Wednesday August 29, 2012
AirAsia soaring towards another good year
PETALING JAYA: Low-cost carrier AirAsia Bhd posted a 3% drop in net operating profit to RM130.94mil for the second quarter ended June 30 compared with the quarter a year ago on a drop in ancillary income and a marginally lower seat-load factor of 80%.
Revenue increased 9.22% to RM1.18bil in the quarter under review on the back of a 10% growth in passenger volume as well as higher average fare of RM177 compared with RM164 previously.
AirAsia's newly-appointed chief executive officer, Aireen Omar, said in a press release that despite the majority of airlines losing money or being severely behind in earnings amid higher fuel prices, the company had continued to outperform each quarter by posting healthy profits.
She said despite the 12% year-on-year increase in capacity (with number of aircraft now at 58), demand remained solid with passenger load factor of 80% for the quarter. This compares with 81% in the same quarter a year ago.
Net profit jumped more than 10-fold to RM1.19bil boosted by a gain on disposal and fair value of interest in Thai AirAsia of RM1.16bil.
Aireen said the company position remained strong with RM2.16bil in cash and bank balances while net gearing remained low at 1.10 times. Earnings before interest, taxes, depreciation, amortisation, and restructuring or rent as well as earnings before interest and tax margins were 32% and 17% respectively.
The company was now recognising profit from Thai AirAsia and Asian Aviation Centre of Excellence of RM11.9mil and RM2.2mil respectively, she said, adding: “This is yet another affirmation of what we have always maintained that our affiliates and adjacency business will contribute healthily to our bottom line while not including Indonesia AirAsia, Philippines AirAsia, AirAsia Japan and AirAsia Expedia which are still posting losses. Eventually when they grow to a larger scale, the company can stand to benefit larger contribution to the bottom line.”
Thai AirAsia posted a 25.08% drop in net profit to 245.79 million baht for the quarter with load factor of 79% while recording a 16% rise in revenue of 4.43 billion baht due to higher passenger volume from introducing new routes.
Indonesia AirAsia posted a 9% gain in revenue to 986.52 million rupiah compared witha year ago on a 15% rise in passenger volume.
Cost per available seat per km was reported at 13.86 sen, an increase of 3% year-on-year while excluding fuel, stood at 7.02 sen, an increase of 6%.
“Since the second quarter last year, the company financed nine out of 14 aircraft through sale-and-leaseback and operating lease, thus increasing the aircraft operating lease expense by 147% year-on-year,” Aireen said.
She said revenue per available seat km was unchanged mainly due to the drop in ancillary income per passenger spent from RM45 to RM37.
“This was due mainly to our experiment on our baggage pricing of which did not work. As the prices did not push demand higher as we envisioned, management then decided to reinstate the previous prices. Overall ticket demand also remained high despite an increase in average fare of 8% year-on-year and capacity increase of 12% year-on-year,” Aireen said.
She added that the company was on course for another good year in terms of performance.
“Based on forward bookings, demand remain positive as the Eid ul-Fitr period will push for strong load factors in the third quarter, and positioning itself for a seasonally strong quarter. We expect to launch more exciting new routes and increase frequencies on few routes within Asean in the second half of the year. This will be supported by the deliveries of 13 (as of date) brand new A320s to be distributed among the five entities,” Aireen said.
To cater to the high demand traffic throughout the region, AirAsia has also brought forward additional aircraft in 2013 and 2014 bringing the total number of aircraft to 21 and 24 respectively.
Aireen said the company was constantly monitoring the fuel price situation and aimed to match hedges against forward bookings. “We will not hesitate to add to our hedges if we perceive an opportunity,” she said.
Meanwhile, at the group level, group CEO Tan Sri Tony Fernandes said the focus would remain on containing or driving down controllable costs to maintain the airline's competitive edge.
“We will strive to increase load factors in line with the higher capacity. We are here to develop and grow markets in the region which is very much a part of our Asean strategy. We will also continue to improve our product offerings to always provide the best customer experience to our guests,” he said.
Fernandes said the airline's efforts had been recognised globally with the award of the World's Best Low Cost Airline for the fourth year in a survey of 17 million air travellers conducted by Skytrax as well as ranked in the United States as number one airline in Aviation Week.