AirAsia net drops 95% on high fuel costs, forex losses

MALAYSIAN budget carrier AirAsia yesterday said its net profit plummeted 95 per cent in the second quarter compared to a year ago, blaming high fuel costs and foreign exchange losses.

The region's biggest low-cost carrier posted net profit of RM9.4 million (US$2.3 million) for the three months to June, compared with RM185.1 million a year earlier.

"This is a commendable performance given that unit fuel price increased by 65 per cent to US$142.5 per barrel," said Chief Executive Tony Fernandes, adding that Malaysia's weakening currency led to a loss of RM77 million.

Fernandes said revenues increased 41 per cent in the quarter to RM608 million, with a 20 per cent increase in passenger load and a 16 per cent rise in fares.

AirAsia said it was benefitting from the global economic slowdown, as more travellers including corporate customers switched from full-service carriers to budget airlines.

It said a new fee for checked-in baggage introduced in the quarter has helped to compensate for some of the higher fuel cost "without undermining passenger demand".

Load factor the proportion of seats filled decreased to 76.4 per cent from 80.7 per cent a year earlier as capacity jumped 33 per cent with the introduction of two Airbus A320s to the fleet.

The carrier had 43 aircraft by the end of the reporting period, up from 34 a year earlier.

AirAsia said its Thai operations "endured a challenging period due to escalating domestic political uncertainty".

Fernandes was characteristically bullish about the carrier's future. "At a time when most airlines are cutting back on capacity and carrying fewer passengers, AirAsia continues to grow the business and expand the route network successfully," he said.

AirAsia also pointed out that its Indonesian route network reorganisation produced positive outcomes with greater passenger flow and substantially higher yields.

But the fuel cost rise affected its Indonesian operations severely because it was using Boeing 737-300 aircraft.

AirAsia said Indonesia will receive its first Airbus A320 aircraft on Sept 19. It will help reduce operational cost and enhance efficiency.

AirAsia said although the third quarter was traditionally the weakest, lower jet fuel prices, together with continued strong demand, is expected to augur well for the firm.

AFP, Bernama