsassociatedwiththepartswillflowtoGroupandcostofcan recognises suchpartsinthecarryingamountofproperty,plantandequipmentasareplacementwhenitis acquisition, constructionorproductionofaqualifyingasset(refertoaccountingpolicyNote2(q)onborrowingcosts). in themannerintendedbymanagement.Costsalsoincludeborrowingcoststhataredirectlyattributableto is directlyattributabletobringingtheassetlocationandconditionnecessaryforitbecapableofoperating The costofanitemproperty,plantandequipmentinitiallyrecognisedincludesitspurchasepriceanythat of aircraft,whicheverisshorter ANNUAL REPORT 2016 10 years 5 years 5 years 177 178 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED) 2 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented Non-currentassetsclassifiedasheldforsaleandtheofadisposalgrouparepresented Non-currentassetsarenotdepreciatedoramortisedwhiletheyclassifiedasheldforsale.Interestandother Animpairmentlossisrecognisedforanyinitialorsubsequentwrite-downoftheassettofairvaluelesscostssell. Non-currentassetsareclassifiedasheldforsaleiftheircarryingamountwillberecoveredprincipallythrough (f) Non-current assets held-for-sale Where the Group and Company have a commitment to maintain aircraft held under operating leases, a provision is WheretheGroupandCompanyhave acommitmenttomaintainaircraftheldunderoperatingleases,provisionis Leased aircraft Theaccountingfor thecostofmajorairframeandcertainenginemaintenancechecksforownaircraftisdescribed in Owned aircraft (i) Maintenance and overhaul Anyimpairmentlossischargedtoprofitorunlessitreversesapreviousrevaluationinwhichcase Assetsthataresubjecttoamortisationreviewedforimpairmentwhenevereventsorchangesincircumstances (h) Impairment of non-financial assets Ondisposalofinvestmentsinsubsidiaries,jointventuresandassociates,thedifferencebetweenproceeds IntheCompany’sseparatefinancial statements,investmentsinsubsidiaries,jointventuresandassociatesarestatedat Investmentsinsubsidiaries,jointventuresandassociates (g) held forsalearepresentedseparatelyfromotherliabilitiesinthestatementoffinancialposition. separately fromtheotherassetsinstatementoffinancialposition.Theliabilitiesadisposalgroupclassifiedas expenses attributabletotheliabilitiesofadisposalgroupclassifiedasheldforsalecontinueberecognised. the non-currentassetisrecognisedatdateofderecognition. cumulative impairmentlosspreviouslyrecognised.Againornotrecognisedbythedateofsale A gainisrecognisedforanysubsequentincreasesinfairvaluelesscoststosellofanasset,butnotexcess under insurancecontracts,whicharespecificallyexemptfromthisrequirement. from employeebenefits,financialassetsandinvestmentpropertythatarecarriedatfairvaluecontractualrights lower ofcarryingamountandfairvaluelesscoststosell,exceptforassetssuchasdeferredtaxassets,arising a saletransactionratherthanthroughcontinuinguseandisconsideredhighlyprobable.Theyarestatedatthe of hoursorcyclesoperated duringthefinancialyear. the endofleasebymakingappropriatecharges totheincomestatementscalculatedbyreferencenumber based onestimatedfuturecostsofmajorairframe, certain enginemaintenancechecksandone-offcostsincurredat made duringtheleasetermforrectificationobligations containedwithintheleaseagreements.Theprovisionsare the accountingpolicyforproperty,plantandequipment (seeNote2(e)). in whichcaseitistakentorevaluationsurplus. increase inrecoverableamountisrecognisedprofitorlossunlessitreversesanimpairmentonarevalued asset the revaluationsurplus.Impairmentlossesongoodwillarenotreversed.Inrespectofotherassets,any subsequent suffered animpairmentarereviewedforpossiblereversalateachreportingdate. level forwhichthereareseparatelyidentifiablecashflows(CGUs).Non-financialassetsotherthan goodwill that fair valuelesscosttosellandvalue-in-use.Forthepurposeofassessingimpairment,assetsaregrouped atthelowest the carryingamountofassetexceedsitsrecoverableamount.Theishigher ofanasset’s indicate thatthecarryingamountmaynotberecoverable.Animpairmentlossisrecognisedfor bywhich the carryingamountsofinvestmentsarerecognisedinprofitorloss. investment isassessedandwrittendownimmediatelytoitsrecoverableamount(seeNote2(h)). cost lessaccumulatedimpairmentlosses.Whereanindicationofexists,thecarryingamount ofthe SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED) 2 If the fair value of the asset is less than the carrying amount of the asset at the date of the transaction, then that Ifthefairvalueofassetislessthancarryingamount atthedateoftransaction,thenthat Ifthesalepriceisabove fairvalue,thenanygainisdeferredandamortisedovertheusefullifeofasset. Ifthesalepriceisbelowfairvaluethengainorlossrecognisedimmediatelyother thantotheextentthataloss Iftheleasebackisclassifiedasanoperatinglease,thenanygainrecognisedimmediately ifthesaleandleaseback Whenasaleandleasebackresults inafinancelease,anygainonthesaleisdeferredandrecognisedasincomeover Saleandleasebacktransactions AssetsleasedoutbytheGroupandCompanyunderoperatingleasesareincludedinproperty,plant andequipment Leasesofassetswhereasignificant portionoftherisksandrewardsownershipareretainedbylessor Operating leases Property,plantandequipmentacquiredunderfinanceleasecontractsare depreciatedovertheestimatedusefullife InitialdirectcostsincurredbytheGroupinnegotiatingandarrangingfinanceleasesareaddedtocarryingamount Financeleasesarecapitalisedatthecommencementdatesofrespectivelowerfairvalue Leasesofproperty,plantandequipmentwheretheGroupCompanyassumesubstantiallyallbenefitsrisks Finance leases Aleaseisanagreement wherebythelessorconveystolesseeinreturnforapayment,orseriesofpayments, (j) Leases difference isrecognisedimmediatelyasalossonthe sale. that theassetisexpectedtobeused. is compensatedforbyfuturerentalsatbelow-market price,thenthelossisdeferredandamortisedoverperiod terms aredemonstrablyatfairvalue.Otherwise,thesaleandleasebackaccountedforasfollows: the leaseterm.Anylossonsaleisimmediatelyrecognisedasanimpairmentwhenoccurs. basis overtheleaseterm. property, plantandequipment.Rentalincome(netofanyincentivesgiventolessees)isrecognisedon a straightline in thebalancesheets.Theyaredepreciatedovertheirexpectedusefullivesonabasisconsistentwith similar owned charged totheincomestatementsonastraight-linebasisoverleaseperiod. classified asoperatingleases.Paymentsmadeunderleases(netofincentivesreceivedfromthe lessor)are term anditsusefullife. that theownershipwillbetransferredtoGroupandCompany,assetisdepreciatedovershorter ofthelease of theasset,inaccordancewithannualratesstatedNote2(e)above.Wherethereisnoreasonable certainty expense. of theleasedassetsandrecognisedasanexpenseinprofitorlossoverleasetermonsamebasis periodic rateofinterestontheremainingbalanceliabilityforeachperiod. element ofthefinancechargeischargedtoincomestatementsoverleaseperiodsoasproduceaconstant outstanding. Thecorrespondingrentalobligations,netoffinancecharges,areincludedinpayables.interest is allocatedbetweentheliabilityandfinancechargessoastoachieveaperiodicconstantrateofinterestonbalance leased propertyandthepresentvalueofminimumleasepaymentsatdateinception.Eachpayment of ownershipareclassifiedasfinanceleases. right touseanassetforagreedperiodoftime. ANNUAL REPORT 2016

179 180 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED) 2 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any Whenahedginginstrumentexpiresorissold,whenhedge nolongermeetsthecriteriaforhedgeaccounting,any Whentheforecasttransactionthatishedgedresultsinrecognition ofanon-financialasset(forexample,inventory Amountsaccumulatedinequityarereclassifiedtotheincomestatementsperiodswhenhedgeditemaffects Theeffectiveportionofchangesinthefairvaluederivativesthataredesignatedandqualifyas cashflowhedgesis Cashflowhedge ThefairvaluesofvariousderivativeinstrumentsusedforhedgingpurposesaredisclosedinNote19tothefinancial TheGroup andCompanydocumentattheinceptionoftransactionrelationshipbetweenhedginginstruments Themethodofrecognisingtheresultinggainorlossdependsonwhetherderivativeisdesignatedasahedging Derivativesareinitiallyrecognisedatfairvalueonthedateaderivativecontractisenteredintoandsubsequently Derivativefinancialinstrumentsandhedgingactivities (l) Netrealisablevaluerepresentstheestimatedsellingpriceinordinarycourseofbusiness,lessallcosts Costisdeterminedontheweightedaveragebasis,andcomprisespurchasepriceincidentalsincurredin Inventoriescomprisingconsumablesusedinternallyforrepairsandmaintenancein-flightmerchandise,arestated (k) Inventories and ‘foreignexchangelosses’. gain orlossthatwasreportedinequityisimmediately transferredtotheincomestatementwithin‘othergains/(losses)’ is ultimatelyrecognisedinprofitorloss.Whenaforecast transactionisnolongerexpectedtooccur,thecumulative cumulative gainorlossexistinginequityatthattime remainsinequityandisrecognisedwhentheforecasttransaction of goodssoldinthecaseinventoryordepreciation inthecaseofproperty,plantandequipment. included intheinitialmeasurementofcost asset.Thedeferredamountsareultimatelyrecognisedinthecost or property,plantandequipment),thegainslosses previouslydeferredinequityaretransferredfromand separately afternetoperatingprofit. portion ofinterestrateswapshedgingvariableborrowingsisrecognisedintheincomestatementsand presented profit orloss(forexample,whentheforecastsalethatishedgedtakesplace).Thegainrelatingto theeffective in theincomestatements. recognised inothercomprehensiveincome.Thegainorlossrelatingtotheineffectiveportionis immediately item islessthan12months. hedged itemismorethan12months,andasacurrentassetorliabilitywhentheremainingmaturityof thehedged statements. Thefullfairvalueofahedgingderivativeisclassifiedasnon-currentassetorliabilitywhen the remaining items. the derivativesthatareusedinhedgingtransactionshighlyeffectiveoffsettingchangescashflows ofhedged The GroupandCompanyalsodocumenttheirassessment,bothathedgeinceptiononanongoingbasis, ofwhether and hedgeditems,aswellitsriskmanagementobjectivesstrategyforundertakingvarioushedging transactions. probable forecasttransaction(cashflowhedge). designates certainderivativesashedgesofaparticularriskassociatedwithrecognisedassetorliabilityhighly as heldfortradingandaccountedinaccordancewiththeaccountingpolicysetoutNote2(w).TheGroup instrument, andthenatureofitembeinghedged.Derivativesthatdonotqualifyforhedgeaccountingareclassified re-measured attheirfairvalue. damaged, obsoleteandslow-movingitems. to completionandapplicablevariablesellingexpenses.Inarrivingatnetrealisablevalue,dueallowanceismadeforall bringing theinventoriestotheirpresentlocationandcondition. at thelowerofcostandnetrealisablevalue. SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED) 2 Depositsheldaspledgedsecuritiesfortermloansgranted arenotincludedascashandequivalents. BankoverdraftswhicharerepayableondemandandformanintegralpartoftheGroup’scashmanagement Forthepurposeofstatementscashflows, cashandequivalentscompriseonhand,bankbalances, Cashandcashequivalents (n) Tradereceivablesarerecognisedinitiallyatfairvalueandsubsequentlymeasuredamortisedcostusingtheeffective Tradereceivablesareamountsduefromcustomersformerchandisesoldorservicesperformedintheordinarycourse receivables (m) Trade Allotherborrowingcostsarerecognised inprofitorlosstheperiodwhichtheyareincurred. Investmentincomeearnedonthetemporaryinvestmentof specificborrowingspendingtheirexpenditure onqualifying Borrowingcoststhataredirectlyattributable totheacquisition,constructionorproductionofqualifyingassets,which Borrowingsareinitially recognisedatfairvalue,netoftransactioncostsincurred.Borrowingsaresubsequentlycarried (q) Borrowings (p) Share capital ProvisionsarerecognisedwhentheGrouphasapresentlegalorconstructiveobligationasresultof pastevents, (o) Provision overdrafts areshownwithinborrowingsincurrentliabilities. included asacomponentofcashandequivalentsinthestatementflows.Inbalancesheets,banks changes invalue. months orlessthatarereadilyconvertibletoknownamountsofcashandwhichsubjectaninsignificantrisk demand deposits,bankoverdraftsandothershort-term,highlyliquidinvestmentswithoriginalmaturitiesofthree interest method,lessallowanceforimpairment. they areclassifiedascurrentassets.Otherwise,presentednon-current of business.Ifcollectionisexpectedinoneyearorless(orthenormaloperatingcyclebusinessiflonger), assets isdeductedfromthe borrowingcostseligibleforcapitalisation. the costofthoseassets,untilsuchtimeasassets aresubstantiallyreadyfortheirintendeduseorsale. are assetsthatnecessarilytakeasubstantialperiod oftimetogetreadyfortheirintendeduseorsale,areadded or lossovertheperiodofborrowingsusing effective interestmethod. at amortisedcost;anydifferencebetweeninitialrecognised amountandtheredemptionvalueisrecognisedinprofit of theamountcanbemade.Provisionsarenotrecognisedforfutureoperatinglosses. when itisprobablethatanoutflowofresourceswillberequiredtosettletheobligation,andareliable estimate Dividends are recognised as a liability in the period in which they are declared. A dividend declared after the end Dividendsarerecognisedasaliabilityintheperiodwhichtheydeclared.Adividenddeclaredafterend Dividends toshareholdersoftheCompany (iii) Incrementalexternalcostsdirectlyattributabletotheissuanceofnewsharesoroptionsareshowninequityas a Shareissuecosts (ii) Ordinaryshareswithdiscretionarydividendsareclassifiedasequity.Otherequityand/or (i) Classification at theendofreportingperiod. of thereportingperiod,butbeforefinancialstatementsareauthorisedforissue,isnotrecognisedas aliability deduction, netoftax,fromtheproceeds. liability accordingtotheeconomicsubstanceofparticularinstrument. ANNUAL REPORT 2016

181 182 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED) 2 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD Deferred and income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax Deferredandincometaxassetsliabilities areoffsetwhenthereisalegallyenforceablerighttocurrenttax Deferredincometaxisprovidedontemporarydifferencesarisinginvestmentsinsubsidiariesandassociates,except Deferredtaxassets arerecognisedtotheextentthatitisprobabletaxableprofitwillbeavailableagainstwhich Deferredtaxisrecognised,usingtheliabilitymethod,ontemporarydifferences arisingbetweentheamountsattributed Managementperiodicallyevaluatespositionstakenintaxreturnswithrespecttosituationswhichapplicable Thecurrentincometaxchargeiscalculatedonthebasisoflawsenactedorsubstantivelyatend Thetaxexpensefortheperiodcomprisescurrentanddeferredtax.Taxisrecognisedinprofitorloss,exceptto Currentanddeferredincometaxes (r) BorrowingsareclassifiedascurrentliabilitiesunlesstheGroupandCompanyhaveanunconditionalrighttodefer Interest,dividends,lossesandgainsrelatingtoafinancialinstrument,orcomponentpart,classifiedasliabilityis Feespaidontheestablishmentofloanfacilitiesarerecognisedastransactioncoststoextentthat itis (q) Borrowings (continued) (s) Employee benefits balances onanetbasis. the sametaxauthorityoneithertaxableentityor differenttaxableentitieswherethereisanintentiontosettlethe assets againstcurrenttaxliabilitiesandwhenthedeferred incometaxassetsandliabilitiesrelatetotaxesleviedby the Groupabilitytocontrolreversaloftemporarydifferencesshallnotberecognised. to controlthereversaloftemporarydifferenceforassociates.Onlywherethereisanagreementinplace thatgives and itisprobablethatthetemporarydifferencewillnotreverseinforeseeablefuture.GenerallyGroup isunable for deferredincometaxliabilitywherethetimingofreversaltemporarydifferenceiscontrolled bytheGroup the deductibletemporarydifferences,unusedtaxlossesorcredits(includingincentives)can beutilised. period andareexpectedtoapplywhentherelateddeferredtaxassetisrealisedorliability issettled. determined usingtaxrates(andlaws)thathavebeenenactedorsubstantivelybytheendof thereporting combination thatatthetimeoftransactionaffectsneitheraccountingnortaxableprofitorloss.Deferred taxis is notaccountedforifitarisesfrominitialrecognitionofanassetorliabilityinatransactionotherthan abusiness to assetsandliabilitiesfortaxpurposestheircarryingamountsinthefinancialstatements.However, deferredtax be paidtothetaxauthorities.Thisliabilityismeasuredusingsinglebestestimateofmostlikely outcome. regulation issubjecttointerpretation.Itestablishesprovisionswhereappropriateonthebasisofamounts expectedto income. of thereportingperiodincountrieswhereGroup’ssubsidiariesandassociatesoperategeneratetaxable also recognisedinothercomprehensiveincomeordirectlyequity,respectively. extent thatitrelatestoitemsrecognisedinothercomprehensiveincomeordirectlyequity.Inthiscasethetaxis settlement oftheliabilityforatleasttwelvemonthsafterbalancesheetdate. reported withinfinancecostintheincomestatements. capitalised asaprepaymentforliquidityservicesandamortisedovertheperiodoffacilitytowhichitrelates. To theextentthereisnoevidencethatitprobablesomeoralloffacilitywillbedrawndown,fee probable thatsomeorallofthefacilitywillbedrawndown.Inthiscase,feeisdeferreduntildrawdownoccurs. The Group’s and Company’s contributions to the Employees’ Provident Fund are charged to the income statement TheGroup’sandCompany’s contributionstotheEmployees’ ProvidentFundarechargedtotheincomestatement (ii) Defined contribution plan Wages,salaries,paidannualleaveandsickleave,bonusesnon-monetarybenefitsareaccrued inthefinancial Shorttermemployeebenefits (i) reduction inthe futurepaymentsisavailable. payment obligations.Prepaid contributionsarerecognisedasanassettothe extentthatacashrefundor in theperiodtowhichthey relate.Oncethecontributionshavebeenpaid,Group andCompanyhavenofurther year inwhichtheassociatedservicesarerenderedby theemployeesofGroupandCompany. SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED) 2 The Group participates in a loyalty programme where customers accumulate points for purchases made which entitle TheGroupparticipatesinaloyaltyprogrammewherecustomersaccumulatepointsforpurchasesmadewhichentitle Interestincomeisrecognisedusingtheeffectiveinterestmethod. Revenuefromaircraftoperatingleaseisrecordedonastraightlinebasisoverthetermoflease. Managementfees,incentivesandcommissionincomearerecognisedonanaccrualbasis. Fuelsurcharge,insuranceadministrativefees,seatchangeconvenienceexcessbaggageand Revenuefromcharterflightsisrecognisedupontherenderingoftransportationservices. Revenuefromscheduledpassengerflightsisrecognisedupontherenderingoftransportationservicesnetdiscounts. (t) Revenue recognition (u) Foreign currencies of pointsredeemedandtheredemptionvalueeachpoint.Awardexpire36monthsafterinitialsale. from theawardpointsisrecognisedwhenareredeemed.Theamountofrevenuebasedonnumber them todiscountsonfuturepurchases.Awardpointsarerecognisedasacostofsaleatthetimeissuewhilerevenue related revenuearerecogniseduponthecompletionofservicesrenderednetdiscounts. baggage handlingfeesarerecogniseduponthecompletionofservicesrenderednetdiscounts.Freightandother The revenueofseatssoldforwhichserviceshavenotbeenrenderedisincludedincurrentliabilitiesassalesadvance. On consolidation, exchange differences arising from the translation of the net investment in foreign operations are Onconsolidation,exchangedifferences arisingfromthetranslationofnetinvestmentinforeign operationsare Theresultsand financial positionofallentitieswithintheGroup(nonewhichhascurrencya (iii) Group companies Foreignexchangegainsandlossesarisingfromoperationsareincluded inarrivingattheoperatingprofit.Foreign Foreigncurrencytransactionsaretranslatedintothefunctionalusingexchangerates prevailingat (ii) Transactions and balances Itemsincludedinthefinancialstatements ofeachtheGroup’sentitiesaremeasuredusingcurrency (i) Functional and presentation currency were recordedinequityare recognisedintheincomestatementsaspartof gainorlossondisposal. taken toshareholders’equity. Whenaforeignoperationisdisposedoforsold, suchexchangedifferencesthat allresultingexchangedifferencesarerecognisedasaseparatecomponentofequity. (iii) (ii) i assets andliabilitiesforeachbalancesheetpresentedaretranslatedattheclosingratedateofthat (i) into thepresentationcurrencyasfollows: hyperinflationary economy)thathaveafunctionalcurrency differentfromthepresentationcurrencyaretranslated associates areseparatelydisclosedafternetoperatingprofit. exchange gainsandlossesarisingfromborrowings(aftereffectsofeffectivehedges)amounts due from other comprehensiveincomeasqualifyingcashflowhedgesandnetinvestmenthedges. assets andliabilitiesdenominatedinforeigncurrenciesarerecognisedprofitorloss,exceptwhendeferred in resulting fromthesettlementofsuchtransactionsandtranslationatyear-endexchangerates monetary the datesoftransactionsorvaluationwhereitemsarere-measured.Foreignexchangegainsand losses are presentedinRinggitMalaysia,whichistheCompany’sfunctionalandpresentationcurrency. primary economicenvironmentinwhichtheentityoperates(“thefunctionalcurrency”).Thefinancialstatements dates, inwhichcaseincomeandexpensesaretranslated atthedatesoftransactions);and average isnotareasonableapproximationofthecumulative effectoftheratesprevailingontransaction balance sheet; ncome andexpensesforeachincomestatement are translatedataverageexchangerates(unlessthis ANNUAL REPORT 2016

