31-May-2006 10:34 AM
Malaysia's AirAsia Q3 to March net profit down 44 pct on higher costs
Analysis
KUALA LUMPUR (XFN-ASIA) - Budget carrier AirAsia reported a 44 pct year-on-year drop in third-quarter to March net profit, citing intense competition, high promotion costs and a hefty one-off maintenance cost.
The carrier announced a net profit of 22.80 mln rgt for the fiscal third quarter, compared to 40.69 mln a year ago.
It said revenues were up 23 pct to 201.68 mln rgt, driven by a 42 pct growth in passengers, but that this was offset by a 14 pct drop in average fares.
Profits were also hit by a one-off maintenance charge of 6.3 mln rgt on the final batch of Boeing 737s brought into the fleet. The airline has ordered 100 new Airbus A320s to quadruple the size of its fleet and shave down costs.
"Our outlook for the fourth quarter is positive relative to the third quarter," chief executive Tony Fernandes said.
"We budget for higher oil prices, but anticipate that these higher costs will be partially offset by a more benign yield environment" now that Malaysia Airlines has dropped a discount promotion, he said.
"The new A320s, the cost and operational benefits from the low-cost terminal and a strengthening ringgit should continue to drive operating costs lower, although fuel volatility will remain a variable," he said.
It said revenues were up 23 pct to 201.68 mln rgt, driven by a 42 pct growth in passengers, but that this was offset by a 14 pct drop in average fares.
Profits were also hit by a one-off maintenance charge of 6.3 mln rgt on the final batch of Boeing 737s brought into the fleet. The airline has ordered 100 new Airbus A320s to quadruple the size of its fleet and shave down costs.
"Our outlook for the fourth quarter is positive relative to the third quarter," chief executive Tony Fernandes said.
"We budget for higher oil prices, but anticipate that these higher costs will be partially offset by a more benign yield environment" now that Malaysia Airlines has dropped a discount promotion, he said.
"The new A320s, the cost and operational benefits from the low-cost terminal and a strengthening ringgit should continue to drive operating costs lower, although fuel volatility will remain a variable," he said.