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Malaysia's AirAsia Q1 net profit up 11.3% on passenger increment

29-Nov-2005

KUALA LUMPUR (XFNews) - Budget carrier AirAsia Bhd said net profit for the first quarter to September rose 11.3 pct to 11.67 mln rgt from 10.47 mln a year earlier on the back of improved passenger numbers and average fares.

AirAsia said passenger numbers in the quarter increased 21% year-on-year to 1.19 million while average fares rose 18% to MYR144.

Pretax profit for the three months grew 12.4% to 11.95 million rgt as revenue expanded nearly 50 pct to MYR186.27 million.

In a statement, the company said the first quarter is seasonally the weakest quarter for the year yet AirAsia managed to achieve encouraging performance results relative to the industry.

"Yields for the quarter improved by 10%," it said, adding that passenger load factor fell 7 percentage points as a result of significant capacity addition and the introduction of multiple new destinations.

In notes accompanying its results, AirAsia said its first quarter results were also affected by the higher fuel price, adding it has implemented a fuel surcharge to mitigate the increase in fuel costs.

AirAsia said earnings before income tax, depreciation and amortisation (EBITDA) margins fell to 18% in the first quarter against 26% a year earlier mainly due to the higher cost of fuel.

Cost per average seat kilometre (ASK) for the quarter was 2.41 US cents, up 16% from a year earlier as fuel prices peaked during the period as result of the US hurricane season and tight global refining capacity.

"Our fuel hedge and, to a certain extent, our fuel surcharge helped to offset some of this, but our effective cost per barrel was 39 pct higher than the same period last year," it added.

Looking ahead, AirAsia said the cost of jet fuel remains a real concern as fuel prices have been on a steady upward trend.

It said it has hedged 100% of its fuel volume requirement for the fiscal year to June 30, 2006.

"The directors expect the results for the current fiscal year to June 2006 to exceed the results for the previous fiscal year barring any unforeseen event and subject to timely delivery of aircraft and no further unusual increase in fuel price," it added.

In a conference call with analysts and journalists to announce the airline's first quarter results, chief executive officer Tony Fernandes said he is confident AirAsia's sales and earnings for year to June 2006 will exceed that of the preceding year.

He also expects the airline's passenger load factor to improve in the coming quarters despite falling seven percentage points in the first quarter to September due to significant capacity addition and the introduction of multiple new destinations.

On its domestic rationalisation plan, Fernandes said the plan presents a chance for AirAsia to grow its domestic routes, especially internal flights between the southern state of Johore and East Malaysia.


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