183 184 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED) 2 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD (w) Financial assets Subsequenttothe initialrecognition,theGroupandCompanymeasurecontingentliabilitiesthatarerecognised TheGroupandCompanyrecogniseseparatelythecontingentliabilities oftheacquireesaspartallocatingcost TheGroupandCompanydonotrecogniseacontingentliabilitybutdisclosesitsexistenceinthefinancialstatements. (v) Contingent liabilities less, whenappropriate,cumulativeamortisationrecognisedinaccordancewithMFRS118“Revenue”. provisions ofMFRS137“Provisions,ContingentLiabilitiesandAssets”theamountinitiallyrecognised separately atthedateofacquisitionhigheramountthatwouldberecognisedinaccordancewith reliably, theresultingeffectwillbereflectedingoodwillarisingfromacquisitions. of abusinesscombinationwheretheirfairvaluescanbemeasuredreliably.Wherethecannot measured reliably.Howevercontingentliabilitiesdonotincludefinancialguaranteecontracts. also arisesintheextremelyrarecircumstancewherethereisaliabilitythatcannotberecognisedbecauseit because itisnotprobablethatanoutflowofresourceswillberequiredtosettletheobligation.Acontingentliability uncertain futureeventsbeyondthecontrolofGroupandCompany,orapresentobligationthatisnotrecognised A contingentliabilityisapossibleobligationthatarisesfrompasteventswhoseexistencewillbeconfirmedby Changes in the fair values of financial assets at fair value through profit or loss, including the effects of currency Changes inthefairvaluesoffinancialassetsatvaluethroughprofit orloss,includingtheeffectsofcurrency Financialassetsatfairvalue through profitorlossaresubsequentlycarriedatfairvalue.Loansandreceivables Subsequent measurement–gainsandlosses (iii) Financialassetsareinitiallyrecognisedatfair valueplustransactioncostsforallfinancialassetsnotcarriedatfair Regularpurchasesandsalesoffinancialassetsarerecognisedonthetrade-date,date onwhichtheGroup Recognitionandinitialmeasurement (ii) Loansandreceivablesarenon-derivativefinancialassetswithfixedordeterminablepaymentsthatnotquoted Loansandreceivables Financialassetsatfairvaluethroughprofitorlossarefinancialheldfortrading.Aassetisclassified Financialassetsatfairvaluethroughprofitorloss TheGroupclassifiesitsfinancialassetsinthefollowingcategories:atfairvaluethroughprofitorlossandloans (i) Classification changes arise. translation, interestanddividend incomearerecognisedinthestatement intheperiodwhich are subsequentlycarriedatamortisedcostusingthe effectiveinterestmethod. fair value,andtransactioncostsareexpensedinprofit orloss. value throughprofitorloss.Financialassetscarried atfairvaluethroughprofitorlossareinitiallyrecognised commits topurchaseorselltheasset. and jointventure’‘deposits,cashbankbalances’inthebalancesheet. receivables comprise‘tradeandotherreceivables’,‘amountsduefromrelatedparties,asubsidiary,an associate of thereportingperiod.Theseareclassifiedasnon-currentassets.TheGroup’sandCompany’sloans and in anactivemarket.Theyareincludedcurrentassets,exceptformaturitiesgreaterthan12monthsafter theend classified asnon-current. in thiscategoryareclassifiedascurrentassetsifexpectedtobesettledwithin12months;otherwise, theyare Derivatives arealsocategorisedasheldfortradingunlesstheydesignatedhedges(seeNote2(l)). Assets in thiscategoryifitisacquiredorincurredprincipallyforthepurposeofsellingrepurchasingnear term. Management determinestheclassificationatinitialrecognition. and receivables.Theclassificationdependsonthepurposeforwhichfinancialassetswere acquired. SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED) 2 (w) Financial assets (continued) Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective Trade payables arerecognisedinitiallyatfair valueandsubsequentlymeasuredatamortisedcostusingtheeffective Tradepayablesare obligationstopayforgoodsorservicesthathavebeenacquired intheordinarycourseofbusiness Tradeand otherpayables (y) Financialassetsandliabilitiesare offsetandthenetamountispresentedinbalancesheetwhentherealegally Offsettingfinancialinstruments (x) interest method. normal operatingcycleof the businessiflonger).Ifnot,theyarepresentedas non-currentliabilities. from suppliers.Accountspayable areclassifiedascurrentliabilitiesifpayment isduewithinoneyearorless(orinthe and settletheliabilitysimultaneously. enforceable righttooffsettherecognisedamountsand thereisanintentiontosettleonanetbasis,orrealisetheasset Financial assets are de-recognised when the rights to receive cash flows from the investments have expired or Financialassetsarede-recognisedwhentherightstoreceivecashflowsfrominvestments haveexpiredor (v) De-recognition Whenanassetisuncollectible,itwrittenoffagainsttherelatedallowanceaccount.Suchassetsare If,inasubsequentperiod,theamountofimpairmentlossdecreasesanddecreasecanberelatedobjectively Theamountofthelossismeasuredasdifferencebetweenasset’scarryingandpresentvalue ThecriteriathattheGroupusestodeterminethereisobjectiveevidenceofanimpairmentlossinclude: TheGroupassessesattheendofreportingperiodwhetherthereisobjectiveevidence thatafinancialasset Assetscarriedatamortisedcost Subsequent measurement–impairmentoffinancialassets (iv) have beentransferredandtheGrouphas substantiallyallrisksandrewardsofownership. after allthenecessaryprocedureshavebeencompletedandamountoflosshasdetermined. the reversalofpreviouslyrecognisedimpairmentlossisinincomestatement. to aneventoccurringaftertheimpairmentwasrecognised(suchasimprovementindebtor’scredit rating), market price. expedient, theGroupmaymeasureimpairmentonbasisofaninstrument’sfairvalueusingobservable measuring anyimpairmentlossisthecurrenteffectiveinterestratedeterminedundercontract.Asa practical is recognisedintheincomestatement.If‘loansandreceivables’haveavariableinterestrate,discount ratefor financial asset’soriginaleffectiveinterestrate.Thecarryingamountisreducedandtheof theloss of estimatedfuturecashflows(excludingcreditlossesthathavenotbeenincurred)discounted atthe Observable dataindicatingthatthereisameasurabledecreaseintheestimatedfuturecashflowsfrom • Disappearanceofanactivemarketforthatfinancialassetbecausedifficulties;or • Itbecomesprobablethattheborrowerwillenterbankruptcyorotherfinancialreorganisation; • TheGroup,foreconomicorlegalreasonsrelatingtotheborrower’sfinancialdifficulty,grantingborrower • Abreachofcontract,suchasadefaultordelinquencyininterestprincipalpayments; • Significantfinancialdifficultyoftheissuerorobligor; • estimated futurecashflowsofthefinancialassetorgroupassetsthatcanbereliablyestimated. after theinitialrecognitionofasset(a‘lossevent’)andthatlossevent(orevents)hasanimpacton losses areincurredonlyifthereisobjectiveevidenceofimpairmentasaresultoneormoreeventsthatoccurred or groupoffinancialassetsisimpaired.Aassetaimpairedandimpairment i) nationalorlocaleconomicconditionsthatcorrelatewithdefaultsontheassetsinportfolio. (ii) adversechangesinthepayment statusofborrowersintheportfolio;and (i) identified withtheindividualfinancialassetsinportfolio,including: portfolio offinancialassetssincetheinitialrecognitionthoseassets,althoughdecreasecannotyetbe a concessionthatthelenderwouldnototherwiseconsider; ANNUAL REPORT 2016

185 186 The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of The estimatesandassumptionsthathaveasignificantriskofcausingmaterialadjustmenttothecarryingamounts TheGroupandCompanymakeestimatesassumptionsconcerningthefuture.resultingaccountingwill, EstimatesandjudgmentsarecontinuallyevaluatedbytheDirectorsbasedonhistoricalexperienceother CRITICALACCOUNTINGESTIMATESANDJUDGMENTS 3 SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED) 2 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD assets andliabilitieswithinthenextfinancialyearareoutlinedbelow: tested forsensitivitytochangesintheunderlyingparameters. variables thatareanticipatedtohaveamaterialimpacttheGroup’sandCompany’sresultsfinancial positionare by definition,rarelyequaltherelatedactualresults.Toenhanceinformationcontentofestimates, certainkey factors, includingexpectationsoffutureeventsthatarebelievedtobereasonableunderthecircumstances. Warrants reserve arising from the issuance of free warrants together with the rights issue, is determined based on the Warrantsreservearisingfromtheissuanceoffreewarrantstogetherwithrightsissue,isdeterminedbasedon (aa) Operatingsegmentsarereportedinamannerconsistentwiththeinternalreportingprovidedtochiefoperating (z) Segment reporting Deferred tax assets are mainly originating from unutilised tax incentives, unabsorbed capital allowances and tax losses Deferredtaxassetsaremainlyoriginatingfromunutilisedincentives,unabsorbedcapitalallowancesandlosses (ii) Deferred tax assets Futureresultsofoperationscouldbemateriallyaffectedbychangesintheseestimatesbroughtabout in TheGroupreviewsannuallytheestimatedusefullivesandresidualvaluesofaircraftframesenginesbasedon Estimated usefullivesandresidualvaluesofaircraftframesengines (i) relation tounexercisedwarrantsattheexpiryofperiodistransferredretainedearnings. non-distributable, andistransferredtothesharepremiumaccountuponexerciseofwarrants.Warrantsreservein rate basis.Proceedsfromwarrantswhichareissuedatavalue,creditedtoreserve.Warrantsreserveis allocation oftheproceedsfromrightissueusingfairvaluewarrantsandordinarysharesonapro- decisions. performance oftheoperatingsegments,hasbeenidentifiedasGroupChiefExecutiveOfficerthatmakesstrategic decision-maker. Thechiefoperatingdecision-maker,whoisresponsibleforallocatingresourcesandassessing has recognisedthedeferredtaxassetsasatbalance sheetdate. these projections,managementbelievesthatthecurrent non-timerestrictedtemporarydifferenceswillbeutilisedand based onpastperformanceandadjustedfornon-recurring circumstancesandareasonablegrowthrate.Basedon delivery, fares,loadfactors,fuelprice,maintenancecost andcurrencymovements.Theseassumptionshavebeenbuilt profits involvessignificantassumptions,especiallyin respectofregulatoryapprovalsforprospectiveroutes,aircraft future taxableprofitswillbeavailableagainstwhichtemporary differencescanbeutilised.Estimatingthefuturetaxable carry forwardwhichhavenoexpirydates.Thedeferredtaxassetsarerecognisedtotheextentthatitis probable that RM 17,603,044(2015:RM10,704,000). (2015: RM3,346,000)anddecreasethecarryingamountofproperty,plantequipmentasat31December 2016by Note 2(e),wouldincreasetherecordeddepreciationforfinancialyearended31December2016by RM3,346,000 the factorsmentionedabove.Areductionof5%inresidualvaluesaircraftairframesandenginesas disclosedin prices. factors suchasbusinessplanandstrategies,expectedlevelofusage,futuretechnologicaldevelopments andmarket Warrant reserve Theremuneration payabletotheDirectorsofCompanyisanalysedasfollows: 5 STAFF COSTS 4 REVENUE DIRECTORS’ REMUNERATION ThedetailsofoutstandingoptionsovertheordinarysharesCompanygrantedunderESOStoeligibleemployees Ancillary revenue includes assigned seat, cancellation, documentation and other fees, and the on-board sale of meals and Ancillaryrevenueincludesassignedseat,cancellation,documentationandotherfees,theon-boardsaleofmeals hr pinepne 8 5 8 559 484 559 25,003 484 – 26,799 285,939 25,362 336,297 98,861 – 27,334 289,900 – 107,508 476,407 341,776 1,361 421,662 134,913 642,715 274,014 98,861 254,720 476,407 1,509 107,508 1,682,740 440,134 – Share optionexpense 421,662 642,715 Defined contributionretirementplan 2,532,543 134,913 Wages, salaries,bonusesandallowances 274,014 254,720 1,682,740 440,134 2,532,543 Management fees Aircraft operatingleaseincome Ancillary revenue Freight services Fuel surcharge Charter flights Scheduled flights ietr’dfndcnrbto ln28–288 – 2,400 – 288 2,400 Directors’ definedcontributionplan Directors’ fees Directors’ salaries,bonusandallowances More thanRM200,000 RM150,001 toRM200,000 RM100,001 toRM150,000 Less thanRM100,000 Range ofremuneration are disclosedinNote27tothefinancialstatements. merchandise. ,0,3 ,6,5 ,0,2 3,061,192 4,005,025 3,062,553 4,006,534 RM’000 RM’000 6,9 1,2 6,8 311,501 363,580 315,821 369,594 2016 2016 ru Company Group Company Group Receivable Company from the RM’000 RM’000 RM’000 ,3 3,333 – 3,333 2015 2015 4 645 – 645 Subsidiaries Receivable RM’000 RM’000 RM’000 Non-executive 2016 2016 062015 2016 from ANNUAL REPORT 2016 34 23 11 11 RM’000 RM’000 RM’000 Group 2015 2015 187 188 8 OTHER GAINS/(LOSSES) 7 OTHER INCOME Thefollowingitemshavebeencharged/(credited)inarrivingatotheroperatingexpenses: OTHER OPERATINGEXPENSES 6 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD Otherincome(‘others’)includesconcessionsreceivedfromsuppliersandcommissions receivedfromadvertisingactivities. mareto neteti on etr (53,888) – 77,245 – 50,107 (7,585) 77,245 – 35,738 7,095 49,335 (7,585) 35,738 6,665 Impairment ofinvestmentinajointventure 7,095 – Other gain/(loss)fromfuelcontractsheldfortrading 6,665 26,508 – 21,630 11,585 32,478 – 299 28,062 42,056 7,752 19,662 39,827 – 12,335 4,670 26,508 62,284 287 (2,944) 15,189 21,630 32,478 – Others 28,065 6,484 42,056 11,585 Commission incomefrominsurance – 7,752 39,827 299 19,662 5,971 Gain ondisposalofaircraftandenginepursuanttosales 62,327 – 12,335 15,189 6,766 (2,944) 287 – 6,112 Fair valuegainonshareholders’benefitsscheme Non-current assetheldforsalewrittenoff 7,094 Property, plantandequipmentwrittenoff Impairment ofreceivables Insurance expenses In-flight mealexpenses Credit cardcharges Advertising expenses Net foreignexchange(gain)/lossonoperations Rental ofequipment Auditors’ remuneration Rental oflandandbuildings Management fee n esbc ragmns–3,4 32,541 – 32,541 – 205 (50,922) (27,675) 341 (19,406) (50,741) 73 393 (50,235) (27,675) 205 and leasebackarrangements (19,054) (50,741) 358 73 410 – Unrealised – Realised – Non-auditfees – Statutoryaudit RM’000 RM’000 RM’000 60016815,7 116,881 56,772 116,881 56,000 578(,8)3,3 (61,473) 35,738 (7,585) 35,738 2016 2016 2016 ru Company Group ru Company Group Company Group RM’000 RM’000 RM’000 2015 2015 2015 RM’000 RM’000 RM’000 2016 2016 2016 RM’000 RM’000 RM’000 2015 2015 2015 10 TAXATION 9 FINANCE INCOME/(COSTS) Deferred taxation:(Note13) eerdtxto 997(708 997(97,028) (96,859) 49,967 49,798 (97,028) (96,859) 49,967 49,779 Current taxation: Total taxexpense/(credit) Deferred taxation e oeg xhnelse 3,8)(9,6)(549 (299,562) (35,489) (299,562) (35,489) (269) Current taxation: (2,544) (74,807) (269) (9,055) (37,716) (2,544) Net foreignexchangelosses (9,614) (74,807) 3,849 15,963 Fair valuemovementrecycledfromcashflowhedge (37,716) (9,055) 5,193 19,582 (9,614) Unrealised foreignexchange(losses)/gainson: FOREIGN EXCHANGELOSSES 15,963 3,849 Bank facilitiesandothercharges 19,582 5,193 Discounting andaccretionofinterestondeposits Interest expenseonbankborrowings Finance costs: Discounting andaccretionofinterestondeposits Interest incomefromdepositswithlicensedbank Finance income: rgnto n eeslo eprr ifrne 997(708 997(97,028) 49,967 (97,028) 49,967 – Originationandreversaloftemporarydifferences rvosfnnilya 19 19 – 169 – (169) – 169 (169) (19) – Previousfinancialyear – Currentfinancialyear oeg aain(9 – 169 – (169) – 6,478 169 – (19) (169) 6,478 – (312,890) 6,850 (37,562) 2,073 (312,890) (37,562) – Foreigntaxation 6,850 – Malaysiantaxation 2,073 reserve – Depositsandbankbalances – Borrowings RM’000 RM’000 4,7)(411 4,7)(84,131) (49,874) (84,131) (49,874) 3,8)(0,4)(549 (306,040) (35,489) (306,040) (35,489) 979(689 978(96,859) 49,798 (96,859) 49,779 4751,1 47519,812 24,775 19,812 24,775 2016 2016 18 6 19 169 (169) 169 (188) 18 6 19 169 (169) 169 (188) ru Company Group ru Company Group RM’000 RM’000 2015 2015 RM’000 RM’000 2016 2016 ANNUAL REPORT 2016 RM’000 RM’000 2015 2015 189 190 The diluted earnings/(loss) per share of the Group is similar to the basic earnings/(loss) per share as the options over Thedilutedearnings/(loss)pershareoftheGroupissimilartobasicasoptionsover Diluted earnings/(loss) per share Basicearnings/(loss)pershareiscalculatedbydividingthenetprofit/(loss)forfinancialyearweightedaverage Basicearnings/(loss)pershare EARNINGS/(LOSS)PERSHARE 11 Theexplanationoftherelationshipbetweentaxationandprofit/(loss)beforeisasfollows: 10 TAXATION (CONTINUED) – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD e rft(os o h iaca er(M00 1,1 (349,616) 210,314 3,359,107 4,148,148 (96,859) 49,798 (96,859) 49,779 Earnings/(Loss) pershare(sen) Weighted averagenumberofordinarysharesinissue(’000) Net profit/(loss)forthefinancialyear(RM’000) (463,406) 260,242 (446,475) (115,852) 260,093 62,458 Tax expense/(credit) (111,619) 62,422 Tax effectsof: Tax calculatedatMalaysiantaxrateof24%(2015:25%) Profit/(Loss) beforetaxation financial year. exercise priceoftheESOSRM1.25peroptionisaboveaveragemarketvalueCompany’s sharesduringthe unissued ordinarysharesgrantedpursuanttotheESOSatendoffinancialyearhaveananti-dilutive effect.The number ofordinarysharesinissueduringthefinancialyear. hne nsauoytxrt ,4 4,043 – – – (31,145) (169) 4,043 (14,070) 46,095 – – (31,145) – 1,579 (14,070) 9,392 (169) 32,470 – 1,596 – shareofresultsanassociateandajointventure – changesinstatutorytaxrate – incomenotsubjecttotax – expensesnotdeductiblefortaxpurposes – overaccrualofprioryeartax RM’000 2016 ru Company Group RM’000 2015 RM’000 2016 062015 2016 . (10.4) 5.1 Group RM’000 2015

2 PROPERTY,PLANTANDEQUIPMENT 12 sesntyti prto 285272(048 1,8)– (15,189) – – (10,408) 2,722 22,875 Assets notyetinoperation apeupet4 2 42 – (2) 44 Ramp equipment apeupet–4 2 42 – (2) – – 44 – Ramp equipment sesntyti prto 6963,9 3,0)––––22,875 – – – – (37,104) 32,993 26,986 Assets notyetinoperation fieeupet untr n itn 492(,6)(1)7,013 (410) (7,569) 14,992 Office equipment,furnitureandfitting Office equipment, furniture Office equipment,furniture Office equipment, furniture Office equipment,furniture oo eils474(,9)–944 – (3,790) 4,734 Motor vehicles oo eils9636––(6)–944 – (368) – – 326 986 Motor vehicles oo eils1,34 Motor vehicles icatsae 4,1 7,2)(068 56,463 (10,628) (75,220) 142,311 Aircraft spares icatsae 627355–(1)(287 56,463 – (12,857) (412) – 3,525 66,207 Aircraft spares icatsae 76019094(9)–(344 46 66,207 (456) (13,404) – (497) 964 1,930 77,670 Aircraft spares icategns ifaeadsrieptnil22563(7,8)(907 1,504,031 (29,047) (672,585) 2,205,663 Aircraft engines,airframeandservicepotential At 31December2016 Aircraft engines, airframe Aircraft engines,airframe Net bookvalue Aircraft engines, airframe Aircraft engines,airframe Net bookvalue n itns526340––(,2)–7,013 – (1,623) – – 3,400 5,236 and fittings Group andCompany Group andCompany n evc oeta ,8,0 0431,0 1,0)(861 1,504,031 – (98,681) (10,408) 10,408 20,403 1,582,309 and servicepotential n itns430244–––(,4)–5,236 – (1,548) – – – 2,414 4,370 and fittings n evc oeta ,2,1 610(610 1516 1943 726 1,582,309 (7,296) (129,493) (105,116) (36,140) 36,140 – 1,824,214 and servicepotential 1 January RM’000 ,3,8 737–(667 1516 1487 772 1,677,613 (7,752) (144,807) (105,116) (36,637) – 37,337 1,934,588 ,7,1 040–(080 1351 1,8)1,568,493 (15,189) (113,531) (10,820) – 30,420 1,677,613 2015 At 1 January RM’000 8–––– 2016 Additions At RM’000 Additions RM’000 Reclassifi- RM’000 cation ,6,4 7916 4,8)1,568,493 (40,085) (759,166) 2,367,744 Reclassifi- RM’000 RM’000 cation Cost Disposals RM’000 Accumulated depreciation Disposals RM’000 RM’000 non-current Transfer to asset held RM’000 for sale Accumulated Depreciation impairment Depreciation RM’000 RM’000 charge losses RM’000 charge ANNUAL REPORT 2016 32 986 – (362) Write off RM’000 Net book RM’000 Write off RM’000 value 31 December 31 December RM’000

RM’000 2016 At 191 2015 At 192 Thebeneficialownershipandoperationalcontrolofcertainaircraftpledgedassecurityforborrowingsrestswiththe Includedinproperty,plantandequipmentoftheGroupCompanyareaircraftpledgedassecurityforborrowings(Note Deferredtaxassetsandliabilitiesareoffsetwhenthereisalegallyenforceablerighttosetoffcurrentagainst 13 DEFERRED TAXATION PROPERTY,PLANTANDEQUIPMENT(CONTINUED) 12 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD Themovementsindeferredtaxassetsandliabilitiesduring thefinancialyearareasfollows: tedo iaca er428452814284542,821 492,854 542,821 492,854 445,793 542,821 542,821 445,793 492,854 542,821 542,821 At endoffinancialyear 492,854 Credited/(charged) toincomestatement(Note10): At beginningoffinancialyear Deferred taxassets oo eils448(,2)–986 22,875 – – 66,207 (10,628) (3,422) 5,236 – (62,999) 4,408 (410) 139,834 22,875 (5,946) 11,592 1,582,309 (29,047) (573,904) 2,185,260 Assets notyetinoperation Office equipment,furnitureandfittings Motor vehicles Aircraft spares Aircraft engines,airframeandservicepotential At 31December2015 delivery, thelegaltitlewillbetransferredtoCompanyonlyuponsettlementofrespectivefacilities. Company whentheaircraftisdeliveredtoCompany.Wherelegaltitleheldbyfinanciersduring 26) withanetbookvalueofRM1,494million(2015:RM1,579million). appropriate offsetting,areshowninthebalancesheets: current taxliabilitiesandwhendeferredtaxesrelatetothesameauthority.Thefollowingamounts, determinedafter tes1,3 ,5 0592,251 – 10,539 (29,594) 81,998 2,251 171,650 (10,397) (11,598) 10,539 (29,594) – 81,998 (10,397) 42,373 (11,598) 171,650 (210,161) 42,373 (210,161) – Others – Derivatives – Salesinadvance – Taxlosses – Property,plantandequipment ,6,6 6621 4,8)1,677,613 (40,085) (646,271) 2,363,969 RM’000 RM’000 RM’000 4,6)9,2 4,6)97,028 (49,967) 97,028 (49,967) 2016 2016 Cost ru Company Group Company Group Accumulated depreciation RM’000 RM’000 RM’000 2015 2015 Accumulated impairment RM’000 RM’000 RM’000 losses 2016 2016 Net book RM’000 RM’000 RM’000 value 2015 2015

