AirAsia 2Q2014 revenue growth supported by increased traffic, ancillary revenue up 13%

AirAsia attributed (20-Aug-2014) growth in revenue of 5% year-on-year in 2Q2014 to 1% growth in passenger numbers. Capacity increased 1% with load factor remaining steady at 80%, in line with the carrier's target. Ancillary income per passenger increased 13% to MYR45 (USD14.2) and the carrier aims to achieve MYR50 (USD15.8) per passenger in the short term. Increased CASK was mainly due to growth in average fuel prices, with non-fuel costs remaining unchanged year-on-year. The company recorded a 17% decrease in operating profit due to its share in Thai AirAsia's net loss for the quarter. Excluding the Thai AirAsia results, AirAsia's operating profit would have been flat year-on-year. Growth in profit after tax of 529% was largely attributed to foreign exchange gain on borrowings. The carrier commenced a route rationalisation exercise in 2Q2014, reducing frequencies on routes where it felt yields were diluted. The airline reported a reduction in "irrational" fare pricing by competitors and a positive upward trend in average fares. AirAsia Group CEO Tony Fernandes said the company foresees reduced capacity in Malaysia and a realignment of business strategy by its competitors to ensure sustainability. Capacity growth in the region, particularly in Malaysia, is expected to return to a "realistic" level in 2H2014. Passenger numbers and fares in Malaysia for 3Q2014 are expected to be broadly in line with 3Q2013, reflecting better price discipline in the market. AirAsia is on track with selling older aircraft to capitalise on residual value and maintain a young and efficient fleet. AirAsia Group CEO Tony Fernandes said, "Despite losses in affiliate operations, I am very optimistic that the current losses is short lived as most are due to external factors like the weakening of local currencies, geo-political climate and the fluctuations of fuel prices." [more - original PR]