Other deposits and prepayments include prepayments for maintenance of aircraft and deposits paid to lessors for leased Otherdepositsand prepaymentsincludefor maintenanceofaircraftanddepositspaidtolessorsforleased OTHERDEPOSITS ANDPREPAYMENTS 15 During thefinancialyearended31December2016,noborrowingcostwerecapitalisedbyGroup andCompany(2015: Thedepositsasat31December 2016 areinrespectofaircraftpurchaseswhichwillbedeliveredfromDecember2018to ThedepositsonaircraftpurchasesaredenominatedinUSDollarandrespectofpre-deliverypayments DEPOSITSONAIRCRAFTPURCHASES 14 DEFERREDTAXATION(CONTINUED) 13 Deferred tax assets are mainly originating from unutilised tax incentives, unabsorbed capital allowances and tax losses carry Deferredtaxassetsaremainlyoriginatingfromunutilisedincentives, unabsorbedcapitalallowancesandtaxlossescarry fstig7,9 359– 73,599 – 73,599 Deferred taxliabilities(afteroffsetting) Offsetting fstig(359 7,9)– (73,599) – 542,821 (73,599) 492,854 542,821 492,854 Deferred taxliabilities(beforeoffsetting) Deferred taxassets(afteroffsetting) Offsetting Deferred taxassets(beforeoffsetting) aircraft. Thedepositsaredenominated inUSDollar. annum. RM10,776,540) onqualifyingassets.Borrowingcosts werecapitalisedinthepreviousfinancialyearatrateof4.25%per December 2027. the finalpriceondelivery. purchases. Pre-deliverypaymentsconstituteinstalmentsmadeinrespectofthepriceaircraftandare deductedfrom differences willbeutilisedandhasrecognisedthedeferredtaxassetsasatbalancesheetdate. reasonable growthrate.Basedontheseprojections,managementbelievesthatthecurrentnon-timerestricted temporary These assumptionshavebeenbuiltbasedonpastperformanceandadjustedfornon-recurringcircumstances anda approvals forprospectiveroutes,aircraftdelivery,fares,loadfactors,fuelprice,maintenancecostandcurrency movements. can beutilised.Estimatingthefuturetaxableprofitsinvolvessignificantassumptions,especiallyinrespect ofregulatory recognised totheextentthatitisprobablefuturetaxableprofitswillbeavailableagainstwhichtemporary differences forward whichhavenoexpirydates.AsdisclosedinNote3tothefinancialstatements,deferred taxassetsare eiaie 857 857 – (8,577) 1,820 – – 3,145 – 13,684 (8,577) – (65,022) 141,261 3,145 – 1,820 145,139 171,650 251,456 129,663 13,684 – – (65,022) – 251,456 141,261 251,456 145,139 129,663 171,650 251,456 – – Derivatives – Property,plantandequipment – Others – Derivatives – Property,plantandequipment – Salesinadvance – Taxlosses – Taxincentives RM’000 6,5 4,2 6,5 542,821 566,453 542,821 566,453 7,9)–(359 – (73,599) – (73,599) 2016 ru Company Group –––– RM’000 2015 RM’000 2016 ANNUAL REPORT 2016 RM’000 2015 193 194 Thedetailsofthesubsidiariesareasfollows: INVESTMENTSINSUBSIDIARIES 16 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD 7 INVESTMENTINANASSOCIATE 17 Thedetailsoftheassociate areasfollows: Therearenocontingentliabilities relatingto the Group’sinvestmentinTAAX. TAAXisaprivatecompanyforwhich thereisnoquotedmarketpriceavailableforitsshares. hiArsaXC. t “AX)Thailand Thai AirAsiaXCo.,Ltd(“TAAX”) ru’ hr fps-custo oss(008 2,1)–– 20,018 20,018 – 20,018 (20,018) 20,018 (20,018) Group’s shareofpost-acquisitionlosses Unquoted investments,atcost Malaysia Malaysia Fly XLimited* Mauritius Malaysia Malaysia AAX CapitalIILimited* AAX MauritiusOneLimited* AAX LeasingILimited Australia AAX CapitalLimited AirAsia XServicesPtyLtd* Unquoted investments,atcost DenotesRM21(2015:RM21). # NotauditedbyPricewaterhouseCoopers,Malaysia * Name Name incorporation Country of incorporation Country of of business/ Principal place Group’s effective Group’s effective Group’s effective Group’s effective equity interest equity interest 2016 2016 100 100 100 100 100 100 49 % % RM’000 2016 2015 2015 0 Dormant 100 Dormant 100 Provisionofaircraftleasingfacilities 100 Provisionofengineleasingfacilities 100 Dormant 100 Provisionofmanagementlogisticaland 100 9Commercialairtransportservices 49 Principalactivities % Principalactivities % ru Company Group 00820,018 20,018 – – marketing services RM’000 2015 RM’000 RM’000 2016 2016 Company ## RM’000 RM’000 2015 2015 Summarised Setoutbelowisthesummarisedfinancialinformationforassociatewhichaccountedusingequitymethod: balance Summarisedfinancialinformationforassociate sheet TAAXisoperatorofcommercialairtransportserviceswhicharebasedinThailand.Thisassociatecompanyastrategic INVESTMENTINANASSOCIATE(CONTINUED) 17 Summarisedstatementofcomprehensiveincome Dividend receivedfromassociate Total comprehensiveincome/(loss) Other comprehensiveincome Profit/(Loss) beforeandaftertax Other income Interest expense Interest income Other operatingexpenses Cost ofsales Revenue Net liabilities Total currentliabilities Other liabilities Financial liabilities Current Assets Non-current Total currentassets Other currentassets Cash andcashequivalents Current geographical marketandnetworkcoverageintheprovisionofairtransportservicesacrossASEANregion. investment oftheCompanyandformanessentialpartCompany’sgrowthstrategy.Theyprovideaccesstoawider 8372 (602,851) (853,702) 0,8 610,651 906,686 RM’000 RM’000 4792 (362,253) (417,972) 7,8 241,534 274,983 3911 (241,373) (379,181) 6,0)(60,932) (67,501) 3,9)(120,880) (38,791) 7504,091 27,540 98858,673 99,828 7,5 182,861 175,155 552 (6,348) (5,502) 18825,867 51,868 9,2)(94,852) (91,121) 2016 2016 ,7 (55,195) (55,195) 7,871 7,871 5 194 350 ANNUAL REPORT 2016 TAAX TAAX –– –– RM’000 RM’000 2015 2015 195 196 Duringthepreviousfinancialyear, impairmentlosseswererecognisedduetotheincurred by thejointventure. IAAXisoperatorofcommercial air transportserviceswhicharebasedinIndonesia.Thisjointventure companyisastrategic There are nocontingentliabilitiesrelatingtotheGroup’sinvestmentinIAAX. IAAXis aprivatecompanyforwhichthereisnoquotedmarketpriceavailableitsshares. 8 INVESTMENTINAJOINTVENTURE 18 Reconciliationofsummarisedfinancialinformation INVESTMENTINANASSOCIATE(CONTINUED) 17 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD Thedetailsofthejointventureareasfollows: TIdnsaArsaEta(IA” Indonesia PT IndonesiaAirAsiaExtra(“IAAX”) cuuae maretlse 5,8)(53,888) (53,888) – 53,888 – 53,888 – – 53,888 (53,888) 53,888 (53,888) (94,852) (3,320) (91,121) (36,337) Accumulated impairmentlosses Group’s shareofpost-acquisitionlosses (4,140) Unquoted investments,atcost (94,852) Carrying valueat31December Unrecognised shareofloss(49%) Interest inassociate(49%) Closing netliabilitiesat31December Effect offoreignexchangetranslation Profit/(Loss) forthefinancialyear Opening netliabilitiesat1January geographical marketandnetwork coverageintheprovisionofairtransportservices acrosstheASEANregion. investment oftheCompany andformanessentialpartoftheCompany’sgrowth strategy.Theyprovideaccesstoawider – cumulativeasat31December – forthefinancialyear Name incorporation Country of of business/ Principal place Group’s effective Group’s effective equity interest 2016 49 % RM’000 2016 2015 9Commercialairtransportservices 49 Principalactivities % ru Company Group –––– RM’000 2015 RM’000 RM’000 09444,850 40,994 2016 2016 ,7 (55,195) 7,871 TAAX 27,045 – –– –– RM’000 RM’000 2015 2015 Summarised Setoutbelowisthesummarisedfinancialinformationforjointventurewhichaccountedusingequitymethod: balance Summarisedfinancialinformationforjointventure sheet INVESTMENTINAJOINTVENTURE(CONTINUED) 18 Summarisedstatementofcomprehensiveincome Dividend receivedfromjointventure Total comprehensiveloss Other comprehensiveincome Loss beforeandaftertax Other income Interest expense Interest income Other operatingexpenses Cost ofsales Revenue Net liabilities Liabilities Non-current Total currentliabilities Other liabilities Financial liabilities Current Assets Non-current Total currentassets Other currentassets Cash andcashequivalents Current 2776 (67,927) (207,766) 6735 (283,089) (627,365) 2561 (145,612) (235,601) RM’000 RM’000 2,2)(111,441) (25,620) 2,2)(19,584) (22,426) 2,3)(77,685) (27,835) 2,9 191,326 623,791 2,6)(108,719) (24,169) 2,1 104,958 124,614 80719,338 28,007 66785,620 96,607 08217,107 50,862 6,1)(29,274) (66,113) 598 (5,727) (5,988) 275 (310) (2,775) ,9 – 2,898 2016 2016 ,5 2,722 1,451 5 216 257 ANNUAL REPORT 2016 –– IAAX IAAX RM’000 RM’000 2015 2015 197 198 9 DERIVATIVEFINANCIALINSTRUMENTS 19 Reconciliationofsummarisedfinancialinformation INVESTMENTINAJOINTVENTURE(CONTINUED) 18 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD Thefullfairvalueofahedgingderivativeisclassifiedasnon-currentassetiftheremainingmaturity ofthehedgeitemi lsn e iblte t3 eebr(613 (29,274) 2,779 (66,113) Commodity derivatives Current (12,670) 76,666 (29,274) Carrying valueat31December Unrecognised shareofloss(49%) Interest injointventure(49%) Closing netliabilitiesat31December Effect offoreignexchangetranslation Loss forthefinancialyear Opening net(liabilities)/assetsat1January As at 31 December 2016, the Group has entered into Singapore Jet Kerosene fixed swap which represents up to 0.35% Asat31December2016,theGrouphasenteredintoSingaporeJetKerosene fixedswapwhichrepresentsupto0.35% Theoutstandingnumberofbarrels ofBrentandfuelderivativecontractsasat31December2016was4,012,809barrels (i) Fuel contracts trading arethosewhichdonotqualifyforhedgeaccounting. more than12monthsand,asacurrentasset,ifthematurityofhedgeditemislessmonths.Derivatives heldfor ahfo egs1652––(107,630) – – 106,582 – cashflowhedges edfrtaig2,5 (7,585) – – 28,153 – heldfortrading – cumulativeasat31December – forthefinancialyear transactions affectstheincome statement. 31 December2016arerecognised intheincomestatementperiodorperiods duringwhichthehedgedforecast exposed to.Gainsandlossesrecognisedinthehedging reserveinequityonBrentandfuelderivativecontractsasof total expectedfuelvolumeforthefinancialyear2017. ThisistohedgeagainstthefuelpriceriskthatGroup entered intoBrentoptionandCrackfixedswapcontracts whichrepresentanadditional77%(2015:4%)oftheGroup’s (2015: 38%)oftheGroup’stotalexpectedfuelvolume forthefinancialyear31December2017.TheGrouphasalso (2015: 2,377,903barrels). RM’000 3,3 (115,215) – – 134,735 Assets 062015 2016 Liabilities Group andCompany RM’000 RM’000 RM’000 2,6)(108,719) (24,169) Assets 75915,706 27,549 18315,706 11,843 2016 –– –– IAAX Liabilities RM’000 RM’000 2015 s 1 RECEIVABLESANDPREPAYMENTS 21 20 INVENTORIES ThenormalcredittermsoftheGroupandCompanyrange from15to30days(2015:days). rpyet 3046,4 30961,528 29,285 27,884 73,019 79,086 29,325 61,541 73,783 28,008 73,034 115,454 79,093 125,187 73,791 (2,754) 115,454 (196) (13,789) 124,786 (746) (2,754) (196) (13,789) 3,985 (746) Prepayments 14,151 Deposits Less: Allowanceforimpairmentofreceivables Other receivables Less: Allowanceforimpairmentofreceivables Trade receivables Beverages, consumablesandin-flightmerchandise (a) Trade receivables Theageinganalysis ofthesetradereceivablesthatarepastduebutnotimpairedisasfollows: Asof31December2016,tradereceivablesfortheGroupandCompanyRM110,056,000(2015:RM32,292,000) Financialassetsthatarepastduebutnotimpaired (ii) TradereceivablesthatareneitherpastduenorimpairedfortheGroupandCompanyofRM13,984,000 Financial assetsthatareneitherpastduenorimpaired (i) oeta 8 as4,4 ,0 3538,601 43,543 8,601 43,543 More than180days ewe 1ad9 as45784457814 6,617 3,782 1,873 10,605 9,315 15,945 4,537 23,978 12,738 6,617 3,782 814 10,605 1,873 15,945 9,315 4,537 23,978 12,738 Between 121and180days Between 91and120days Between 61and90days Between 31and60days Less than30days recent historyofdefault. were pastduebutnotimpaired.Thesedebtsrelatetoanumberofindependentcustomersforwhomthere isno good collectiontrackrecords. RM14,385,000 respectively(2015:GroupandCompany:RM82,966,000),aresubstantiallyfromcompanies with RM’000 RM’000 8,8 8,6 8,3 282,403 285,338 282,463 285,084 2,4 1,5 2,4 115,258 124,441 115,258 124,040 1,5 222100632,292 110,056 32,292 110,056 0027,3 99476,332 59,994 76,339 60,002 2016 2016 ru Company Group ru Company Group RM’000 RM’000 2015 2015 Group andCompany RM’000 RM’000 RM’000 2016 2016 2016 ANNUAL REPORT 2016 RM’000 RM’000 RM’000 2015 2015 2015 199 200 1 RECEIVABLESANDPREPAYMENTS(CONTINUED) 21 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD Other receivables include refunds of value-added tax receivable from the authorities in various countries in which the Otherreceivablesinclude refundsofvalue-addedtaxreceivablefromtheauthoritiesinvariouscountrieswhich (b) Other receivables (a) Trade receivables (continued) As at 31 December 2016, other receivables for the Group and Company of RM22,330,000 (2015: RM23,794,000) Asat31 December2016,otherreceivablesfortheGroupandCompanyofRM22,330,000(2015:RM23,794,000) Financialassetsthatarepastduebutnotimpaired (ii) Otherreceivablesthatareneitherpastduenorimpairedforthe GroupandCompanyofRM37,672,000 Financial assetsthatareneitherpastduenorimpaired (i) Group operates. Movementsontheallowanceforimpairmentoftradereceivablesareasfollows: Theindividuallyimpairedtrade receivablesrelatemainlytodisputedbalanceswithcustomersorfor Thecarryingamountsoftradereceivablesindividuallydeterminedtobeimpairedareasfollows: Financial assetsthatarepast dueandimpaired (iii) ageing analysisoftheseotherreceivablesthatarepast duebutnotimpairedisasfollows: were pastdue.Thesedebtsrelatetoanumberofexternal partieswherethereisnoexpectationofdefault.The companies withgoodcollectiontrackrecords. RM37,664,000 (2015:Group:RM52,545,000,Company:RM52,538,000)respectivelyaresubstantially with t3 eebr761676196 196 More than180days Between 121and180days Between 91and120days 746 196 Between 61and90days Between 31and60days – Less than30days 196 196 550 746 196 – 550 (196) (746) At 31December Allowance forimpairment(Note6) At 1January which managementisoftheviewthatamountsmaynotberecoverable. Less: Allowanceforimpairmentofreceivables More than180days RM’000 2016 ru Company Group RM’000 2015 Group andCompany Group andCompany RM’000 RM’000 RM’000 23023,794 22,330 ,0 5,647 9,200 1555,582 11,515 2016 2016 2016 ,5 502 1,353 4 196 746 6 5,231 262 6,698 134 – – –– RM’000 RM’000 RM’000 2015 2015 2015 1 RECEIVABLESANDPREPAYMENTS(CONTINUED) 21 (b) Other receivables (continued) Thecarrying amounts oftheGroup’s andCompany’s trade andotherreceivables approximate their fairvalues. Depositsincludefundsplacedwith lessorinrespect ofmaintenancetheleasedaircraft. Includedinprepaymentsareadvances madeforpurchasesoffuel,leaseaircraftandmaintenance ofengines. Deposits oftheGroupandCompanyatbalance sheetdatearewithanumberofexternalpartiesforwhich Themaximumexposuretocreditriskatthereportingdateiscarryingvalueofeach classofreceivables Theotherclasseswithin receivablesdonotcontainimpairedassets. Thecurrencyprofileofreceivablesanddeposits(excluding prepayments)isasfollows: Movementsontheallowanceforimpairmentofotherreceivablesareasfollows: Theindividuallyimpairedother receivablesrelatemainlytodisputedbalanceswithcustomersorfor Thecarryingamountsofotherreceivablesindividuallydeterminedtobeimpairedareasfollows: Financial assetsthatarepast dueandimpaired (iii) tes3,9 ,1 4688,119 588 – 1,529 34,698 1,230 310 91,049 8,119 3,522 59,689 588 21,743 – 1,529 34,698 59,901 27,311 1,230 91,049 123,505 3,522 59,736 310 21,743 59,901 2,754 27,042 2,754 there isnoexpectationof default. 123,505 13,789 mentioned above.TheGroupandCompanydonot hold anycollateralassecurity. 2,754 – 2,754 2,754 11,035 13,789 Others 2,754 New ZealandDollar Indian Rupee – Euro Australian Dollar US Dollar Ringgit Malaysia 11,035 (2,754) At 31December (13,789) Allowance forimpairment(Note6) At 1January which managementisoftheviewthatamountsmaynotberecoverable. Less: Allowanceforimpairmentofreceivables More than180days RM’000 RM’000 1,5 2,2 1,1 220,875 212,319 220,922 212,050 2016 2016 ru Company Group ru Company Group RM’000 RM’000 2015 2015 Group andCompany RM’000 RM’000 RM’000 3792,754 13,789 2016 2016 2016 ANNUAL REPORT 2016 –– RM’000 RM’000 RM’000 2015 2015 2015 201 202 The amounts due from/(to) related parties are in respect of trading transactions. The normal credit terms of the Group and Theamountsduefrom/(to)relatedpartiesareinrespectoftradingtransactions.normalcredittermstheGroupand 22 AMOUNTS DUEFROM/(TO)RELATEDPARTIES,ANASSOCIATE,AJOINTVENTURE AND – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD The Group and Company have not made any impairment on these balances as management is of the view that these TheGroupandCompany havenotmadeanyimpairmentonthesebalances asmanagementisoftheviewthatthese Themaximumexposure tocreditriskasatthebalancesheet dateisthecarryingvalueofamountsduefromrelated Thecurrencyprofileofamountsduefromrelatedparties, a jointventure,anassociateandsubsidiaryareasfollows: The ageing analysis of amounts due from related parties, an associate, a joint venture and a subsidiary that are past due Theageinganalysisofamountsduefromrelatedparties,an associate,ajointventureandsubsidiarythatarepastdue Amountsduefromrelatedparties,anassociate,ajointventure,andsubsidiarythat areneitherpastduenorimpairedfor oeta ots107051610705,166 62,105 110,720 103,121 5,166 1,145 62,105 – 110,720 871 103,121 94,108 – 1,145 198,371 15,797 94,108 871 773 34,725 198,371 15,797 – More than6months 34,725 (2,263) Less than6months (1,488) 26,150 – – (45,668) 69,590 (25,879) – – – 55,570 29,330 (45,668) Others US Dollar 112,816 Australian Dollar (25,256) 51,561 Ringgit Malaysia 26,150 – 55,570 30,103 69,590 112,816 51,561 Amounts duetosubsidiaries Amounts duetorelatedparties Amount duefromasubsidiary Amount duefromanassociate Amount duefromajointventure Amounts duefromrelatedparties Company rangefrom30to60days(2015:days). amounts arerecoverableas thereisnohistoryofdefault. parties, anassociate,ajoint venture,andasubsidiarymentionedabove. SUBSIDIARIES but notimpairedisasfollows: the GroupandCompanyamountedtoRM20,126,000(2015:RM44,552,000RM43,779,000)respectively. RM’000 RM’000 RM’000 3,6 1,2 3,6 111,050 233,967 111,823 233,967 111,050 233,967 111,823 233,967 2,5)(568 2,6)(47,931) (27,367) (45,668) (25,256) 1,4 721238167,271 213,841 67,271 213,841 2016 2016 2016 ru Company Group Company Group ru Company Group RM’000 RM’000 RM’000 2015 2015 2015 RM’000 RM’000 RM’000 2016 2016 2016 RM’000 RM’000 RM’000 2015 2015 2015 Forthepurposesofstatementscashflows,andequivalentsincludefollowing: DEPOSITS,CASHANDBANKBALANCES 23 Thecurrencyprofileofamountsduetorelatedparties,anassociateandsubsidiariesareasfollows: 22 AMOUNTS DUEFROM/(TO)RELATEDPARTIES,ANASSOCIATE,AJOINTVENTURE AND The depositswithlicensedbanksoftheGroupandCompany amounting toRM39,615,000(2015:RM58,442,000) are TheGroupandCompany’sweightedaverageeffectiveinterestrateofdepositsatthe balancesheetdateis2.98%(2015: Thecurrencyprofileofdeposits,cashandbankbalancesisasfollows: tes5,5 4655,9 14,658 1,589 3,511 57,890 8,834 14,665 92,039 8,210 19,949 22,338 57,659 1,589 53,261 3,511 13,497 14,517 154,841 92,039 8,834 19,949 22,846 8,210 263,308 53,261 154,841 13,497 16,125 263,547 251,832 58,442 380,790 (58,442) 251,832 252,347 (39,615) 39,615 813 Others 380,790 Euro Indian Rupee 382,406 (58,442) 1,450 Japanese Yen 58,442 252,347 29,484 Chinese Renminbi – (39,615) Australian Dollar US Dollar 39,615 382,406 1,488 Ringgit Malaysia 15,219 16,184 – – 29,484 10,660 14,596 – 16,184 – Cash andcashequivalents Deposits pledgedassecurities 10,660 Deposits withlicensedbanks Cash andbankbalances New ZealandDollar US Dollar Australian Dollar Ringgit Malaysia pledged assecuritiesforbanking facilitiesgrantedtotheGroupandCompany (Note26). 2.77 %)perannum. SUBSIDIARIES (CONTINUED) RM’000 RM’000 RM’000 2,2 1,8 2,0 310,274 420,405 310,789 422,021 310,274 420,405 310,789 422,021 5264,6 73747,931 27,367 45,668 25,256 2016 2016 2016 8 ,4 8 1,349 888 1,349 888 ru Company Group Company Group ru Company Group RM’000 RM’000 RM’000 2015 2015 2015 RM’000 RM’000 RM’000 2016 2016 2016 ANNUAL REPORT 2016 RM’000 RM’000 RM’000 2015 2015 2015 203 204 5 TRADEANDOTHERPAYABLES 25 NON-CURRENTASSETSHELDFORSALE 24 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD Thecurrencyprofileoftradeandotherpayables(excluding aircraftmaintenanceprovision)isasfollows: ThecredittermoftradepayablesgrantedtotheGroupand Companyis0to90days(2015:days). Includedinotherpayablesandaccrualsareoperationalexpensespassengerservicechargespayabletoairport Thenon-currentassetsheldforsalearecertainaircraftequipmentswhichpotentialbuyershavebeenidentified. tes9,9 6389,9 16,358 – 9,013 97,893 28,536 27,723 1,759 7,600 16,358 58,687 46,229 415,258 63,413 9,013 – 97,893 28,536 318,815 27,723 480,746 107,151 7,600 58,687 415,258 1,759 140,236 46,229 64,209 318,815 480,746 107,870 140,258 401,308 251,253 Others 30,837 446,971 Chinese Renminbi Japanese Yen 401,618 Indian Rupee 62,796 626,252 Euro Australian Dollar 251,253 US Dollar 447,457 30,837 Ringgit Malaysia 409,098 626,993 62,796 591,574 409,098 591,574 Other payablesandaccruals Trade payables Current: Other deposits Aircraft maintenanceprovision Non-current: Property, plantandequipment authorities. sale isexpectedtobecompletedbeforetheendof2017. RM’000 RM’000 5,7 3,3 5,7 439,935 654,370 439,935 654,370 7,4 4,7 7,0 848,279 877,505 849,075 878,246 4,4 7,1 4,0 879,116 940,301 879,912 941,042 2016 2016 ru Company Group ru Company Group RM’000 RM’000 2015 2015 Group andCompany RM’000 RM’000 RM’000 271105,116 92,781 2016 2016 2016 RM’000 RM’000 RM’000 2015 2015 2015 Totalborrowingsconsistofthefollowingbankingfacilities: 26 BORROWINGS Themovementinaircraftmaintenanceprovisionisasfollows: TRADEANDOTHERPAYABLES(CONTINUED) 25 Total borrowings Secured: Non-current Secured: Current ae hn1ya n o ae hn5yas8292781,653 832,912 US Dollar Ringgit Malaysia The currencyprofileofborrowings isasfollows: Later than5years Later than1yearandnotlater5years Not laterthan1year The Group’sandCompany’sborrowingsarerepayable asfollows: Floating rateborrowings Fixed rateborrowings – 409,098 409,098 591,574 – 409,098 409,098 182,476 591,574 409,098 409,098 182,476 At 31December Additions duringtheyear At 1January ieprhs .028 633 1,109,577 16 16 952,072 120,120 3.02 199,341 2.80 16 – 208,222 3.17 2.80 3.02 2.80 4.52 3.17 2.80 – – Hirepurchase – Termloans – Hirepurchase – Termloans – Revolvingcredit Weighted averagerate RM’000 2016 2016 ffnneGroupandCompany of finance % ru Company Group RM’000 2015 2015 % Group andCompany ,6,2 1,429,087 1,160,326 ,6,2 1,429,087 1,160,326 1,429,087 1,160,326 ,6,2 1,429,087 1,429,038 1,160,326 1,160,293 RM’000 RM’000 RM’000 5,8 1,109,610 952,088 4,6 755,485 643,362 0,3 319,477 208,238 0,3 319,477 208,238 1,6 673,602 516,964 1,7 327,957 119,176 2016 2016 2016 ANNUAL REPORT 2016 349 33 RM’000 RM’000 RM’000 2015 2015 2015 205 206 27 SHARE CAPITAL Thecarryingamountsandfairvaluesofthefixedrateborrowingsareasfollows: 26 BORROWINGS (CONTINUED) – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD The term loans are for the purchase of new Airbus A330-300 aircraft. The repayment of the term loans is on a quarterly ThetermloansareforthepurchaseofnewAirbusA330-300aircraft.repaymentisonaquarterly Term Therevolvingcreditwasfullyrepaidduringthefinancialyear. loans Therevolvingcreditfacilitywastofinancepre-delivery payments(“PDPs”)inrespectoftheGroup’sandCompany’sfirm Revolving credit Thefairvaluesofthefixedrateborrowingsarebasedoncashflowsdiscountedusingborrowingratesthatreflective facilities Thefairvaluesoffloatingrateborrowingsapproximatestheircarryingamounts,asthe impact ofdiscountingisnot ieprhs 32 955 49 20 33 Hire purchase emlas633962277546726,472 755,436 652,237 643,329 Term loans Total authorised At endoffinancialyear Created duringthefinancialyear At beginningoffinancialyear Ordinary sharesofRM0.15each: Authorised: c Assignmentofairframeandenginewarrantieseachaircraft. (c) Assignmentofinsuranceeachaircraft;and (b) Assignment ofrightsundercontractwithAirbusovereachaircraft; (a) interest ratesofbetween2.82%to5.45%(2015:5.45%)perannum.Thetermloansaresecured bythefollowing: basis over10to12years,withequalprincipalinstalments,atacombinationoffloatingrateLIBOR +0.8%andfixed annum abovethebank’sUSDcostoffunds. repayable upondeliveryoftherelevantaircraftandcarriesinterestrangingfrom3.2%to3.25%(2015: to3.25%)per order ofAirbusA330-300aircraft,withanoptiontoacquireadditionalaircraft.The facilitybecomes rate borrowingsarewithinlevel2ofthefairvaluehierarchy. of theGroupandCompany’screditriskatbalancesheetdate,1.76%(2015:3.83%)perannum.Thefairvaluesfixed significant. Carrying RM’000 4,6 5,5 5,8 726,527 755,485 652,257 643,362 amount 062015 2016 Fair value Group andCompany RM’000 ,0,0 1,000,000 1,000,000 1,000,000 500,000 1,000,000 1,000,000 Group andCompany Carrying RM’000 RM’000 amount 2016 500,000 – Fair value RM’000 RM’000 2015 The shares to be allotted and issued upon any valid exercise of options will, upon such allotment and issuance, rank pari Thesharestobeallottedandissueduponanyvalidexercise ofoptionswill,uponsuchallotmentandissuance,rankpari ThemainfeaturesoftheESOSareasfollows: TheCompanyhadimplementedanESOSwhichentailstheissuanceofuptotenpercent(10%)issuedandpaid-up EMPLOYEESHAREOPTIONSCHEME(“ESOS”) SHARECAPITAL(CONTINUED) 27 On11June2015,theCompany completedarenounceablerightsissueofnewordinarysharesRM0.15eachinthe On27March2015,theauthorisedsharecapitalof theCompanywasincreasedfromRM500,000,000comprising suneo hrsdrn h iaca er–266,666 – Total issuedandfullypaidup At endoffinancialyear Issuance ofsharesduringthefinancialyear At beginningoffinancialyear Ordinary sharesofRM0.15each: Issued andfullypaidup: the dateofallotmentsuchshares.Theoptionsshall notcarryanyrighttovoteatageneralmeetingoftheCompany. dividends, rights,allotmentsand/oranyotherdistributions whichmaybedeclared,madeorpaidtoshareholdersprior passu inallrespectswiththeexistingandissuedshares exceptthatsuchsharessoissuedwillnotbeentitledtoany Theoptions grantedareexercisableintranchesof25%ateachanniversarydategrant. (d) (c) An (c) An TheESOSCommitteedulyauthorisedbytheBoard(andgovernedBy-Laws) may,atitsabsolutediscretion, (b) Themaximumnumberofordinaryshares,whichmaybeallottedpursuanttotheexercise ofoptionsunderthescheme, (a) which wereapprovedbytheshareholderson12October2012. extend forafurtherfive(5)years,subjecttomaximumdurationoften(10)years.TheESOSisgoverned bytheBy-Laws time eligibleemployeesoftheGroup(“ESOSOptions”).ThetenureESOSshallbefive(5)years withanoptionto share capitaloftheCompanyatanyonetimepursuanttoexerciseoptionsbegrantedunder theESOS,tofull- 4,148,148,177 ordinarysharesofRM0.15eachwithasharepremiumRM911,820,644andwarrantreserve ofRM62,222,223. shares. Followingthecompletionofexercise,issuedandfullypaidordinarysharesCompanyconsists RM0.15 eachwereissuedduringthefinancialyear.Thesenewordinarysharesrankparipassuwithexisting Company togetherwithfreedetachablewarrantsforworkingcapitalpurpose.Asaresult,1,777,777,790ordinarysharesof 3,333,333,333 ordinarysharestoRM1,000,000,000comprising6,666,666,667shares. lapse andbenullvoid. acceptance ofthatoffer.Ifofferisnotaccepted in suchmanner,theoffershall,uponexpirydate,automatically completed prescribedacceptanceformaccompanied bythepaymentofsumRM1.00asaconsiderationfor relevant authorities. the listingrequirementsofBursaMalaysia,By-Lawsandanylaws,regulationsguidelinesissued byother number ofnewsharesissuedundertheESOSOptionsgrantedshallnotexceedmaximumpermitted under offer suchnumberofESOSOptionstotheeligibleemployeesduringsubsistenceESOS,provided thatsuch the durationofscheme. shall notexceedtenpercent(10%)oftheissuedandpaid-upsharecapitalCompanyatanypoint in timeduring eligible employeewhoacceptsanofferofESOSOptionmustreturn,onorbeforetheexpirydate, theduly Group andCompany RM’000 2,2 622,222 622,222 622,222 355,556 622,222 622,222 2016 ANNUAL REPORT 2016 RM’000 2015 207 208 The amount recognised in the financial statements (Note 5) for all employees arising from the ESOS to the Group and Theamountrecognisedinthefinancialstatements(Note5)forallemployeesarisingfromESOStoGroupand Volatilityismeasuredovera4-yearperiodtoincreasethe credibilityofassumption. 28 OTHER RESERVES The fair value as at the grant date of share options was determined using the Black Scholes valuation model, taking into ThefairvalueasatthegrantdateofshareoptionswasdeterminedusingBlackScholesvaluation model,takinginto Outofthe3,770,663outstandingoptions(2015:3,976,148options),2,920,6633,076,148options) SetoutbelowaredetailsofoptionsovertheordinarysharesCompanygrantedunderESOS: EMPLOYEESHAREOPTIONSCHEME(“ESOS”)(CONTINUED) SHARECAPITAL(CONTINUED) 27 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD t3 eebr21 1760 ,7 (105,556) (107,071) 2,074 559 (6,478) (107,630) – (107,630) (6,478) At 31December 2015 Amounts transferredtoincome statement Net changeinfairvalue At 1January2015 t3 eebr21 0,8 ,5 109,140 2,558 106,582 At 31December2016 mut rnfre oicm ttmn 0,3 107,630 – 107,630 Amounts transferredtoincomestatement e hnei arvle165244107,066 484 106,582 Net changeinfairvalue arvleo pina aeo rn R)04 0.41 0.41 Fair valueofoptionatdategrant(RM) Exercise priceofoption(RM) Share priceatdateofgrant(RM) Expected lifeofoption(years) Risk-free interestrate(%) Expected volatility(%) t1Jnay21 1760 ,7 (105,556) 2,074 (107,630) At 1January2016 Group andCompany Company areRM484,000(2015:RM559,000). account thetermsandconditionsuponwhichoptionsweregranted.Theinputstomodelused were asfollows: were exercisableasattheendofreportingperiod. uy21 1Otbr21 .9 ,5 8*–(,5)3,976 (2,355) – 3,771 (205) 181* – 6,150 – 0.99* 11October2017 3,976 Theexercisepriceoftheoptionsandnumber grantedwereadjustedasaresultoftherightsissueexerciseon11 * 0.99* 1 July2013 11October2017 1 July2013 rn aeExpirydate Grant date rn aeExpirydate Grant date RM/share RM/share Exercise Exercise price price 1.1.2016 1.1.2015 ’000 ’000 At At Adjustment Adjustment Cash flow RM’000 reserve hedge ,7 ,1 7,993 1,515 6,478 ’000 ’000 Share option Exercised Exercised RM’000 reserve ’000 ’000 39 33.97 33.97 062015 2016 June 2015. .43.84 3.84 .51.25 1.25 1.25 1.25 44 Forfeited Forfeited RM’000 ’000 ’000 Total 31.12.2016 31.12.2015

’000 ’000 At

At Therelatedparties of theCompanyandtheirrelationshipsat31December2016areasfollows: Inadditiontorelatedpartydisclosures mentionedelsewhereinthefinancialstatements,setoutbelowareothersignificant SIGNIFICANTRELATEDPARTYTRANSACTIONS 30 29 COMMITMENTS AirAsia Berhad Shareholder of the Company for which there is no control, significant influence or joint Shareholder oftheCompanyforwhichthereisnocontrol,significant influenceorjoint CommonDirectors andshareholders CaterhamJet GlobalLtd JointVenture Associate AirAsia Berhad PT IndonesiaAirAsiaExtra Subsidiary Subsidiary Thai AirAsiaXCo.,Ltd AirAsia XMauritiusOneLtd AirAsia XServicesPtyLtd Thefutureminimumleasepaymentsandsubleasereceiptsundernon-cancellableoperatingleasesareasfollows: Non-cancellableoperatingleases (b) Includedincapitalcommitmentsasat31December2016isthepurchaseofAirbusA330andA350aircraftover related partydisclosures. a Capitalcommitmentsnotprovidedforinthefinancialstatementsareasfollows: (a) The Group leases various aircraft and engines under non-cancellable operating lease agreements. The lease terms are TheGroup leasesvariousaircraftandenginesundernon-cancellableoperatingleaseagreements.Thetermsare aeo opne Relationship Name ofCompanies ae hn5yas383969472470641,214,852 4,700,684 954,762 3,893,976 Later than5years ae hn1ya n o ae hn5yas4045612152390001,206,650 3,920,000 1,261,582 4,094,546 Later than1yearandnotlater5years o ae hn1ya ,2,1 1,9 8,1 293,769 987,113 315,396 1,024,614 Not laterthan1year Property, plantandequipment–approvedcontractedfor: next 12years. between 10to12years. – Laterthan5years ae hn1ya n o ae hn5yas3,8,4 19,064,614 30,289,045 – Laterthan1yearandnotlater5years – Notlaterthan1year control; commonDirectors andshareholders payments minimum ,1,3 ,3,4 ,0,9 2,715,271 9,607,797 2,531,740 9,013,136 RM’000 Future lease 062015 2016 minimum sublease Group andCompany receipts RM’000 Future 1,9,0 113,906,660 119,092,201 8831694,842,046 88,803,156 payments minimum Group andCompany RM’000 RM’000 Future lease 2016 ANNUAL REPORT 2016 –– minimum sublease receipts RM’000 RM’000 Future 2015 209 210 TherelatedpartiesoftheCompanyandtheirrelationshipsat31December2016areasfollows(continued): SIGNIFICANTRELATEDPARTYTRANSACTIONS(CONTINUED) 30 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD Key management personnel are categorised as head or senior management officers of key operating divisions within the Keymanagementpersonnelarecategorisedasheadorseniorofficersofkeyoperatingdivisionswithinthe Allrelatedpartytransactionswerecarriedoutonagreedterms andconditions. a Income: (a) ueIsrneMlyi ehd CommonDirectors andshareholders CommonDirectorsandshareholders CommonDirectorsandshareholders CommonDirectors andshareholders CommonDirectorsandshareholders CommonDirectorsandshareholders – TuneInsuranceMalaysiaBerhad CommonDirectorsandshareholders CommonDirectorsandshareholders – TuneProtectReLtd(formerlyknownasGenReLtd) Commonshareholders Other relatedentities CommonDirectorsandshareholders CommonDirectorsandshareholders – TPAAYAsiaSdnBhd(formerlyknownasTuneMoneyBhd) CommonDirectorsandshareholders – ThinkBigDigitalSdnBhd – RokkiSdnBhd(formerlyknownasTuneBoxBhd) – AirAsiaGlobalSharedServicesSdnBhd Subsidiaries ofAirAsiaBerhad CommonDirectorsandshareholders – AsianAviationCentreofExcellenceSdnBhd CommonDirectorsandshareholders Joint ventureofAirAsiaBerhad – AAETravelPteLtd – AirAsia(India)PvtLtd – PhilippinesAirAsiaInc(formerlyknownasZestAirwayInc) – PhilippinesAirAsia(formerlyknownasInc) – AirAsiaJapanCo.Ltd – PTIndonesiaAirAsia – ThaiAirAsiaCo.,Ltd Associates ofAirAsiaBerhad Group andCompany.ThekeymanagementcompensationisdisclosedinNote30(g)below. aeo opne Relationship Name ofCompanies Management fees chargedto Commission ontravelinsurance forpassengers Provision ofcarriedpassengerservicesto Aircraft operatingleaseincomeforleasedaircraft TIdnsaArsa159131–– – 16,542 5,211 10,940 1,361 – – 3,920 42,867 1,509 179,025 16,542 10,940 5,211 – 94,989 329,402 – 42,867 3,920 110,732 – 179,025 94,989 329,402 – 110,732 – PTIndonesia AirAsia – TuneInsuranceMalaysia Berhad charged to – ThaiAirAsiaXCo.,Ltd – AirAsiaBerhad – ThaiAirAsiaXCo.,Ltd – PTIndonesiaAirAsiaExtra – AAXMauritiusOneLimited RM’000 2016 ru Company Group RM’000 2015 RM’000 2016 RM’000 2015 0 SIGNIFICANTRELATEDPARTYTRANSACTIONS(CONTINUED) 30 e Receivables: (e) Premiumcollectedontravelinsurancefor (d) Othercharges: (c) Recharges: (b) Shared servicemanagementfeechargedby Charter airtravelserviceschargedby In-flight entertainmentsystemandsoftwareexpense Training serviceschargedby Brand licensefeechargedby Management feeschargedby Recharges ofexpensesby Recharges ofexpensesto TIdnsaArsa–958–9,548 – 26,150 69,590 9,548 – – (20,843) – (2,536) (15,681) (6,386) (3,827) (2,481) (20,843) (6,606) (15,681) (2,536) (8,530) (5,126) (6,386) (3,983) (8,530) (3,827) (2,481) – PhilippinesAirAsia(including (6,606) – – PTIndonesiaAirAsia (6,836) – – AAXMauritiusOneLimited (8,530) (5,126) 1,884 (13,214) – (841) (8,530) – TuneInsuranceMalaysiaBerhad (7,833) passengers paidto: (604) – (11,032) 2,598 3,663 (65,640) – – – AirAsiaGlobalSharedServicesSdnBhd (13,214) – 1,819 5,835 (7,833) 979 1,884 – CaterhamJetGlobalLtd 3,784 (11,032) 2,082 (841) (65,640) – RokkiSdnBhd 10,370 1,271 (604) charged by – 2,598 3,663 3,260 – AsianAviationCentreofExcellenceSdnBhd 1,819 5,835 979 3,784 – AirAsiaBerhad 2,082 10,370 1,271 – AirAsiaXServicesPtyLtd 3,260 – AirAsia(India)PvtLtd – AirAsiaJapanCo.,Ltd. – AirAsiaBerhad – PhilippinesAirAsia – PhilippinesAirAsiaInc – ThaiAirAsiaCo.,Ltd – ThaiAirAsiaXCo.,Ltd – PTIndonesiaAirAsiaExtra – PTIndonesiaAirAsia tes1297381296,565 1,229 1,513 4,431 7,338 34,719 6,751 1,229 1,513 4,431 34,719 6,751 – Others – AirAsia(India)PvtLtd – AirAsiaBerhad hiArsaXC. t 9502,5 – 55,570 – 112,816 26,150 55,570 69,590 112,816 – PTIndonesiaAirAsiaExtra – ThaiAirAsiaXCo.,Ltd n)8827238827,273 8,862 7,273 8,862 Inc) RM’000 3,6 1,2 3,6 111,050 233,967 111,823 233,967 2016 ru Company Group RM’000 2015 RM’000 2016 ANNUAL REPORT 2016 RM’000 2015 211 212 The Group and Company also seek to ensure that the financial resources that are available for the development of the TheGroupandCompanyalsoseektoensurethatthefinancialresources thatareavailableforthedevelopmentof TheBoardofDirectorsisresponsibleforsettingtheobjectivesandunderlying principlesoffinancialriskmanagementfor TheGroup’sandCompany’sfinancialriskmanagementpoliciesseektoensurethatadequateresourcesare FINANCIAL RISKMANAGEMENTPOLICIES 31 SIGNIFICANTRELATEDPARTYTRANSACTIONS(CONTINUED) 30 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD Included in the key management compensation is Executive Director’s remuneration as disclosed in Note 5 to the financial IncludedinthekeymanagementcompensationisExecutiveDirector’sremunerationasdisclosed inNote5tothefinancial g Keymanagementcompensation: (g) Payables: (f) interest rate,foreigncurrencyexchange,credit,liquidity andcashflowrisks. Group’s andCompany’sbusinessesareconstantly monitored andmanagedvis-a-visitsongoingexposuretofuelprice, regularly toreflectchangesinthemarketcondition,andGroup’sCompany’sactivities. measurement, exposurelimitsandriskmanagementstrategies.Riskpoliciesprocedures arereviewed the GroupandCompany.Themanagementteamthenestablishesdetailedpoliciessuchasrisk identification and minimise theeffectsofsuchvolatilityontheirfinancialperformance. Company operatewithindefinedguidelinesthatareapprovedandreviewedperiodicallybytheBoard ofDirectorsto price risk,interestrateriskandforeigncurrencyexchangerisk),creditliquiditycashflowrisk. TheGroupand available forthedevelopmentofGroup’sandCompany’sbusinesseswhilstmanagingtheirmarket risk (includingfuel statements. es667166721 636 721 891 1,540 636 2,773 1,007 4,538 7,863 – 727 1,450 891 – 2,415 9,643 1,058 30,030 1,488 2,773 1,504 2,552 1,007 4,538 7,863 1,307 5,806 – – 2,676 2,415 – 9,643 30,030 1,058 6,454 2,552 – 5,806 881 1,307 4,224 2,676 – fees – definedcontributionplan – basicsalaries,bonusandallowances 5,483 6,454 4,224 – Others – PhilippinesAirAsiaInc – CaterhamJetGlobalLtd 5,483 – AirAsiaXServicesPtyLtd – ThaiAirAsiaCo.,Ltd – PTIndonesiaAirAsia – TuneInsuranceMalaysiaBerhad – RokkiSdnBhd – AsianAviationCentreofExcellenceSdnBhd RM’000 5264,6 73747,931 27,367 45,668 25,256 1269451,8 9,475 11,286 9,475 11,286 2016 ru Company Group RM’000 2015 RM’000 2016 RM’000 2015

Thepoliciesinrespectofthemajorareastreasuryactivitiesareasfollows: FINANCIALRISKMANAGEMENTPOLICIES(CONTINUED) 31 Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes Marketriskisthethatfairvalueorfuturecashflowsofafinancialinstrumentwillfluctuatebecausechanges (a) Market risk As at 31 December 2016, if USD denominated barrel had been USD5 higher/lower with all other variables held Asat31December2016, ifUSDdenominatedbarrelhadbeenUSD5higher/lowerwithallothervariablesheld Duringthefinancialyearended31December2016,GroupandCompanyenteredintoSingaporeJetKerosene TheGroupandCompanyareexposedtojetfuelpriceriskarisingfromthefluctuationsinpricesoffuel. Fuelpricerisk (i) on risk. management istomanageandcontrolmarketriskexposurewithinacceptableparameterswhileoptimisingthereturn in marketpricessuchasforeigncurrencyexchangerates,jetfuelandinterestrates.Theobjectiveofrisk At 31 December 2016, if interest rate on USD denominated borrowings had been 60 basis points higher/lower with At31December2016,ifinterestrateonUSDdenominatedborrowingshadbeen60basispointshigher/lower with Inviewofthesubstantialborrowings takentofinancetheacquisitionofaircraft,Group’sandCompany’s Cashflowinterestrateriskisthethatfuturecashflowsofafinancialinstrumentwillfluctuatebecause (ii) Interest rate risk constant, theimpactonpost-taxprofitandequityforyearendaretabulatedbelow: and fuelcontractsoutstandingasat31December2016. fixed swap,BrentoptionandCrackswapcontracts.Therewere4,012,809barrels(2015:2,377,903barrels)of in OperatingExpenses. when therisktransferstoGroupandCompanyuponconsumptionoffuel,within“Aircraftfuelexpenses” which iscontractedandmanagedbytherelatedparty.Anygainorlossarisingfromfuelhedgingrecognised The GroupandCompanyrelyonarelatedpartyforcertaintreasuryactivities,includinghedgingoffuelprice, all othervariablesheldconstant,theimpacton post-tax profitforthefinancialyeararetabulatedbelow: reputable financialinstitutionsatthemostfavourableinterestrate. arises fromtheGroup’sandCompany’sfloatingrateborrowingsdeposits.Surplusfundsareplaced with income andoperatingcashflowsarealsoinfluencedbychangesinmarketinterestrates.Interestrate exposure will fluctuateduetochangesinmarketinterestrates. changes inmarketinterestrates.Fairvaluerateriskisthethatfairofafinancialinstrument mato ottxpois(,3)358(,9)3,497 (3,497) 3,538 (3,538) (3,081) Impact onposttaxprofits 2,515 (38,811) 424 38,811 (8,727) (66,499) 76,857 Impact onothercomprehensiveincome Impact onposttaxprofits RM’000 RM’000 +60bps +USD5 062015 2016 062015 2016 RM’000 RM’000 –60bps –USD5 RM’000 RM’000 +60bps +USD5 ANNUAL REPORT 2016 RM’000 RM’000 –60bps –USD5

213 214 1 FINANCIALRISKMANAGEMENTPOLICIES(CONTINUED) 31 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD a Marketrisk(continued) (a) TheGroup’scurrencyexposureisasfollows: Asat31 December2016,ifRMhadweakened/strengthenedby5%againsttheUSDwithallothervariablesheld ApartfromRinggitMalaysia(“RM”),theGroupandCompanytransactbusinessinvariousforeigncurrencies Foreign currencyrisk (iii) e xoue(0,3)(473 542 057(083 3,9)(22,446) (34,295) (30,823) 10,597 (5,482) (64,703) (808,232) Net exposure Financial liabilities Financial assets Includescurrencyexposureforotherdepositsthatarefinancialassetsonly. * risk oftheGroupandCompanyisnotmaterialhence,sensitivityanalysispresented. (2015: RM5.4million)higher/lowerduetothecashflowhedginginUSD.Theexposureotherforeigncurrency receivables andborrowings.Similarly,theimpactonothercomprehensiveincomewouldhavebeenRM6.7million RM42.6 million)lower/higher,mainlyasaresultofforeignexchangelosses/gainsontranslationUSDdenominated constant, post-taxprofitforthefinancialyearGroupandCompanywouldhavebeenRM40.4million(2015: possible byintragrouparrangementsandsettlements. currency payablesarematchedagainstreceivablesdenominatedinthesameforeigncurrency,orwhenever risk. Theseexposuresaremanaged,totheextentpossible,bynaturalhedgesthatarisewhenpaymentsforforeign firm orderofAirbusA330-300aircraft.Therefore,theGroupandCompanyareexposedtocurrencyexchange 26), mainlytofinancethepurchaseofaircraftandpre-deliverypaymentsinrespectGroup’sCompany’s (“RMB”) andJapaneseYen(“JPY”).Inaddition,theGroupCompanyhavesignificantborrowingsinUSD(Note including UnitedStatesDollar(“USD”),Australian(“AUD”),EURO,IndianRupee(“INR”),ChineseRenminbi orwns1,160,293 Borrowings Amounts dueto Trade andother Derivative financial Derivative financial Deposits, cash and Deposits, cashand Amounts duefrom te eois*439,293 Other deposits* eevbe 1732,4 ,3 ,2 ,0 61216,917 16,182 1,909 3,522 1,230 27,042 21,743 Receivables At 31December2016 aals407617807601794,2 86797,893 58,687 46,229 1,759 7,600 107,870 14,596 480,746 related parties payables ntuet 134,735 instruments on etr 9,7 871 – 57,659 – 8,210 – 13,497 8,834 – 888 16,125 – 53,261 198,371 bank balances joint venture associate, anda related parties,an ,5,3 0,7 ,0 ,5 6295,8 97,893 58,687 46,229 1,759 7,600 107,870 1,655,635 4,0 3172181,5 5462,9 75,447 24,392 15,406 12,356 2,118 43,167 847,403 RM’000 USD RM’000 AUD –––––– –––––– –––––– –––––– RM’000 EURO RM’000 INR RM’000 RMB RM’000 JPY RM’000 Others 1 FINANCIALRISKMANAGEMENTPOLICIES(CONTINUED) 31 a Marketrisk(continued) (a) TheCompany’scurrencyexposureisasfollows: TheGroup’scurrencyexposureisasfollows:(continued) Foreign currencyrisk(continued) (iii) e xoue(,6,2)1,4 706 ,1 508 2,4)1,311 (21,441) (5,098) 3,118 (7,076) 19,146 (1,268,624) Net exposure Financial liabilities e xoue(0,5)(681 542 057(083 3,9)(22,215) (34,295) (30,823) 10,597 (5,482) (66,811) (808,855) Net exposure Financial liabilities Financial assets Financial assets Includes currency exposureforother deposits thatarefinancialassets only. * Includescurrencyexposureforotherdepositsthatarefinancialassetsonly. * Derivative financial Derivative financial orwns1,429,03 Borrowings Amounts due to Amounts dueto Trade and other Trade andother Trade and other Trade andother te eois*443,17 Other deposits* orwns1,160,293 Borrowings Amounts dueto Derivative financial Derivative financial Deposits, cash and Deposits, cashand te eois*4923–––––– – – – – – 439,293 Other deposits* Deposits, cashand Amounts duefrom Amounts due from Amounts duefrom eevbe 1095,3 8 ,2 ,3 ,8 3,004 3,584 1,531 1,529 588 59,736 91,049 Receivables eevbe 1732,1 ,3 ,2 ,0 61216,917 16,182 1,909 3,522 1,230 27,311 21,743 Receivables At 31December2015 At 31December2016 ntuet 115,21 instruments eae ate 29,48 related parties aals45286,0 ,1 7732,3 16,358 28,536 27,723 – 9,013 64,209 415,258 payables aals407617117601794,2 86797,893 58,687 46,229 1,759 7,600 107,151 480,746 payables usdais1,1 1,48 15,219 subsidiaries related partiesand ntuet 3,3 – – – – – – 134,735 instruments akblne 2092,4 ,4 ,8 99935114,665 3,511 19,949 1,589 1,349 22,846 92,039 bank balances usday1831–––––871 – – 57,890 8,210 – 13,497 8,834 – 888 – 14,517 53,261 198,371 bank balances subsidiary joint ventureanda related parties,a on etr 41873––115–– – 1,145 – – 773 94,108 joint venture associate, anda related parties,an ,8,9 429903–2,2 85616,358 28,536 27,723 – 9,013 64,209 1,988,995 ,5,5 0,3 ,0 ,5 6295,8 97,893 58,687 46,229 1,759 7,600 108,639 1,656,258 4,0 1882181,5 5462,9 75,678 24,392 15,406 12,356 2,118 41,828 847,403 RM’000 RM’000 2,7 3351973182,2 ,9 17,669 7,095 22,625 3,118 1,937 83,355 720,371 USD USD 4–––––– 8–––––– 5–––––– 5–––––– RM’000 RM’000 AUD AUD 8––––– –––––– RM’000 RM’000 EURO EURO RM’000 RM’000 INR INR RM’000 RM’000 RMB RMB RM’000 RM’000 ANNUAL REPORT 2016 JPY JPY RM’000 RM’000 Others Others

215 216 1 FINANCIALRISKMANAGEMENTPOLICIES(CONTINUED) 31 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD a Marketrisk(continued) (a) TheGroupandCompany generallyhavenoconcentrationofcreditriskarisingfromtradereceivables. Creditriskrelatingtoreceivablesisminimisedbyregularmonitoring and,inaddition,creditriskiscontrolledasthe TheGroup’sandCompany’s exposuretocreditriskortheofcounterpartiesdefaultingarisesmainlyfromvarious CreditriskistheoffinanciallosstoGroupandCompanyifacustomerorcounterparty (b) Credit risk financial institutionsisremoteonthebasisoftheir strengthandsupportoftheirrespectivegovernments. reputable parties.TheDirectorsareoftheviewthat thepossibilityofnon-performancebymajoritythese majority oftheGroup’sandCompany’sdeposits bankbalancesareplacedwithmajorfinancialinstitutionsand procedures. the riskofcounterpartiesdefaulting,iscontrolledbyapplicationcreditapprovals,limitsand monitoring to creditriskisrepresentedbythetotalcarryingamountsofthesefinancialassetsinbalancesheet. Credit risk,or deposits andbankbalances,receivables.AstheGroupCompanydonotholdcollateral,maximum exposure from customers,cashandequivalentsfinancialassets(derivativeinstruments). instrument failstomeetitscontractualobligationsandarisesprincipallyfromtheGroup’sCompany’s receivables TheCompany’scurrencyexposureisasfollows:(continued) Foreign currencyrisk(continued) (iii) e xoue(,6,2)1,6 706 ,1 508 2,4)491 (21,441) (5,098) 3,118 (7,076) 17,164 (1,268,624) Net exposure Financial liabilities Financial assets Includescurrencyexposureforotherdepositsthatarefinancialassetsonly. * Derivative financial Derivative financial orwns1,429,03 Borrowings Amounts due to Amounts dueto Trade and other Trade andother te eois*443,17 Other deposits* Deposits, cash and Deposits, cashand Amounts due from Amounts duefrom eevbe 1095,8 8 ,2 ,3 ,8 3,004 3,584 1,531 1,529 588 59,689 91,049 Receivables At 31December2015 ntuet 115,21 instruments usdais2,8 ,5 813 – – – – 1,450 29,484 subsidiaries related partiesand aals45286,1 ,1 7732,3 16,358 28,536 27,723 – 9,013 63,413 415,258 payables akblne 2092,3 ,4 ,8 99935114,658 3,511 19,949 1,589 1,349 22,338 92,039 bank balances usday94,10 subsidiary joint ventureanda related parties,a ,8,9 483903–2,2 85617,171 28,536 27,723 – 9,013 64,863 1,988,995 RM’000 2,7 2071973182,2 ,9 17,662 7,095 22,625 3,118 1,937 82,027 720,371 USD 8–––––– 8––– 5–––––– 5–––––– RM’000 AUD RM’000 EURO RM’000 INR RM’000 RMB ,4 – – 1,145 RM’000 JPY RM’000 Others 1 FINANCIALRISKMANAGEMENTPOLICIES(CONTINUED) 31 The table below analyses the Group’s and Company’s financial liabilities into relevant maturity groupings based on the ThetablebelowanalysestheGroup’sandCompany’sfinancialliabilitiesintorelevant maturitygroupingsbasedonthe TheDirectorsarecommittedtoensuringthattheGroupandCompanywillhavesufficientfundsenable WhilsttheGroup’sand Company’scurrentliabilitiesexceededtheirassetsbyRM642,595,000and TheGroup’sandCompany’spolicyonliquidityriskmanagementistomaintainsufficientcashequivalents Liquidityandcashflowrisk (c) ieprhs 91 9– 19 451,547 337,398 – 19 632,726 19 – 229,627 236,446 120,86 849,075 45,66 Amounts duetorelatedparties Trade andotherpayables Hire purchase Revolving credit Term loans At 31December2015 mut u orltdpris2,5 – – – 25,256 Amounts duetorelatedparties rd n te aals8826––439,935 – – 878,246 Trade andotherpayables ieprhs 91 – – 19 19 Hire purchase emlas200023035890212,296 568,960 233,033 240,080 Term loans At 31December2016 are thecontractualundiscountedcashflows. remaining periodatthebalancesheetdatetocontractualmaturitydate.Theamountsdisclosedintablebelow renounceable rightsissueexerciseon11June2015,asdisclosedinNote27tothefinancialstatements. operations. Thisincludesraisingfundsfromthemarket,asevidencedsuccessfulcompletionof and Companytomeettheirliabilitiesastheyfallduecarryonbusinesswithoutsignificantcurtailmentof future operatingprofitsandcashflows. and dischargetheirliabilitiesinthenormalcourseofbusinessthatfinancialpositionwillbeimprovedthrough their cashflowrequirements.TheDirectorsbelievethattheGroupandCompanyareabletorealiseassets Group andtheCompanywillhavesufficientcashflowsfornexttwelvemonthsfromreportingdatetomeet RM645,481,000 (2015:RM1,186,057,000andRM1,189,005,000)respectively,theDirectorsareofviewthat requirements. to haveavailablefundingthroughadequateamountsofcommittedcreditfacilitiesandlinesforworkingcapital Group Under 1year ,5,6 2,4 3,4 788,945 632,745 229,646 1,252,068 ,4,0 3,5 6,6 652,231 568,960 233,052 1,143,601 RM’000 0––– 8––– 1-2 years RM’000 2-5 years RM’000 ANNUAL REPORT 2016 Over 5years RM’000

217 218 1 FINANCIALRISKMANAGEMENTPOLICIES(CONTINUED) 31 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD c Liquidityandcashflowrisk(continued) (c) The table below analyses the Group’s and Company’s derivative financial instruments for which contractual maturities Thetable belowanalysestheGroup’sandCompany’sderivativefinancialinstrumentsforwhichcontractualmaturities ieprhs 91 9– 19 451,547 337,398 – 19 632,726 19 – 229,627 236,446 2,26 120,86 848,279 45,66 Amounts duetosubsidiaries Amounts duetorelatedparties Trade andotherpayables Hire purchase Revolving credit Term loans At 31December2015 mut u osbiire ,8 – – – 1,488 Amounts duetosubsidiaries mut u orltdpris2,7 – – – 25,879 Amounts duetorelatedparties rd n te aals8755––439,935 – – 877,505 Trade andotherpayables rdn 5,71 108,08 Hedging Trading Net-settled derivatives At 31December2015 ieprhs 91 – – 19 19 Hire purchase egn – – – – Hedging emlas200023035890212,296 568,960 233,033 240,080 Term loans At 31December2016 rdn – – – – Trading Net-settled derivatives At 31December2016 the contractualundiscountedcashflows. remaining periodfromthebalancesheetdatetocontractualmaturitydate.Theamountsdisclosedin thetableare are essentialforanunderstandingofthetimingcashflowsintorelevantmaturitygroupings based onthe Company Group andCompany Under 1year Less than ,5,3 2,4 3,4 788,945 632,745 229,646 1,253,535 ,4,7 3,5 6,6 652,231 568,960 233,052 1,144,971 RM’000 RM’000 1 year 0––– 8––– 8––– 3––– 3––– 1-2 years 1-2 years RM’000 RM’000 2-5 years 2-5 years RM’000 RM’000 Over 5years Over 5years RM’000 RM’000 1 FINANCIALRISKMANAGEMENTPOLICIES(CONTINUED) 31 The Group’s and Company’s overall strategy remained unchanged from 2015. The gearing ratio as at 31 December 2016 TheGroup’sandCompany’soverallstrategyremainedunchanged from2015.Thegearingratioasat31December2016 Consistentwithothersintheindustry,Groupmonitorscapitalonbasisofgearingratio.Thisratiois Inordertomaintainoradjustthecapitalstructure, theGroupmayadjustamountofdividendspaidtoshareholders, TheGroup’sobjectiveswhenmanagingcapitalaretosafeguardtheabilitycontinueasagoingconcernin Capitalriskmanagement (d) The Group’s financial instruments are measured in the balance sheet at fair value. Disclosure of fair value measurements TheGroup’sfinancialinstruments aremeasuredinthebalancesheetatfairvalue.Disclosureofvaluemeasurements Determinationoffairvalueand fairvaluehierarchy Thecarryingamountsofcashandequivalents,tradeothercurrentassets, andtradeothercurrent (e) Fair value measurement The Group and the Company are in compliance with all externally imposed capital requirements for the financial years TheGroupandtheCompanyareincompliancewithallexternallyimposedcapitalrequirementsforfinancialyears ern ai 24 51 21 64.5% 42.1% 1,826,132 65.1% 1,177,255 1,853,553 779,536 42.4% 1,808,547 1,176,740 1,834,805 777,920 1,429,087 1,160,326 (251,832) 1,429,087 1,160,326 (380,790) (252,347) Gearing ratio (382,406) Total capital Total equityattributabletoholdersofthe Net debt Less: Cashandcashequivalents(Note23) Total borrowings(Note26) and 2015wereasfollows: is calculatedas‘equity’shownintheGroupandCompany’sbalancesheetsplusnetdebt. current borrowings”asshownintheGroupandCompany’sbalancesheets)lesscashequivalents.Totalcapital calculated asnetdebtdividedbytotalcapital.Netisborrowings(including“currentandnon- return capitaltoshareholders,issuenewsharesorsellassetsreducedebt. to reducethecostofcapital. order providereturnsforshareholdersandbenefitsotherstakeholderstomaintainanoptimalcapitalstructure • Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level Inputsfortheassetorliability thatarenotbasedonobservablemarketdata(that is,unobservableinputs)(Level • Inputsotherthan quotedpricesincludedwithinLevel1thatareobservable fortheassetorliability,eitherdirectly • Quoted prices(unadjusted)inactivemarketsforidentical assetsorliabilities(Level1); • are bylevelofthefollowingfairvaluemeasurement hierarchy: statements. The fairvaluesofotherclassesfinancialassets andliabilitiesaredisclosedintherespectivenotestofinancial liabilities approximatetheirrespectivefairvaluesdue totherelativelyshort-termmaturityofthesefinancialinstruments. management remainsunchanged. the Companyarenotindefaultofanyborrowings.TheGroup’sandCompany’soverallstrategyfor capitalrisk year. Intheeventofabreach,Groupwillseekindulgencesfromrespectivebankstoensurethat Groupand are enforcedannually,theGroupmonitorscompliancewithfinancialcovenantratiosatendof each financial year ended31December2015.Thesaidborrowingfacilitywasfullysettledduringthefinancialyear.As the covenants indulgences totheGroupandCompanyfromhavingcomplywithfinancialcovenantratiosfor thefinancial ratio covenantsforoneborrowingfacilitytotallingRM120millionasat31December2015.Thelender hadgranted ended 31December2016and2015,exceptthattheGroupCompanydidnotmeetcertain financial ru n opn ,5,8 3,0 ,7,1 648,877 1,074,017 631,807 1,056,885 Group andCompany 3). (that is,asprices)orindirectly (thatis,derivedfromprices)(Level2); RM’000 2016 ru Company Group RM’000 2015 RM’000 2016 ANNUAL REPORT 2016 RM’000 2015 219 220 32 FINANCIAL INSTRUMENTS FINANCIALRISKMANAGEMENTPOLICIES(CONTINUED) 31 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD ThefollowingtablepresentstheGroupandCompany’sassetsliabilitiesthataremeasuredatfairvalue. Fairvaluemeasurement(continued) (e) a Financialinstrumentsbycategory (a) Where fair value is determined using unquoted market prices in less active markets or quoted prices for similar assets Wherefairvalueisdeterminedusingunquoted marketpricesinlessactivemarketsorquotedforsimilarassets oa 0,8 813137321,442,067 1,307,332 28,153 106,582 Total eois ahadbn aacs––4201422,021 422,021 – – Deposits, cashandbankbalances eiaiefnnilisrmns16522,5 134,735 – 28,153 106,582 Derivative financialinstruments mutdefo nascae––6,9 69,590 69,590 – – Amount duefromanassociate mutdefo on etr 1,1 112,816 112,816 – – Amount duefromajointventure mut u rmrltdpris––5,6 51,561 51,561 – – Amounts duefromrelatedparties rdn eiaie 755 (7,585) – (107,630) – (7,585) 106,582 (107,630) – – – 106,582 – Derivatives usedforhedging – Tradingderivatives Financial liabilitiesatfairvaluethroughprofitorloss Liabilities At 31December2015 Derivatives usedforhedging te eoisecuigpeamns––4732467,302 467,302 – – Other depositsexcludingprepayments rdn eiaie 813–28,153 – 28,153 – – Tradingderivatives Financial assetsatfairvaluethroughprofitorloss Assets At 31December2016 Trade and other receivables excluding prepayments Trade andotherreceivablesexcludingprepayments Assets asperbalancesheet 31 December2016 at thebalancesheetdate,withresultingvaluediscountedbacktopresentvalue. instruments comprisefuelswapcontracts.Thefairvalueofcontractsisdeterminedusingforward fuelprice including butnotlimitedtoyieldcurves,volatilitiesandforeignexchangerates.TheGroup’sLevel 2financial available, theGroupthendeterminesfairvaluebaseduponvaluationtechniquesthatuseasinputs,market parameters and liabilities,suchinstrumentsaregenerallyclassifiedasLevel2.Incaseswherequotedprices generally not Group andCompany n eois––1402184,042 184,042 – – and deposits Group the profit fair value Assets at and loss RM’000 RM’000 through Level 1 1525 (115,215) – (115,215) – 3,3 134,735 – 134,735 – Derivatives used for hedging RM’000 RM’000 Level 2 receivables Loan and RM’000 RM’000 Level 3 RM’000 RM’000 Total Total 2 FINANCIALINSTRUMENTS(CONTINUED) 32 a Financialinstrumentsbycategory(continued) (a) oa ,8 0,3 ,5,6 2,469,882 2,354,667 1,429,087 107,630 1,429,087 879,912 45,668 115,215 7,585 – 879,912 45,668 – – – – 107,630 – – 7,585 Total Derivative financialinstruments Amount duetorelatedparties Trade andotherpayables Borrowings Liabilities asperbalancesheet 191,597 Total Deposits, cashandbankbalances Amount duefromanassociate Amount duefromajointventure Amounts duefromrelatedparties Other depositsexcludingprepayments Trade andotherreceivablesexcludingprepaymentsdeposits Assets asperbalancesheet 31 December2015 Total Amount duetorelatedparties Trade andotherpayables Borrowings Liabilities asperbalancesheet Group Group Group at fairvalue Liabilities the profit and loss RM’000 through Derivatives used for hedging RM’000 liabilities at amortised financial RM’000 Other cost ANNUAL REPORT 2016 amortised cost Other financial liabilities at receivables 1,086,709 Loan and 2,126,624 1,160,326 472,500 RM’000 RM’000 RM’000 941,042 310,789 55,570 30,103 25,256 26,150 Total 221 222 2 FINANCIALINSTRUMENTS(CONTINUED) 32 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD a Financialinstrumentsbycategory(continued) (a) oa 0,8 813135951,440,720 1,305,985 28,153 106,582 Total eois ahadbn aacs––4045420,405 420,405 – – Deposits, cashandbankbalances eiaiefnnilisrmns16522,5 134,735 – 28,153 106,582 Derivative financialinstruments mutdefo usday––6,9 69,590 69,590 – – Amount duefromasubsidiary mutdefo on etr 1,1 112,816 112,816 – – Amount duefromajointventure mut u rmrltdpris––5,6 51,561 51,561 – – Amounts duefromrelatedparties te eoisecuigpeamns––4718467,178 467,178 – – Other depositsexcludingprepayments rd n te eevbe xldn rpyet n eois191,590 Total Deposits, cashandbankbalances Amount duefromasubsidiary Amount duefromajointventure Amount duefromrelatedparties Other depositsexcludingprepayments Trade andotherreceivablesexcludingprepayments anddeposits Assets asperbalancesheet 31 December2015 Total Amount duetosubsidiaries Amount duetorelatedparties Trade andotherpayables Borrowings Liabilities asperbalancesheet Trade and other receivables excluding prepayments Trade andotherreceivablesexcludingprepayments Assets asperbalancesheet 31 December2016 Company Company n eois––1445184,435 184,435 – – and deposits Company the profit fair value Assets at and loss RM’000 through Derivatives used for hedging RM’000 receivables Loan and RM’000 amortised cost Other financial liabilities at receivables Loan and 1,085,373 2,127,994 1,160,326 RM’000 RM’000 RM’000 472,459 940,301 310,274 29,330 55,570 25,879 26,150 Total 1,488 2 FINANCIALINSTRUMENTS(CONTINUED) 32 a Financialinstrumentsbycategory(continued) (a) Allotherreceivablesanddeposits aresubstantially withexistingcounterparties nohistoryof default. Existingcustomers/related parties (morethan6months)withnodefaultsinthepast. – Group2 Newcustomers/relatedparties (less than6months) – Group1 Thecreditqualityoffinancialassetsthatareneitherpastduenorimpairedcanbeassessedbyreference toexternal Creditqualityoffinancialassets (b) ru ,6 4,965 43,779 38,814 – 20,126 20,126 367 44,552 4,965 39,587 310,274 20,126 – 464 420,405 20,126 23,861 22 310,789 286,046 367 9,755 410,186 422,021 23,861 464 286,561 23 9,090 9,755 411,802 73,876 131 14,254 9,090 Total 73,876 Group 2 Group 1 131 13,853 Amounts duefromrelatedparties,ajoint Total Cash inhand BBB toBBB- AAA toA- Deposits, cashandbankbalances Total tradereceivablesthatareneitherpastduenor Group 2 Group 1 Counterparties withoutexternalcreditrating oa ,8 0,3 ,5,3 2,471,349 2,356,134 2,263 1,429,087 107,630 1,429,087 879,116 115,215 45,668 2,263 7,585 – 879,116 45,668 – – – – – 107,630 – – 7,585 – Total Derivative financialinstruments Amount duetosubsidiaries Amount duetorelatedparties Trade andotherpayables Borrowings Liabilities asperbalancesheet credit ratings(ifavailable)ortohistoricalinformationaboutcounterpartydefaultrates: mard1,8 2961,8 82,966 14,385 82,966 13,984 venture, asubsidiaryandanassociate impaired Company Note at fairvalue Liabilities the profit and loss RM’000 RM’000 RM’000 through 2,5 1,2 1,4 309,907 419,941 310,422 421,557 2016 2016 ru Company Group ru Company Group Derivatives used for hedging RM’000 RM’000 RM’000 2015 2015 liabilities at amortised financial RM’000 RM’000 RM’000 Other 2016 2016 cost ANNUAL REPORT 2016 RM’000 RM’000 RM’000 Total 2015 2015 223 224 TheGroup’soperationsbygeographicalsegmentsareasfollows: Consistentwithinformationprovidedtothechiefoperatingdecisionmaker,revenueandcertaindirectcosts(fuel,oil TheoperatingsegmentsderivetheirrevenuesprimarilyfromtheGroup’sactivitiesofprovisionlonghaulairtransportatio TheGroup’sCEOconsidersthebusinessfromageographicperspective.With terminationofcertainroutesinthe Managementhasdeterminedtheoperatingsegmentsbasedonreportsthatarereviewed andusedtomakestrategic 33 SEGMENTAL INFORMATION – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD aain(35,424) Taxation rftbfr a 8,5 1,3)9,7 260,093 90,074 (13,133) 183,152 Profit beforetax te an 7071,0 ,6 35,738 6,068 12,603 17,067 Other gains oeg xhnelse 1,2)(337 401 (35,489) (4,021) (13,347) (18,121) Foreign exchangelosses iac ot 2,3)(756 801 (49,874) (8,021) (17,516) (24,337) Finance costs iac noe1,8 ,1 ,6 24,775 3,467 8,919 12,389 Finance income BT1614(,9)9,8 284,943 92,581 (3,792) 196,154 EBIT ercaino rpry ln n qimn 5,7)(082 1,8)(113,531) (16,687) (40,872) (55,972) Depreciation ofproperty,plantandequipment BTA22163,8 0,6 398,474 109,268 37,080 252,126 EBITDA BTA 6,7 4,0 3,0 1,244,478 232,401 342,300 669,777 EBITDAR rs rft22163,8 0,6 398,474 109,268 37,080 252,126 Gross profit Operating expenses e rftfrtefnnilya 4,2 986 242210,314 72,482 (9,896) 147,728 Net profitforthefinancial year External revenue departure ofanaircraftanditsarrivalatdestination,asrecordedintheflightlog. costs areallocatedtothevarioussegmentsbasedon“blockhours”.Blockhoursdefinedastimebetween operating segmentresultsforthefinancialyearsended31December2016and2015respectively.Allother maintenance, overhaulandusercharges)wereextractedonactualearned/incurredbasisdisclosedaccordinglyinthe services totheselocations. East andWestAsia. previous financialyear,theoperatingsegmentshavebeenreassessedandidentifiedasNorthAsia,AustraliaMiddle decisions bytheGroup’sChiefExecutiveOfficer(“CEO”)whoisidentifiedaschiefoperatingdecisionmaker. te noe3,8 18030156,000 3,081 21,830 31,089 – Otherincome te prtn xess(3,6)(779 2,7)(251,336) (22,076) (97,799) (131,461) – Otheroperatingexpenses icatoeaiglaeepne 4761 3520 1313 (846,004) (123,133) (305,220) (417,651) – Aircraftoperatingleaseexpenses srcags(3,9)(6,3)(946 (461,685) (59,456) (169,635) (232,594) – Usercharges aneac n vral 3579 2257 9,4)(619,331) (91,045) (222,537) (305,749) – Maintenanceandoverhaul icatfe xess(6,3)(1,6)(2,0)(1,116,110) (128,306) (419,067) (568,737) – Aircraftfuelexpenses tf ot 1263 1855 5,0)(369,594) (58,406) (138,555) (172,633) – Staffcosts icatoeaiglaeicm 4,7 7,4 148440,134 21,418 176,642 242,074 – Aircraftoperatingleaseincome aaeetfe 3 0 51,509 75 604 830 – Managementfees nilr eeu 1,6 4,4 716642,715 77,106 246,849 318,760 – Ancillaryrevenue rih evcs5,3 5492,9 134,913 20,592 55,489 58,832 – Freightservices hre lgt ,5 5,6 254,720 252,062 – 2,658 – Charterflights ceue lgt ,2,0 8,7 1,5 2,532,543 217,356 888,479 1,426,708 – Scheduledflights 2016 North Asia ,4,6 ,6,6 8,0 4,006,534 588,609 1,368,063 2,049,862 RM’000 Australia RM’000 ,3 1,9)(49,779) (17,592) 3,237 Middle East West Asia RM’000 and RM’000 Total n The Group has not disclosed information relating to revenue from external customers which are attributed to the country TheGrouphasnotdisclosedinformation relatingtorevenuefromexternalcustomerswhichareattributedthecountry Allmaterial non-currentassetsarebasedinMalaysiaattheendofcurrentandpreviousfinancialyearend. Earnings before interestandtaxes – Earningsbeforeinterest,taxes,depreciationandamortisation EBIT – EBITDA Earningsbeforeinterest,taxes,depreciation,amortisationandrestructuringorrentcosts – EBITDAR Note: TheGroup’soperationsbygeographicalsegmentsareasfollows:(continued) SEGMENTALINFORMATION(CONTINUED) 33 aain4,4 9141,5 96,859 18,556 29,154 (349,616) 49,148 (4,251) (97,428) (247,938) Net lossforthefinancialyear Taxation te oss(,4)(,8)(,5)(7,585) (1,453) (37,443) 19,812 55,556 (2,283) 107,364 3,796 (299,562) 813,422 (3,464) (37,566) 83,298 (3,849) (57,391) 5,963 218,566 (7,197) (89,535) 40,123 (84,131) (90,168) 107,364 10,053 252,646 (11,307) (16,057) (152,003) (16,118) 83,298 342,210 (19,062) (25,323) 40,123 (144,807) (42,690) (16,057) (27,742) (43,587) Loss beforetax (73,478) Other losses Share ofresultsajointventure Foreign exchangeloss Interest expenseandfinancecharges Interest income EBIT Depreciation ofproperty,plantandequipment EBITDA EBITDAR Gross (loss)/profit Operating expenses External revenue nature ofactivitiesintheGroup,necessaryinformation isnotavailableandthecosttodevelopitwouldbeexcessive. of domicileandwhichareattributabletoallforeign countriesintotalfromwhichtheGroupderivesrevenue.Dueto te noe 9383,8 232116,881 22,392 (137,445) 35,181 (315,821) 1,361 (26,332) 59,308 (60,505) (41,371) 421,662 (1,020,881) 261 (706,058) 98,861 (95,062) (195,582) 476,407 (69,742) 107,508 421,662 (135,268) (160,254) (307,285) 762 274,014 54,223 410 (212,523) 27,847 – (518,014) 1,682,740 15,729 (358,267) 177,413 55,144 29,914 690 128,974 95,526 – 244,771 42,955 49,747 571,227 162,759 982,539 – Otherincome – Otheroperatingcosts – Aircraftoperatingleaseexpenses – Maintenance,overhaulanduserchargesother – Aircraftfuelexpenses – Staffcosts – Aircraftoperatingleaseincome – Managementfees – Ancillaryrevenue – Freightandcargo – Fuelsurcharge – Charterflights – Scheduledflights 2015 eae xess(5,4)(6,5)(7,6)(891,865) (170,865) (268,451) (452,549) related expenses North Asia 2706 1652 2,0)(446,475) (22,807) (126,582) (297,086) ,8,6 2,3 4,5 3,062,553 649,458 929,634 1,483,461 RM’000 Australia RM’000 Middle East West Asia RM’000 and ANNUAL REPORT 2016 RM’000 Total 225 226 The Group and the Company does not provide any financial support to the SPC or have any contractual obligation to make TheGroupandtheCompanydoesnotprovideanyfinancialsupporttoSPCorhavecontractual obligationtomake TheSPCdonotincuranylossesorearnincomeduringthefinancialyearended31December2016.aircraftand Comparativeshavebeenre-presentedtoalignwiththecurrent financialyear’spresentation. Forthefinancialyearended31December2016,presentationof‘maintenance,overhaul,userchargesandotherrelated RECLASSIFICATIONOFCOMPARATIVES 35 ThedetailsoftheMerahXentitiesareasfollows: TheSPCareorphantrustcompaniesinwhichtheCompanyhasnoequityinterest. TheCompanyhassetupMerah Xentities,specialpurposecompanies(“SPC”)pursuanttoaircraftrelatedborrowings UNCONSOLIDATEDSTRUCTUREDENTITIES 34 – 31December2016(continued) Notes toTheFinancialStatements AIRASIA XBERHAD ea nmLmtdMlyi Purchaseof2AirbusA330-300aircraft Malaysia Merah XEnamLimited ea iaLmtdMlyi Purchaseof2AirbusA330-343aircraft Malaysia Merah XTigaLimited ea u iie aasaPurchaseof3AirbusA330-300 aircraft good thelosses,ifany. upon thepurchaseofaircraft. Malaysia the correspondingtermloansandfinancecostsassociatedwithSPChavebeenrecognisedbyGroupCompany Merah XDuaLimited the Group. expenses’ waschangedto‘maintenanceandoverhaul’‘usercharges’betterreflecttheoperating performanceof under thefacility. Agreement withtheSPC,permittingcompanytopossessandoperateeachofAirbusA330-300aircraftfinanced obtained fromvariousfinancialinstitutions.Underthearrangement,CompanyentersintoanAircraftInstalmentSale Name noprto Purpose incorporation Country of format prescribedbyBursaMalaysiaSecuritiesBerhad. Securities BerhadListingRequirements,asissuedbytheMalaysianInstituteofAccountants.Thisdisclosureisbasedon No.1 –DeterminationofRealisedandUnrealisedProfitsorLossesintheContextDisclosurePursuanttoBursaMalaysia The followinganalysisofrealisedandunrealisedretainedprofitsispreparedinaccordancewiththeGuidanceonSpecialMatte disclosed pursuanttoBursaMalaysiaSecuritiesListingRequirement Supplementary Information Securities Berhadandshouldnotbeappliedforanyotherpurposes. The disclosureofrealisedandunrealisedlossesaboveissolelyforcompliancewiththedirectiveissued bytheBursaMalaysia Total accumulatedlossesasperconsolidatedfinancial Total shareofaccumulatedlossesfromjointventure: Total shareofaccumulatedlossesfromassociatedcompany: Total accumulated losses of AirAsia X Berhad and its Total accumulatedlossesofAirAsiaXBerhadandits elsd(388 5,8)–– – (841,832) – (631,388) – (859,029) (53,888) (648,715) (20,018) (53,888) (20,018) statements – Realised – Realised nelsd159614261596174,216 145,936 (1,016,048) (777,324) 174,216 (959,339) 145,936 (720,745) – Unrealised – Realised subsidiaries: 5489 7513 6138 (841,832) (631,388) (785,123) (574,809) RM’000 2016 ru Company Group RM’000 2015 RM’000 2016 ANNUAL REPORT 2016 RM’000 2015 r

227 228 COMMISSIONER FOROATHS Subscribed andsolemnlydeclaredbytheabovenamed CheokHueiShianatKualaLumpuron28March2017,beforeme. CHEOK HUEISHIAN 1960. declaration conscientiouslybelievingthesametobetrue,andbyvirtueofprovisionsStatutory DeclarationsAct, DATUKKAMARUDINBINMERANUN sincerely declarethatthefinancialstatementssetoutonpages165to226are,inmyopinion,correctand Imakethissolemn I, CheokHueiShian,theOfficerprimarilyresponsibleforfinancialmanagementofAirAsiaXBerhad, dosolemnlyand pursuant toSection251(1)oftheCompaniesAct,2016 Statutory Declaration Director TAN SRIRAFIDAHAZIZ Signed onbehalfoftheBoardDirectorsinaccordancewitharesolutiondated28March2017. Securities BerhadListingRequirements,asissuedbytheMalaysianInstituteofAccountants. 1,DeterminationofRealisedandUnrealisedProfitsorLossesintheContextDisclosurePursuanttoBursaMalaysia No. The supplementaryinformationsetoutonpage227hasbeenpreparedinaccordancewiththeGuidanceSpecialMatter International FinancialReportingStandardsandtherequirementsofCompaniesAct,2016inMalaysia. of theCompanyforfinancialyearended31December2016inaccordancewithMalaysianFinancialReportingStandards, of thefinancialpositionGroupandCompanyasat31December2016performance opinion oftheDirectors,financialstatementssetoutonpages165to226aredrawnupsoasgiveatrueandfairview We, TanSriRafidahAzizandDatukKamarudinBinMeranun,beingtwooftheDirectorsAirAsiaXBerhad,statethat,in pursuant toSection251(2)oftheCompaniesAct,2016 Statement byDirectors AIRASIA XBERHAD as revenuewhen theflighthasflown. the balancesheets.Theamounts aresubsequentlyrecognised and theamountspaidarerecognised as‘salesinadvance’on scheduled flights.Passengers payfortheirflightsinadvance ended 31December2016 wereprimarilyderivedfrom Revenue fromtheGroupand Companyforthefinancialyear Company forrevenueandbalancesheetssalesinadvance. Refer toNote4thefinancialstatementsofGroup and Revenue recognitionfromscheduledflights provide aseparateopiniononthesematters. of thefinancialstatementsGroupand Company asawhole,andinformingouropinionthereon,wedonot statements oftheGroupandCompanyfor currentyear.Thesematterswereaddressedinthecontextofouraudit Key auditmattersarethosethat,inourprofessionaljudgement,wereofmostsignificance auditofthefinancia Key auditmatters controls, andtheindustryinwhichGroupCompanyoperate. statements asawhole,takingintoaccountthestructureofGroupandCompany,accounting processesand We tailoredthescopeofourauditinordertoperformsufficientworkenableusprovideanopinion onthefinancial to fraud. among othermatters,considerationofwhethertherewasevidencebiasthatrepresentedariskmaterial misstatementdue are inherentlyuncertain.Asinallofouraudits,wealsoaddressedtheriskmanagementoverrideinternal controls,incl example, inrespectofsignificantaccountingestimatesthatinvolvedmakingassumptionsandconsidering futureeventsthat statements oftheGroupandCompany.Inparticular,weconsideredwheredirectorsmadesubjective judgements;for As partofdesigningouraudit,wedeterminedmaterialityandassessedtherisksmaterialmisstatement inthefinancial Our auditapproach with theBy-LawsandIESBACode. Code ofEthicsforProfessionalAccountants(“IESBACode”),andwehavefulfilledourotherethicalresponsibilities inaccorda Practice) oftheMalaysianInstituteAccountants(“By-Laws”)andInternationalEthicsStandardsBoard forAccountants’ We areindependentoftheGroupandCompanyinaccordancewithBy-Laws(onProfessional Ethics,Conductand Independence andotherethicalresponsibilities We believethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion. financial statements”sectionofourreport. Auditing. Ourresponsibilitiesunderthosestandardsarefurtherdescribedinthe“Auditors’forauditof We conductedourauditinaccordancewithapprovedstandardsonauditingMalaysiaandInternationalStandards Basis foropinion notes tothefinancialstatements,includingasummaryofsignificantaccountingpolicies,assetoutonpages165226. statements ofchangesinequityandcashflowstheGroupCompanyforyearthenended, December2016oftheGroupandCompany,incomestatements,statementscomprehensiveincome, 31 We haveauditedthefinancialstatementsofGroupandCompany,whichcomprisebalancesheetsasat What wehaveaudited Reporting StandardsandtherequirementsofCompaniesAct,1965inMalaysia. and theircashflowsfortheyearthenendedinaccordancewithMalaysianFinancialReportingStandards,InternationalFinancia fair viewofthefinancialpositionGroupandCompanyasat31December2016,theirperformance In ouropinion,thefinancialstatementsofAirAsiaXBerhad(“theCompany”)anditssubsidiariesGroup”)giveatrue Our opinion REPORT ONTHEAUDITOFFINANCIALSTATEMENTS (Company No.734161-K) (Incorporated inMalaysia) to themembersofAirAsiaXBerhad Independent Auditors’Report e ui atr Howourauditaddressedthekey auditmatters Key auditmatters reservation system. ancillary fares andapprovalforfare overrideintheflight relevant controlsoverapproval forchangesinbasefaresand on theoperatingeffectiveness ofthosecontrols.Wetestedthe auditors. Weobtainedand evaluated theexternalauditors’report vendor, thesecontrolswere testedbythevendor’sexternal technology generalcontrols overthissystemaremanagedbythe controls overtheflightreservationsystem.Where information in Australia.Wetestedtheinformationtechnology general The flightreservationsystemismanagedbyathirdparty vendor ANNUAL REPORT 2016 uding uding nce nce the the l l

229 230 significant auditeffortspent onthisarea. audit matterbecauseofthe magnitudeoftheprovisionand We haveidentifiedaircraft maintenanceprovisionasakey balance sheet(refertoNote25thefinancialstatements). included withintradeandotherpayablesintheconsolidated of CompanyamountedtoRM592million.Theprovision is As at31December2016,theaircraftmaintenanceprovision service providerandthelessors. of eachreportingperiodbasedonpaymentsmade to both has estimatedtheaircraftmaintenanceprovisionat the end the costofaircraftmaintenance.Followingthis,management agreement withamaintenanceserviceproviderand prepays aircraft tothelessors.TheCompanyalsoentered intoan the Companytopaydepositsformaintenanceofleased condition agreedwithlessors.Theleaseagreementsrequire return theaircraftatendofleaseterminacertain operating lease,theCompanyiscontractuallycommittedto under operatingleasearrangement.Foraircraft The Companyoperatesaircraftwhichareownedorheld Aircraft maintenanceprovision effort spentonthisarea. significant volumeoftransactionsandtheaudit the magnitudeofrevenueandsalesinadvancebalance, Revenue fromscheduledflightsisakeyauditmatterdueto data. showing flightbookingdatathatarenotmatchedtopayment The reconciliationsystemgeneratesexceptionreport data fromfinancialinstitutionsandonlinepaymentgateways. booking dataintheflightreservationsystemwithpayment company alsousesareconciliationsystemtoreconcileflight revenue accountingsystemsforrecognition.The There isahighdependencyontheflightreservationand generate journalentriestobepostedintothegeneralledger. which interfaceswiththeflightreservationsystemto Company usesanintegratedrevenueaccountingsystem cancelled) recordedintheflightreservationsystem.The transactions andchangestoflights(flown,unflownor rates attheflightbookingdatetotranslateforeigncurrency dependent onthefarespaidbypassengers,foreignexchange Accuracy ofrevenuerecognisedintheincomestatementsis Revenue recognitionfromscheduledflights(continued) Key auditmatters(continued) REPORT ONTHEAUDITOFFINANCIALSTATEMENTS(CONTINUED) (Company No.734161-K) (Incorporated inMalaysia) to themembersofAirAsiaXBerhad(continued) Independent Auditors’Report AIRASIA XBERHAD e ui atr Howourauditaddressedthekeymatters Key auditmatters the followingprocedures: maintenance serviceproviderandlessors,wehaveperformed Given thattheprovisionisestimatedbasedonpaymentsto performing thefollowingprocedures: We testedthesalesinadvanceandrevenuerecognisedby of exceptionitemstosupportingdocuments. exceptions viainquirieswithmanagementandtracingsamples how managementreviewsthesereportsandresolvesthe to theflightbookingdataandpaymentdata.Wealsotested by thereconciliationsystemtracingsamplesofexceptions system. Wetestedreliabilityoftheexceptionreportsgenerated over thereconciliationsystemandpaymentgateway We alsotestedtheinformationtechnologygeneralcontrols c) Compared the provision estimated by management against Comparedtheprovisionestimated bymanagementagainst c) Tracedalldepositsandprepaymentsforaircraftmaintenance b) Reviewedtheleaseagreementsto confirm theCompany’s a) Testedcompletenessofrevenue andsalesinadvanceby e) Agreedsamplesofrevenuetransactionstoflightmanifests d) Agreedtherevenuerecognisedduringfinancialyearto c) Testedtheforeigncurrencytranslationforsamplesofflight b) Agreedsamplesofflightbookingswhichcashhasbeen a) year end. the prepaymentsanddepositsforaircraftmaintenance at service providerrespectively;and during theyeartoinvoicesissuedbylessorsandmaintenance payment ofdepositstolessors; contractual obligationontheaircraftmaintenanceand transactions andsalesinadvancebalancesrespectively. year andflightssubsequenttoendrevenue tracing samplesoftravelitinerariesforflightsduringthe and of flownflightsandtoathirdpartyflighttrackingwebsite; system andpostedbymanagement; each monthlyjournalsgeneratedbytherevenueaccounting bookings madeinforeigncurrencies; from financialinstitutionsandonlinepaymentgateways; received frompassengers,totheexternalpaymentreports (c) Evaluate the Obtainanunderstandingofinternalcontrolrelevanttotheauditinorder todesignauditproceduresthatareappropriate (b) Identifyandassesstherisksofmaterialmisstatementfinancial statementsoftheGroupandCompany,whether (a) exercise professionaljudgementandmaintain scepticismthroughouttheaudit.Wealso: As partofanauditinaccordancewithapprovedstandardsonauditingMalaysiaandInternationalStandards onAuditing,we could reasonablybeexpectedtoinfluencetheeconomicdecisionsofuserstakenonbasisthese financial statements. when itexists.Misstatementscanarisefromfraudorerrorandareconsideredmaterialif,individually intheaggregate,t approved standardsonauditinginMalaysiaandInternationalStandardsAuditingwillalwaysdetecta materialmisstatement opinion. Reasonableassuranceisahighlevelofassurance,butnotguaranteethatanauditconducted inaccordancewith a wholearefreefrommaterialmisstatement,whetherduetofraudorerror,andissueanauditors’report thatincludesour Our objectivesaretoobtainreasonableassuranceaboutwhetherthefinancialstatementsofGroupand oftheCompanyas Auditors’ responsibilitiesfortheauditoffinancialstatements operations, orhavenorealisticalternativebuttodoso. the goingconcernbasisofaccountingunlessdirectorseitherintendtoliquidateGroupor Companyortocease and theCompany’sabilitytocontinueasagoingconcern,disclosing,applicable,mattersrelated concernandusing In preparingthefinancialstatementsofGroupandCompany,directorsareresponsiblefor assessingtheGroup’s Company thatarefreefrommaterialmisstatement,whetherduetofraudorerror. control asthedirectorsdetermineisnecessarytoenablepreparationoffinancialstatements the Groupandof Standards andtherequirementsofCompaniesAct,1965inMalaysia.Thedirectorsarealsoresponsible forsuchinternal that giveatrueandfairviewinaccordancewithMalaysianFinancialReportingStandards,International FinancialReporting The directorsoftheCompanyareresponsibleforpreparationfinancialstatementsGroup andoftheCompany Responsibilities ofthedirectorsforfinancialstatements to reportinthisregard. we concludethatthereisamaterialmisstatementofthisotherinformation,arerequiredtoreportfact.Wehavenothi If, basedontheworkwehaveperformedotherinformationthatobtainedpriortodateofthisauditors’report, the GroupandofCompanyorourknowledgeobtainedinauditotherwiseappearstobemateriallymisstated. information and,indoingso,considerwhethertheotherismateriallyinconsistentwithfinancialstatementso In connectionwithourauditofthefinancialstatementsGroupandCompany,responsibilityistoreadoth express anyformofassuranceconclusionthereon. Our opiniononthefinancialstatementsofGroupandCompanydoesnotcoverotherinformationwedo thereon. date. OtherinformationdoesnotincludethefinancialstatementsofGroupandCompanyourauditors’report Sustainability Reportandothersectionsofthe2016AnnualReport,whichareexpectedtobemadeavailableusafterthat Management’s DiscussionandAnalysis,Chairman’sStatement,StatementonCorporateGovernance,AuditCommitteeReport, Statement onRiskManagement&InternalControl,whichweobtainedpriortothedateofthisauditor’sreport,and The directorsoftheCompanyareresponsibleforotherinformation.informationcomprisesDirectors’Reportand Information otherthanthefinancialstatementsandauditors’reportthereon REPORT ONTHEAUDITOFFINANCIALSTATEMENTS(CONTINUED) (Company No.734161-K) (Incorporated inMalaysia) to themembersofAirAsiaXBerhad(continued) Independent Auditors’Report disclosures madebythedirectors. Company’s internalcontrol. in thecircumstances,butnotforpurposeof expressing anopinionontheeffectivenessofGroup’sand misrepresentations, ortheoverrideofinternalcontrol. from fraudishigherthanforoneresultingerror, asfraudmayinvolvecollusion,forgery,intentionalomissions, sufficient andappropriatetoprovideabasisforour opinion.Theriskofnotdetectingamaterialmisstatementresulting due tofraudorerror,designandperformauditprocedures responsivetothoserisks,andobtainauditevidencethatis appropriateness of accounting policies used and the reasonableness of accounting estimates and related appropriateness ofaccountingpoliciesusedandthe reasonablenessofaccountingestimatesandrelated ANNUAL REPORT 2016 hey hey ng ng er er f

231 232 consequences ofdoingsowouldreasonablybeexpectedtooutweighthepublicinterestbenefitssuch communication. extremely rarecircumstances,wedeterminethatamattershouldnotbecommunicatedinourreport becausetheadverse describe thesemattersinourauditors’reportunlesslaworregulationprecludespublicdisclosureabout the matterorwhen,i the financialstatementsofGroupandCompanyforcurrentyeararetherefore key auditmatters.We From thematterscommunicatedwithdirectors,wedeterminethosethatwereofmostsignificance intheauditof and whereapplicable,relatedsafeguards. and tocommunicatewiththemallrelationshipsothermattersthatmayreasonablybethoughtbear onourindependence, We alsoprovidethedirectorswithastatementthatwehavecompliedrelevantethicalrequirementsregardingindependence, audit findings,includinganysignificantdeficienciesininternalcontrolthatweidentifyduringouraudit. We communicatewiththedirectorsregarding,amongothermatters,plannedscopeandtimingofauditsignificant Securities Berhad. information isprepared,in allmaterialrespects,inaccordancewiththeMIA GuidanceandthedirectiveofBursaMalaysia Accountants (“MIAGuidance”)andthedirectiveof BursaMalaysiaSecuritiesBerhad.Inouropinion,thesupplementary of DisclosurePursuanttoBursaMalaysiaSecurities BerhadListingRequirements,asissuedbytheMalaysianInstituteof in accordancewithGuidanceonSpecialMatterNo.1, DeterminationofRealisedandUnrealisedProfitsorLossesintheContext and isnotpartofthefinancialstatements.Thedirectors areresponsibleforthepreparationofsupplementaryinformation The supplementaryinformationsetoutinpage227 isdisclosedtomeettherequirementofBursaMalaysiaSecuritiesBerhad OTHER REPORTINGRESPONSIBILITIES (d) Wearesatisfiedthatthefinancialstatementsofsubsidiarieshave beenconsolidatedwiththeCompany’sfinancial (c) Wehaveconsideredthefinancialstatementsandauditors’reportsofallsubsidiarieswhichwenotacted (b) Inouropinion,theaccountingandotherrecordsregistersrequiredbyActtobekeptCompanyits (a) In accordancewiththerequirementsofCompaniesAct,1965inMalaysia,wealsoreportfollowing: REPORT ONOTHERLEGALANDREGULATORYREQUIREMENTS Obtainsufficientappropriateauditevidenceregardingthefinancialinformationofentitiesorbusinessactivitieswit (f) Evaluatetheoverallpresentation,structureandcontentoffinancialstatementsGroupCompany, (e) Concludeontheappropriatenessofdirectors’usegoingconcernbasisaccountingand,basedaudit (d) Auditors’ responsibilitiesfortheauditoffinancialstatements(continued) REPORT ONTHEAUDITOFFINANCIALSTATEMENTS(CONTINUED) (Company No.734161-K) (Incorporated inMalaysia) to themembersofAirAsiaXBerhad(continued) Independent Auditors’Report AIRASIA XBERHAD comment madeunderSection174(3)oftheAct. of theGroupandwehavereceivedsatisfactoryinformationexplanationsrequiredbyusforthosepurposes. statements areinformandcontentappropriateproperforthepurposesofpreparationfinancial statements as auditors,whichareindicatedinNote16tothefinancialstatements. subsidiaries ofwhichwehaveactedasauditorsbeenproperlykeptinaccordancewiththeprovisions oftheAct. transactions andeventsinamannerthatachievesfairpresentation. including thedisclosures,andwhetherfinancialstatementsofGroupCompanyrepresentunderlying Company toceasecontinueasagoingconcern. evidence obtaineduptothedateofourauditors’report.However,futureeventsorconditionsmaycauseGroup of theCompanyor,ifsuchdisclosuresareinadequate,tomodifyouropinion.Ourconclusionsbasedonaudit are requiredtodrawattentioninourauditors’reporttherelateddisclosuresfinancialstatementsofGroupand the Group’sorCompany’sabilitytocontinueasagoingconcern.Ifweconcludethatmaterialuncertaintyexists, evidence obtained,whetheramaterialuncertaintyexistsrelatedtoeventsorconditionsthatmaycastsignificantdoubton and performanceofthegroupaudit.Weremainsolelyresponsibleforourauditopinion. the GrouptoexpressanopiniononfinancialstatementsofGroup.Weareresponsiblefordirection,supervision The auditors’reportsonthefinancialstatements of thesubsidiariesdidnotcontainanyqualificationoradverse hin hin n

N.A:14) (No.2914/04/17(J)) CharteredAccountant NGGANHOOI 28 March2017 Kuala Lumpur Chartered Accountants (No. AF:1146) PRICEWATERHOUSECOOPERS 2016 inMalaysiaandfornootherpurpose.Wedonotassumeresponsibilitytoanypersonthecontentofthisreport. This reportismadesolelytothemembersofCompany,asabody,inaccordancewithSection266CompaniesAct, OTHER MATTERS (Company No.734161-K) (Incorporated inMalaysia) to themembersofAirAsiaXBerhad(continued) Independent Auditors’Report ANNUAL REPORT 2016

233 234 4 DeemedinterestedbyvirtueofSection8theCompaniesAct,2016(“theAct”)throughashareholdingmorethan20%in (4) SharesheldthroughCIMBGroupNominees(Tempatan)Sdn.Bhd.andownname. (3) SharesheldthroughCIMBGroupNominees(Tempatan) Sdn.Bhd. (2) SharesheldthroughTuneGroupSdn.Bhd.,CimsecNominees(Tempatan)Bhd.andKenanga (1) NOTES: the RegisterofSubstantialShareholdersareasfollows:- The directandindirectshareholdingsoftheshareholdersholdingmorethan5%inAirAsiaXBerhad(“AirAsia X”)basedon SUBSTANTIAL SHAREHOLDERS DISTRIBUTION OFSHAREHOLDINGS as at20March2017 Analysis ofShareholdings AIRASIA XBERHAD Shareholdings Name au aaui i eau 337,702,739 Datuk KamarudinBinMeranun iAi ehd(AB)5078521.6–– – 13.76 570,728,502 AirAsia Berhad(“AAB”) esta 0 3 .31,0 0.00 10,506 0.63 231 Less than100 ueGopSn h.(TS” 592,873,892 Tune GroupSdn.Bhd.(“TGSB”) a r r nhn rni enne 87,303,728 Tan SriDr.AnthonyFrancisFernandes 0 ,0 ,9 39 ,5,7 0.11 4,554,979 13.99 5,098 100 –1,000 ,0 0001,4 82 265191.99 82,605,129 38.28 13,947 1,001 –10,000 001–10001,5 99 9,1,3 12.00 497,612,638 39.95 14,552 10,001 –100,000 0,0 ols hn5 fise hrs26071 ,9,3,2 62.50 2,592,636,423 7.14 2,600 100,001 tolessthan5%ofissuedshares %adaoeo sudsae .190785223.40 970,728,502 0.01 2 5% andaboveofissuedshares Voting rights Class ofshares One voteperordinaryshare Ordinary shares(“Shares”) Shareholders Shares Held 640100 ,4,4,7 100.00 4,148,148,177 100.00 36,430 No. of No. of No. of IETINDIRECT DIRECT (3) (2) (1) Issued Shares hrhlesNo.ofShares Shareholders 42 – – 14.29 % of % of % of .41,163,602,394 8.14 .11,163,602,394 2.11 Shares Held No. of TGSB andAAB. (4) (4) Issued Shares Share Capital % of Issued % ofIssued 28.05 28.05 % of There werenooptionsofferedtoandexercisedby,orsharesgrantedvestedinDirectorsduring thefinancialyear. Deemedinterestheldthroughhisspouseandchildren. (6) DeemedinterestedbyvirtueofSection8theCompaniesAct,2016throughashareholding ofmorethan20%inTGSBandAAB (5) SharesheldthroughCIMBGroupNominees(Tempatan)Sdn.Bhd. (4) SharesheldthroughCIMBGroupNominees(Tempatan)Sdn.Bhd.andownname. (3) Deemedinterestheldunderthenameofherspouse (deceased). (2) SharesheldthroughCimsecNominees(Tempatan)Sdn.Bhd. (1) * Negligible. NOTES: based ontheCompany’sRegisterofDirectors’Shareholdingsareasfollows:- The interestsoftheDirectorsAirAsiaXinSharesandoptionsoversharesCompanyitsrelatedcorporations as at20March2017 List ofDirectors’Shareholdings Name au aaui i eau 337,702,739 Dato’ YusliBinMohamedYusoff Dato’ FamLeeEe Datuk KamarudinBinMeranun i inOn––197,833,356 – – 87,303,728 Lim KianOnn Tan SriDr.AnthonyFrancisFernandes a r aia zz175,000 Tan SriRafidahAziz a r sa i aaui 297,400 Tan SriAsmatBinKamaludin Shares Held No. of IETINDIRECT DIRECT –––– –––– (1) (4) (3) (1) Issued Shares .0 100,000 0.00* % of .140,000 0.01 .41,163,602,394 8.14 .11,163,602,394 2.11 Shares Held No. of . ANNUAL REPORT 2016 (6) (6) (5) (5) (2) Issued Shares 0.00* 0.00* 28.05 28.05 % of 4.77 235 236 as at20March2017 List ofTop30LargestShareholders AIRASIA XBERHAD .AirAsiaBerhad 1. Name ofShareholders 3 HSBCNominees(Asing)Sdn.Bhd. 13. 0 DB(Malaysia)Nominee (Asing)Sdn.Bhd. 30. CartabanNominees(Asing) Sdn. Bhd. 29. RHBNominees (Tempatan)Sdn.Bhd. 28. HSBCNominees(Asing) Sdn.Bhd. 27. RHBInvestmentBankBerhad 26. DB(Malaysia)Nominee(Asing)Sdn.Bhd. 25. KenangaNominees(Tempatan)Sdn.Bhd. 24. CimsecNominees (Tempatan)Sdn.Bhd. 23. AmanahrayaTrusteesBerhad 22. LohLeanKhim 20. DB(Malaysia)Nominee(Asing)Sdn.Bhd. 19. HSBC Nominees(Asing)Sdn.Bhd. 18. CartabanNominees(Asing)Sdn.Bhd. 17. HSBCNominees(Asing)Sdn.Bhd. 16. AmanahrayaTrusteesBerhad 15. HSBCNominees(Asing)Sdn.Bhd. 14. Kenanga Nominees(Tempatan)Sdn.Bhd. 12. AmsecNominees(Tempatan)Sdn.Bhd. 11. CIMBGroupNominees(Tempatan)Sdn.Bhd. 10. CitigroupNominees(Asing)Sdn.Bhd. 9. CimsecNominees(Tempatan)Sdn.Bhd. 8. KenangaInvestmentBankBerhad 7. CitigroupNominees(Tempatan)Sdn.Bhd. 6. KamarudinBinMeranun 4. HSBCNominees(Asing)Sdn.Bhd. 3. .KenangaNominees(Tempatan)Sdn.Bhd. 2. 1 UOBMNominees (Asing)Sdn.Bhd. 21. CIMBGroupNominees(Tempatan)Sdn.Bhd. 5. Exempt AnforJPMorganChaseBank, NationalAssociation(JPMELABAIFAPG) IVT “SWBook1” The BankofNewYorkMellonforInternationalReconstruction andDevelopment ECM LibraPartnersSdn.Bhd.PledgedSecuritiesAccountforTune GroupSdn.Bhd. CIMB BankforLiewJunKuan(MY0750) Amanah SahamBumiputera Banque DeLuxembourgforRAM(Lux)SystematicFunds–EmergingMarketsEquities The BankofNewYorkMellonforAcadianEmergingMarkets(SmallCapEquityFund,LLC) BBH andCoBostonforVanguardEmergingMarketsStockIndexFund SSBT FundZVY5forStateStreetEmergingMarketsSmallCap(ActiveNon-LendingQIBCommonTrustFund) HSBC BkforSaudiArabianMonetaryAuthority Amanah SahamNasional Exempt AnforJPMorganChaseBank,NationalAssociation(U.S.A.) Exempt AnforMorganStanley&Co.LLC(Client) Pledged SecuritiesAccountforTuneGroupSdn.Bhd.(3rdPartyEDSP) Pledged SecuritiesAccount–Ambank(M)BerhadforKalimullahBinMasheerulHassan(Smart) Pledged SecuritiesAccountforAnthonyFrancisFernandes(GCMCBM-SKYX) Exempt AnforCitibankNewYork(NorgesBank14) Pledged SecuritiesAccountforTuneGroupSdn.Bhd.(EDG&GCM) IVT-(EDSP-OTC/ESH) Exempt AnforAIABhd. Pledged SecuritiesAccountforKamarudinBinMeranun(GCMCBM-SKYX) Exempt AnforBankJuliusBaer&Co.Ltd.(SingaporeBch) For TuneGroupSdn.Bhd.(Barclays) The BankofNew YorkMellonforFloridaRetirement System SSBT FundC021forCollegeRetirement EquitiesFund Pledged SecuritiesAccountforYong LoyHuat 0,0,0 9.64 400,000,000 0,0,5 4.91 203,503,956 7,2,0 13.76 570,728,502 Shares Held 000001.21 50,000,000 5,3,8 3.72 154,430,982 4,4,7 3.60 149,343,475 3,5,0 3.16 131,250,000 4,2,8 3.54 146,728,982 000000.24 10,000,000 500000.36 15,000,000 065300.74 30,685,350 270000.31 12,740,000 160800.76 31,640,800 557200.62 25,527,200 020200.25 10,220,200 859600.45 18,549,600 733782.10 87,303,728 498102.29 94,978,100 8,7,5 4.42 183,271,757 993000.48 19,983,020 953500.47 19,573,500 442881.07 44,432,818 650000.40 16,510,000 031000.25 10,381,000 359000.33 13,519,000 135000.27 11,375,000 396770.34 13,926,727 ,2,0 0.23 9,429,800 100100.27 11,080,100 ,9,2 0.24 9,992,625 No. of Share Capital % of Issued % ofIssued DISTRIBUTION OFWARRANTHOLDINGS as at20March2017 Analysis ofWarrantHoldings Size ofWarrantholdings esta 0 ,1 .14,3 0.01 49,632 7.31 1,013 Less than100 0 ,0 ,0 58 ,1,1 0.14 1,216,910 15.88 2,200 100 –1,000 ,0 0006774.02,5,2 3.25 28,852,428 48.90 6,777 1,001 –10,000 001–10003202.519788712.35 109,748,847 23.45 3,250 10,001 –100,000 0,0 ols hn5 fise arns6544 4,8,4 50.00 444,482,242 4.44 615 100,001 tolessthan5%ofissuedwarrants %adaoeo sudwrat .234588634.26 304,538,836 0.02 3 5% andaboveofissuedwarrants Voting rights Maturity date No. ofWarrantUnexercised No. ofWarrantExercised No. ofWarrantIssued shares oftheCompany. in theCompanyuntilandunlesssuchwarrantholdersexercisetheirwarrantsintoordinary and voteatsuchmeetingsorparticipateinanydistributionand/orofferoffurthersecurities The warrantholdersarenotentitledtoattendmeetingsofthemembersCompany 8th June2020 888,888,895 – 888,888,895 Warrant holders 388100 8,8,9 100.00 888,888,895 100.00 13,858 No. of arn odr No.ofWarrants Warrant holders % of % of

ANNUAL REPORT 2016 Warrant Capital % of Issued % ofIssued

237 238 There werenooptionsofferedtoandexercisedby,orsharesgrantedvestedinDirectorsduring thefinancialyear. Deemedinterestheldthroughhisspouseandchildren. (5) DeemedinterestedbyvirtueofSection8theActthroughashareholdingmorethan20%inTGSBandAAB. (4) WarrantsheldthroughCIMBGroupNominees(Tempatan)Sdn.Bhd. (3) WarrantsheldthroughCIMBGroupNominees(Tempatan) Sdn.Bhd.andthroughownname. (2) WarrantsheldthroughCimsecNominees(Tempatan)Sdn.Bhd. (1) * Negligible. NOTES: Company’s RegisterofDirectors’warrantholdingsareasfollows:- The interestsoftheDirectorsAirAsiaXinwarrantCompanyanditsrelatedcorporationsbasedon as at20March2017 List ofDirectors’WarrantHoldings AIRASIA XBERHAD Name Dato’ FamLeeEe i inOn––42,392,862 – – 18,707,941 Lim KianOnn Tan SriDr.AnthonyFrancisFernandes au aaui i eau 98,798,772 Datuk KamarudinBinMeranun a r aia zz37,500 Tan SriRafidahAziz Tan SriAsmatBinKamaludin Dato’ YusliBinMohamedYusoff Warrants Held No. of IETINDIRECT DIRECT –––– –––– –––– (3) (2) (1) Issued Warrants .0 – – 0.00* % of 11 280,785,294 11.12 .1280,785,294 2.11 Warrants Held No. of (5) (4) (4) Issued Warrants 31.59 31.59 % of 4.77 as at20March2017 List ofTop30LargestWarrantHolders .AirAsiaBerhad 1. Name ofWarrantHolders 9 RHBCapitalNominees(Tempatan) Sdn.Bhd. 29. 3 CimsecNominees(Tempatan)Sdn.Bhd. 13. CIMBGroupNominees(Tempatan)Sdn.Bhd. 8. 5 a hHc e hHc ,0,0 0.52 CimsecNominees (Tempatan) Sdn.Bhd. 30. 4,600,000 WuLung Yen 28. AlliancegroupNominees (Tempatan)Sdn.Bhd. 27. DanYokePyng 21. MaybankNominees(Tempatan)Sdn.Bhd. 20. CimsecNominees(Tempatan)Sdn.Bhd. 19. ChuaChinChyang 17. TanAhHock@Tee 15. AmsecNominees(Tempatan)Sdn.Bhd. 14. SatkunarajahA/LRajendra 10. CIMBGroupNominees(Tempatan)Sdn.Bhd. 9. KamarudinBinMeranun 6. CimsecNominees(Tempatan)Sdn.Bhd. 5. HSBCNominees(Asing)Sdn.Bhd. 4. CIMBGroupNominees(Tempatan)Sdn.Bhd. 3. .KenangaNominees(Tempatan)Sdn.Bhd. 2. 2 HowWongYuh 22. Alliancegroup Nominees(Tempatan)Sdn.Bhd. 18. AmsecNominees(Tempatan)Sdn.Bhd. 16. TongYunMong 11. CitigroupNominees(Tempatan)Sdn.Bhd. 7. 3 GanHaiToh 23. Maybank Nominees(Tempatan)Sdn.Bhd. 12. 4 YeoPohAnn 24. 5 NgKokHin 25. 6 KenangaNominees(Tempatan)Sdn.Bhd. 26. Pledged SecuritiesAccountforLimKeanSeng(015) Pledged SecuritiesAccountforCheeKwokFai CIMB BankforLiewJunKuan(MY0750) Pledged SecuritiesAccountforSiewBoonYeong Pledged SecuritiesAccountforTanPengNguang Pledged SecuritiesAccount–Ambank(M)BerhadforKalimullahBinMasheerulHassan(Smart) Exempt AnforCIMBSecurities(Singapore)PteLtd(RetailClients) Chua ChinChyang Pledged SecuritiesAccountforTuneGroupSdn.Bhd.(GCMCBM-SKYX) Pledged SecuritiesAccountforAnthonyFrancisFernandes(GCMCBM-SKYX) Exempt AnforAIABhd. Pledged SecuritiesAccountforTuneGroupSdn.Bhd.(EDG&GCM) Exempt AnforBankJuliusBaer&Co.Ltd.(SingaporeBch) Pledged SecuritiesAccountforKamarudinBinMeranun(GCMCBM-SKYX) For TuneGroupSdn.Bhd.(Barclays) CIMB forMohamad ZekriBinHajiIbrahim(PB) Pledged SecuritiesAccountforKhoo EngLee(MLK) Pledged SecuritiesAccountforLing HengSeek(8120306) Warrants Held 0,7,0 12.36 109,875,000 2,9,6 13.76 122,298,964 643902.97 26,433,900 808802.03 18,048,830 234828.14 72,364,872 ,0,0 0.67 6,000,000 815003.16 28,125,000 ,0,0 0.56 5,000,000 ,0,0 0.79 7,000,000 ,0,0 0.29 2,600,000 ,0,0 0.28 2,500,000 320101.49 13,200,100 ,6,0 0.45 3,960,000 ,5,0 0.39 3,450,000 217824.74 42,167,862 ,5,0 0.41 3,650,000 ,5,0 0.32 2,850,000 ,3,0 0.41 3,638,000 ,7,0 0.32 2,874,000 362152.66 23,672,175 ,0,0 0.46 4,100,000 ,0,0 0.37 3,305,500 877912.10 18,707,941 ,0,0 0.35 3,100,000 ,5,0 0.30 2,653,300 ,5,0 0.33 2,953,500 ,0,0 0.33 2,904,100 ,9,7 0.63 5,592,775 ,1,0 0.29 2,611,000 No. of ANNUAL REPORT 2016 % of Issued % ofIssued Warrant Warrant Capital

239

Corporate Directory Selangor, Malaysia 64000 KLIA,Sepang Jalan KLIA2 KL InternationalAirport LS2-3-110, Level3,TerminalKLIA2 AIRASIA XPASSENGEROPSOFFICE KUALA LUMPUR TianHe International Airport,Wuhan International Terminal GB17-18, 2ndFloor WUHAN Airport, China Terminal 3OfXi’anXianyang International International Zone1-177 XI’AN Terminal 2 Shanghai PudongInternationalAirport Room 2-B3-M11 SHANGHAI Sichuan Province,China 610202 Chengdu Chengdu ShuangliuInternationalAirport International Departure Chengdu RepresentativeOfficeL318 CHENGDU Beijing, China Beijing CapitalInternationalAirport Room 32092,Terminal2 BEIJING Hangzhou ZhejiangProvince,China Xiaoshan District Hangzhou XiaoshanInternationalAirport Room 2025A,InternationalTerminal HANGZHOU WA 6105,Australia Perth Airport 31/383 HorneMillerDrive PERTH Airport, NSW2020,Australia Sydney InternationalAirport Level 3-1062 SYDNEY Tullamarine, VIC3045,Australia Level 2,T2MelbourneAirport MELBOURNE Australia 1 EasternAvenue,QLD4225 Level 1,AirportCentral GOLD COAST Auckland 2150,NewZealand Auckland InternationalAirport Menzies Aviation,POBox73115 AUCKLAND OFFICES &STATIONS NEW ZEALAND AUSTRALIA MALAYSIA CHINA

Chongqing JiangbeiInternationalAirport Level 2,Terminal1 CHONGQING Floor 4,Room116 Terminal Nanjing LukouInternationalAirport NANJING Busan, S.Korea 108 Gonghangjinipno,Gangseo-Gu Gimhae InternationalAirport 3rd Floor,InternationalTerminalof BUSAN Incheon City,22382Rep.ofKorea 272 GonghangRo,JungGu Passenger Terminal Room 2063,IncheonInternationalAirport SEOUL Taoyuan City,Taiwan,ROC 15 HangZhanSRd.DayuanDistrict Taoyuan InternationalAirport C-O-260-2 Terminal1 TAIPEI Third floor,Unit 5,Tehran,Iran Sayeh Tower, 1049 ValiAsrSt TEHRAN Hajj Terminal,KSA King AbdulazizInternational Airport No. 12,MadinahRoad L02-B10-003 AlnakhilTrading Centre JEDDAH Terminal 3,NewDelhi–110037,India Indira GandhiInternationalAirport OL-17, Level4 DELHI Kathmandu, Nepal Tribhuvan InternationalAirport Room No.111,OperationsBuilding KATHMANDU Kansai Airport Room 2906StarGateHotel OSAKA Tokyo, Japan144-0041 2-6-5 HanedaKuko,Otaku International PassengerBuilding Room S7K0 TOKYO Hokkaido, 066-0012Japan New ChitoseAirportBibi, International TerminalBldg2F SAPPORO SAUDI ARABIA SOUTH KOREA TAIWAN JAPAN NEPAL INDIA IRAN

+66 251519999 +886 287933532 050 409200525 +632 7222742 +64 98876920 chargeable atRM1.95perminute (AirAsia XPremiumLine) 1600 858888 +853 62626352 +852 30135060 +81 5068648181 +62 8041333333 +62 2129270999 1860 5008000 +86 51285557711 +61 281882133 Honolulu, Hawaii96819USA 300 RodgersBoulevard#55 Honolulu InternationalAirport AirAsia XBerhad HONOLULU, HAWAII Plaine Magnien,Mauritius SSR InternationalAirport Hall A,Level1,DepartureTerminal AirAsia XBerhad PLAINE MAGNIEN CALL CENTRENUMBERS UNITED STATESOFAMERICA NEW ZEALAND SOUTH KOREA HONG KONG PHILIPPINES AUSTRALIA INDONESIA MAURITIUS MALAYSIA THAILAND TAIWAN MACAU JAPAN CHINA INDIA ANNUAL REPORT 2016

241 242 3. To approve the Non-Executive Directors’ Remuneration with effect from the financial year ToapprovetheNon-ExecutiveDirectors’Remunerationwitheffectfromfinancialyear 3. 8. To considerandifthoughtfit,topass,withorwithout modifications,thefollowingResolutions: ToapprovetheNon-IndependentNon-ExecutiveDirectors’FeesofRM246,885andan 2. ToreceiveandconsidertheAuditedFinancialStatementstogetherwithReportsof 1. 23 May 2017at 10.00 a.m.for thefollowing purposes:- International Airport,64000Sepang,SelangorDarulEhsan,Malaysia onTuesday, of Excellence, Lot PT25B,JalanKLIAS5,SouthernSupportZone, Kuala Lumpur Berhad (734161-K) (“AAX” Company”) or“the willbeheldatAsianAviation Centre NOTICE ISHEREBY GIVENTHAT Notice ofAnnualGeneralMeeting AIRASIA XBERHAD 7. To appoint Messrs Ernst & Young as Auditors of the Company in place of the retiring Auditors, ToappointMessrsErnst&YoungasAuditors oftheCompanyinplaceretiringAuditors, 7. Tore-appointthefollowingDirectorsofCompany:- 6. Tore-electDato’YusliBinMohamedYusoffasaDirectoroftheCompany, whoretirespursuant 5. Tore-electTanSriDr.AnthonyFrancisFernandesasaDirectoroftheCompany, whoretires 4. AS SPECIALBUSINESS AS ORDINARYBUSINESS i TanSriAsmatBinKamaludin. ii. TanSriRafidahAziz;and i. Please refertoNoteB. Please refertoNoteA. Please refertoNoteF. Please refertoNoteE. Please refertoNoteD. Please refertoNoteC. the year2018. ending 31December2017untilthenextAnnualGeneralMeetingofCompanytobeheldin of thenextAnnualGeneral MeetingoftheCompany.” Malaysia SecuritiesBerhad ANDTHATsuchauthorityshallcontinueinforceuntil theconclusion for thelistingofandquotation fortheadditionalsharessoissuedonMain MarketofBursa Company forthetimebeingandthatDirectors be andalsoempoweredtoobtainapproval shares issuedpursuanttothisresolutiondoesnotexceed 10%oftheissuedsharecapital Directors may,intheirabsolutediscretion,deemfit provided thattheaggregatenumberof Company fromtimetoanduponsuchterms conditionsandforsuchpurposesasthe of relevantauthorities,theDirectorsbeandarehereby empoweredtoissuesharesinthe “ ACT, 2016 AUTHORITY TOALLOTSHARESPURSUANTSECTIONS 75AND76OFTHECOMPANIES ORDINARY RESOLUTION 31 December2016. additional RM55,000fortheIndependentNon-ExecutiveDirectorsfinancialyearended Directors andAuditorsthereonforthefinancialyearended31December2016. Messrs PricewaterhouseCoopersandtoauthorisetheDirectorsdeterminetheirremuneration. to Article126oftheCompany’sArticlesAssociation. pursuant toArticle126oftheCompany’sArticlesAssociation. THAT pursuant to Sections 75 and 76 of the Companies Act, 2016 and subject to the approval pursuant toSections75and76oftheCompaniesAct, 2016andsubjecttotheapproval the Eleventh AnnualGeneral MeetingofAirAsiaX (Resolution 4) (Resolution 6) (Resolution 8) (Resolution 3) (Resolution 5) (Resolution 2) (Resolution 7) (Resolution 1) 28 April 2017 Selangor Darul Ehsan Company Secretary (MAICSA 7002687) JASMINDAR KAURA/PSARBAN SINGH By OrderoftheBoard To transactanyotherbusinessofwhichduenoticeshallhavebeengiven. 10. 9. OTHER ORDINARYBUSINESS 2.6 oftheCircular.” provided alwaysthatsuchamountoramountscomply withtheproceduressetoutinSection one ofthembeandareherebyauthorisedtoagree to theactualamountoramountsthereof Section 2.3oftheCircularbeingprovisionalinnature, theDirectorsofCompanyand/orany AND THAT Resolution. Recurrent RelatedPartyTransactionscontemplatedand/orauthorisedbythisOrdinary the DirectorsofCompanyintheirdiscretiondeemfitandexpedienttogiveeffect necessary andwithfullpowerstoassentanymodifications,variationsand/oramendmentsas interest oftheCompany,includingexecutingallsuchdocumentsasmayberequiredor complete anddoallsuchactsthingsastheyconsidernecessaryorexpedientinthebest THAT whicheveristheearliest. theshareholders’mandateissubjecttoannualrenewalandthisshall c) thedisclosureismadeinannualreportofbreakdownaggregatedvalue b) theRecurrentRelatedPartyTransactionsareenteredintoinordinarycourseof a) Please refertoNoteG. (“Circular”), subjectfurthertothefollowing: Transactions”) assetoutinSection2.3oftheCirculartoShareholdersdated28April2017 transactions ofarevenueortradingnaturewiththerelatedparties(“RecurrentRelatedParty and newshareholders’mandatefortheCompanytoenterintorecurrentrelatedparty “ NATURE (“PROPOSEDMANDATE”) MANDATE FORRECURRENTRELATEDPARTYTRANSACTIONSOFAREVENUEORTRADING PROPOSED RENEWALOFEXISTINGSHAREHOLDERS’MANDATEANDNEW ORDINARY RESOLUTION THAT iii) revoked or varied by resolution passed by the shareholders of the Company in a revokedorvariedbyresolution passedbytheshareholdersofCompanyina iii) theexpirationofperiodwithinwhichnextAGMafterdateis required tobe ii) theconclusionofnextAnnualGeneralMeeting(“AGM”)Companyfollowing i) only continuetobeinfullforceuntil: thenamesofrelatedpartiesinvolvedineachtypeRecurrentRelatedParty ii) thetypeofRecurrentRelatedPartyTransactionsmade;and i) during thefinancialyear,amongothers,basedonfollowinginformation: the RecurrentRelatedPartyTransactionsconductedpursuanttoshareholders’mandate Company; commercial termswhicharenottothedetrimentofminorityshareholders Recurrent RelatedPartyTransactionsareundertakenonarm’slengthbasisandnormal more favourabletotherelatedpartiesthanthosegenerallyavailablepublic,and business whicharenecessaryfortheday-to-dayoperationsandontermsnot the Directors of the Company and/or any one of them be and are hereby authorised to the DirectorsofCompanyand/oranyonethembeandareherebyauthorisedto approval be and is hereby given for the renewal of the existing shareholders’ mandate approval beandisherebygivenfortherenewalofexistingshareholders’mandate general meeting, extend tosuchextensionasmaybeallowedpursuantSection340(4)oftheAct);or held pursuanttoSection340(2)oftheCompaniesAct,2016(“Act”)(butshallnot unless byaresolutionpassedatthenextAGM,suchauthorityisrenewed; the AGMatwhichthisshareholders’mandateisapproved,timeitwilllapse, Transaction madeandtheirrelationshipwiththeCompany; as the estimates given for the Recurrent Related Party Transactions specified in as theestimatesgivenforRecurrentRelatedParty Transactionsspecifiedin ANNUAL REPORT 2016 (Resolution 9)

243 244 EXPLANATORY NOTES: The NRC recommended and the Board affirmed for an increase in the TheNRCrecommended andtheBoardaffirmed foranincreaseinthe ToapprovetheNon-ExecutiveDirectors’Remunerationwith effectfrom C. TheShareholder’sapprovalis beingsoughtunderResolution1forthe h) Pursuant to Paragraph 8.29A(1) of the Main Market Listing Requirements of PursuanttoParagraph8.29A(1)oftheMainMarketListingRequirements h) TheProxyFormorotherinstrumentsofappointmentshallnotbetreated g) WhereaMemberoftheCompanyisanexemptauthorisednomineewhich f) Whereamemberappointstwoproxies,theappointmentshallbeinvalid e) TheProxyForminthe caseofanindividualshallbesignedbythe d) Amemberentitledtoattendandvoteisappointaproxy(orin c) Amembermustberegistered intheRecordofDepositorsat5.00p.m.on b) PursuanttotheSecuritiesIndustry(CentralDepositories)(Foreign a) NOTES ONAPPOINTMENTOFPROXY Notice ofAnnualGeneralMeeting AIRASIA XBERHAD As for the Non-Independent Non-Executive Directors, the NRC proposed AsfortheNon-IndependentNon-ExecutiveDirectors,NRCproposed BasedontheannualreviewofDirectors’Remunerationby ToapprovetheNon-IndependentNon-ExecutiveDirectors’Feesof B. ThisAgendaitemismeantfordiscussiononlyasundertheprovisionsof AuditedFinancialStatementstogetherwiththeReportsofDirectors A. basic board fee from RM60,000 p.a. to RM65,000 p.a. and no change to basic boardfeefrom RM60,000p.a.toRM65,000 p.a.andnochangeto Chairman ofthe Board’s feefromRM150,000p.a.to RM165,000p.a.,the (Resolution 2) Meeting (“AGM”)oftheCompany tobeheldintheyear2018 the financialyearending31December 2017untilthenextAnnualGeneral the explanationabove. Executive Directorsforthefinancial yearended31December2016asper RM246,885 andanadditionalRM55,000 fortheIndependentNon- payment totheNon-Independent Non-ExecutiveDirectors’Feesof shall beputtovotebywayofpoll. Bursa MalaysiaSecuritiesBerhad,alltheresolutionssetoutinthisNotice copies ofthedulyexecutedformproxyarenotacceptable. forty-eight (48)hoursbeforethetimesetforholdingmeeting. 47301 PetalingJaya,SelangorDarulEhsan,Malaysianotlessthan B-13-15, Level13,MenaraPrimaTowerB,JalanPJU1/39,DataranPrima, as validunlessdepositedattheRegisteredOfficeofCompany each omnibusaccountitholds. proxies whichtheexemptauthorisednomineemayappointinrespectof securities account(“omnibusaccount”),thereisnolimittothenumberof holds ordinarysharesintheCompanyformultiplebeneficialownersone by eachproxy. unless hespecifiestheproportionofhisshareholdingstoberepresented common sealorunderthehandofanofficerattorneydulyauthorised. appointor orhisattorney,andinthecaseofacorporation,eitherunderits proxy(ies). in hisstead.Thereshallbenorestrictionastothequalificationof the caseofacorporation,toappointrepresentative),attendandvote attend andvoteattheMeeting. and timeshallbedisregardedindeterminingtherightsofanypersonto in theentriesonRecordofDepositorsafterabovementioneddate name appearsintheGeneralMeetingRecordofDepositors.Anychanges entitled toattendtheMeetingandspeakvotethereatunlesshis and voteattheMeeting.AdepositorshallnotberegardedasaMember 16 May2017(“GeneralMeetingRecordofDepositors”)inordertoattend of theforthcomingAnnualGeneralMeeting. disenfranchised votingrightsshallbeautomaticallyvestedintheChairman entitled tovote,willsimilarlynotbevote.Consequently,allsuch Meeting, shallbeentitledtovote.AproxyappointedbyaForeignernot Record ofDepositorstobeusedfortheforthcomingAnnualGeneral total issuedandpaid-upcapital,onafirst-in-timebasisbasedthe shares uptothecurrentprescribedforeignownershiplimitof45.0% of Association,onlythoseForeigners(asdefinedintheArticles)whohold Ownership) Regulations1996andArticle44(1)oftheCompany’sArticles 31 December 2016:- 31 December the followingandBoardaffirmedforfinancialyearended anew feetobepaidfortheSafetyReviewBoard(“SRB”)Chairmanof c. a50%incrementonthefeepayabletooneNRCMemberfrom b. a50%incrementonthefeepayabletoNRCChairmanfrom a. following forthefinancialyearended31December2016:- Non-Executive Directors,theNRCproposedandBoardaffirmed Nomination andRemunerationCommittee(“NRC”),fortheIndependent (Resolution 1) Executive Directorsforthefinancialyearended31December2016 RM246,885 andanadditionalRM55,000fortheIndependentNon- the matterwillnotbeputforwardforvoting. accounts donotrequiretheformalapprovalofshareholdersandhence, Section 248(2)and340(1)oftheCompaniesAct,2016.Theaudited and Auditorsthereonforthefinancialyearended31December2016 R ebrRM16,885 RM20,000 RM60,000each 1 SRBmember RM30,000 1 NRCmember 1 AuditCommitteemember 3 Directors Directors’ Fee(perannum) RM30,000 p.a. RM10,000 toRM20,000p.a.;and RM15,000 toRM30,000perannum(p.a.); Other CommitteeMember Non-Executive Director/ Faxed Faxed Ordinary Resolution 9, if passed, will allow the Group to enter into OrdinaryResolution 9, ifpassed,willallowthe Grouptoenterinto Proposedrenewalofexistingshareholders’mandateandnew G. TheGeneralMandate,ifgranted, willprovidetheflexibilitytoCompany OrdinaryResolution8hasbeenproposedforthepurposeofrenewing Authoritytoallotsharespursuant toSections75and76ofthe F. TheproposedappointmentofEYissubjecttothereceipttheirconsent TheCompany’sexistingauditors,MessrsPricewaterhouseCoopers(“PwC”), TheCompanyhasreceivedaletterdated21March2017fromitsmajor AppointmentofAuditors (Resolution7) E. ThedetailsoftheaboveDirectorsaresetoutinProfile TheproposedOrdinaryResolutions5and6,ifpassed,willenablebothTan AttheTenthAnnualGeneralMeetingofCompanyheldon31May2016, WiththecomingintoforceCompaniesAct2016on31January2017, ToreappointthefollowingDirectorsofCompany (Resolutions5and6) D. TheShareholder’sapprovalisbeingsoughtunderResolution2forthe Shareholders dated 28April2017forfurtherinformation. Bursa MalaysiaSecurities Berhad.Pleaserefertothe Circularto pursuant totheprovisions oftheMainMarketListing Requirementsof Recurrent Related PartyTransactionsofarevenue ortradingnature revenue ortradingnature(“Proposed Mandate”)(Resolution9) shareholders’ mandateforRecurrent RelatedPartyTransactionsofa convening ofadditionalshareholders meeting(s). thereby reducingadministrativetime andcostsassociatedwiththe repayment ofbankborrowing,working capitaland/oracquisition(s)and placing ofsharesforthepurposes offundingfutureinvestmentproject(s), for anyfuturefundraisingactivities, includingbutnotlimitedtofurther next AGMisrequiredbylawtobeheld,whicheverearlier. General Meeting(“AGM”)ortheexpirationofperiodwithinwhich the Company inageneralmeeting,expireattheconclusionofnext Annual general meeting.TheGeneralMandatewill,unlessrevokedorvaried bythe the Companyattheirdiscretionwithouthavingtofirstconveneanother will givetheDirectorsofCompanyauthoritytoissueordinary shares in and 76oftheAct(“GeneralMandate”).OrdinaryResolution8,ifpassed, general mandateforissuanceofsharesbytheCompanyunderSections 75 Companies Act,2016(Resolution8) conclusion ofthenextAGMCompany. to actasauditorsandifapproved,theyshallholdofficeuntilthe Company. PwChavebeentheauditorsofCompanysinceAugust2007. the conclusionofforthcomingAnnualGeneralMeeting(“AGM”) General MeetingoftheCompanyheldon31May2016toholdofficeuntil were re-appointedastheauditorsofCompanyatTenthAnnual the appointmentofcompany’sauditorsfromtimetotime. proposed changeisinlinewithgoodcorporategovernanceofrevisiting annexed andmarkedas‘AppendixA’intheAnnualReport2016.The (“EY”), asthenewstatutoryauditorsofCompany.Acopywhichis shareholder, TuneGroupSdn.Bhd,nominatingMessrsErnst&Young pages 49and55ofthisAnnualReport. Directors oftheCompany. Tan SriRafidahAzizandAsmatBinKamaludinbere-appointedas re-appointment. TheBoardhasendorsedtheNRC’srecommendationthat Aziz andTanSriAsmatBinKamaludinrecommendedfortheir the CompanyhasassessedcriteriaandcontributionofTanSriRafidah at alaterdate.TheNominationandRemunerationCommittee(“NRC”)of Directors oftheCompanyandtheyshallsubjecttoretirementbyrotation Sri RafidahAzizandTanAsmatBinKamaludintocontinueactas General Meetingandtheyhaveofferedthemselvesforre-appointment. Meeting. TheirtermofofficewillendattheconclusionEleventhAnnual Act, 1965toholdofficeuntiltheconclusionof11thAnnualGeneral the ageof70,werere-appointedpursuanttoSection129Companies both TanSriRafidahAzizandAsmatBinKamaludin,whoareabove there isnoagelimitfordirectors. accordance withtheremunerationstructureassetoutabove. year ending31December2017uptothenextAGMofCompanyin payment oftheRemunerationtoNon-ExecutiveDirectorsforfinancial shown below:- 2017 untilthenextAGMofCompanytobeheldinyear2018as the Committeefeeswitheffectfromfinancialyearended31December, (per annum) Directors’ Fee Non-Executive etn loac ,0 1,000 20,000 20,000 1,000 30,000 30,000 30,000 65,000 course ofcarryingouttheirduties. and otherclaimableexpensesincurredinthe Insurance premiumsonmedicalcoverage, Other Non-ExecutiveDirectors’Benefits 40,000 Meeting allowance committee member) 165,000 each directoror (per attendanceby Directors’ Benefits Non-Executive SRB NRC Audit Committee Board ofDirectors or ietr BoardCommittees Board Directors Non-Executive Non-Executive Chairman RM Directors. the Non-Executive of RM100,000forall Up toatotalamount Committee Member Per Non-Executive Per Non-Executive Director/Per other Director/Per other RM APPENDIX A The service you need. Guaranteed. rockwellcollins.com X. AirAsia with to partner Proud 246 time. Every Anytime. Anywhere. your MRO needs. tofit tailored and reliable, support, of 24/7 service equipmen critical of cycle thelife ensure and extend From Kuala Lumpur day toKansas to airlines City, Collins around onRockwell every theworldrely Glossary AIRASIA XBERHAD Stage Revenue PassengerKilometres(RPK) Revenue perASK(RASK) Passengers carried Load factor fuel) Cost perASK,excludingfuel(CASKex Cost perASK(CASK) Capacity Block hours Average BaseFare Load Factor Revenue PassengerKilometres(RPK) Available SeatKilometres(ASK) Aircraft utilisation Aircraft atendofperiod AirAsia X t. At Rockwell Collins, At Rockwell t. we’ve built aglobal network A one-wayrevenueflight. passengers haveflown. Number ofpassengersmultipliedbythenumberkilometresthose Revenue dividedbyavailableseatkilometres. seats providedtostaffforbusinesstravel. passengers (includingno-shows),seatsprovidedforpromotionalpurposesand Number ofearnedseatsflown.Earnedcomprisessoldto Number ofpassengersasapercentagecapacity. seat kilometres. Revenue lessoperatingprofitandaircraftfuelexpenses,dividedbyavailable Revenue lessoperatingprofitdividedbyavailableseatkilometres. The numberofseatsflown. at thedestinationairport. the terminalatdepartureairporttotimethatitarrives Hours ofserviceforaircraft,measuredfromthetimethataircraftleaves Passenger seatsales,surchargesandfeesdividedbynumberofpassengers. percentage ofASKs. The numberofRevenuePassengerKilometres(RPKs)expressedasa Total passengersflownmultipliedbydistanceflown. Total seatsflownmultipliedbydistanceflown. Average numberofblockhoursperdayaircraftoperated. duration attheendofperiod. Number ofaircraftownedoronleasearrangementsoveronemonth’s “The Company”or“AirAsiaX”. © 2017 Roc k we ll Co ll ins. A ins. ll rig h ts reserve d . Smart technology updates technology Smart solutions Performance-based solutions service Tailorable, cycle life Fly East

Your Partner to Expand new Markets

Tel: +60 6856 6927 E-mail: [email protected] This page has been intentionally left blank. AIRASIA X BERHAD Form of Proxy (Company No.: 734161-K) Incorporated in Malaysia

I/We NRIC No./or Co. No.: of (FULL NAME IN BLOCK LETTERS) (COMPULSORY)

(ADDRESS) telephone no. being a member of the Company hereby appoints (COMPULSORY)

NRIC No.: (FULL NAME IN BLOCK LETTERS) (COMPULSORY) of (ADDRESS) and/or NRIC No.: (FULL NAME IN BLOCK LETTERS) (COMPULSORY) of (ADDRESS) as my/our proxy(ies) to vote in my/our name and on my/our behalf at the Eleventh Annual General Meeting of the Company to be held on Tuesday, 23 May 2017 at 10.00 a.m. and at any adjournment of such meeting and to vote as indicated below:

AGENDA No. 1 To consider the Audited Financial Statements and the Reports of Directors and Auditors thereon

RESOLUTIONS DESCRIPTION FOR AGAINST

Ordinary Ordinary Business

No. 1 To approve the Non-Independent Non-Executive Directors’ Fees of RM246,885 and an additional RM55,000 for the Independent Non-Executive Directors for the financial year ended 31 December 2016

No. 2 To approve the Non-Executive Directors’ Remuneration with effect from the financial year ending 31 December 2017 until the next Annual General Meeting of the Company to be held in the year 2018

No. 3 Re-election of Tan Sri Dr. Anthony Francis Fernandes as a Director of the Company, who retires pursuant to Article 126 of the Company’s Articles of Association

No. 4 Re-election of Dato’ Yusli Bin Mohamed Yusoff as a Director of the Company, who retires pursuant to Article 126 of the Company’s Articles of Association

No. 5 Re-appointment of Tan Sri Rafidah Aziz

No. 6 Re-appointment of Tan Sri Asmat Bin Kamaludin

No. 7 Appointment of Messrs Ernst & Young in place of the retiring Auditors, Messrs PricewaterhouseCoopers and authority to the Directors to determine the Auditors’ remuneration

Special Business

No. 8 Authority to allot shares pursuant to Sections 75 and 76 of the Companies Act, 2016

No. 9 Proposed renewal of existing and new shareholders’ mandate for Recurrent Related Party Transactions of a revenue or trading nature

(Please indicate with an “X” in the spaces provided how you wish your votes to be cast. If you do not do so, the proxy will vote or abstain from voting as he thinks fit)

No. of shares held:

CDS Account No.:

The proportion of my/our holding First Proxy : % to be represented by my/our proxies are as follows: Second Proxy : %

Date: Signature of Shareholder/Common Seal Notes to Form of Proxy a. Pursuant to the Securities Industry (Central Depositories) (Foreign d. The Proxy Form in the case of an individual shall be signed by the Ownership) Regulations 1996 and Article 44(1) of the Company’s Articles appointor or his attorney, and in the case of a corporation, either under its of Association, only those Foreigners (as defined in the Articles) who hold common seal or under the hand of an officer or attorney duly authorised. shares up to the current prescribed foreign ownership limit of 45.0% of e. Where a member appoints two proxies, the appointment shall be invalid the total issued and paid-up capital, on a first-in-time basis based on the unless he specifies the proportion of his shareholdings to be represented Record of Depositors to be used for the forthcoming Annual General by each proxy. Meeting, shall be entitled to vote. A proxy appointed by a Foreigner not f. Where a Member of the Company is an exempt authorised nominee which entitled to vote, will similarly not be entitled to vote. Consequently, all holds ordinary shares in the Company for multiple beneficial owners in one such disenfranchised voting rights shall be automatically vested in the securities account (“omnibus account”), there is no limit to the number of Chairman of the forthcoming Annual General Meeting. proxies which the exempt authorised nominee may appoint in respect of b. A member must be registered in the Record of Depositors at 5.00 p.m. on each omnibus account it holds. 16 May 2017 (“General Meeting Record of Depositors”) in order to attend g. The Proxy Form or other instruments of appointment shall not be treated and vote at the Meeting. A depositor shall not be regarded as a Member as valid unless deposited at the Registered Office of the Company at entitled to attend the Meeting and to speak and vote thereat unless his B-13-15, Level 13, Menara Prima Tower B, Jalan PJU 1/39, Dataran Prima, name appears in the General Meeting Record of Depositors. Any changes 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia not less than in the entries on the Record of Depositors after the abovementioned date forty-eight (48) hours before the time set for holding the meeting. Faxed and time shall be disregarded in determining the rights of any person to copies of the duly executed form of proxy are not acceptable. attend and vote at the Meeting. h. Pursuant to Paragraph 8.29A(1) of the Main Market Listing Requirements c. A member entitled to attend and vote is entitled to appoint a proxy (or in of Bursa Malaysia Securities Berhad, all the resolutions set out in this the case of a corporation, to appoint a representative), to attend and vote Notice shall be put to vote by way of poll. in his stead. There shall be no restriction as to the qualification of the proxy(ies).

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STAMP

COMPANY SECRETARY AirAsia X Berhad (Company No. 734161-K) B-13-15, Level 13 Menara Prima Tower B Jalan PJU 1/39, Dataran Prima 47301 Petaling Jaya Selangor Darul Ehsan

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