PETALING JAYA: AirAsia Group Bhd’s net profit for the second quarter ended June 30, 2019 fell 95% to RM17.94 million from RM361.81 million a year ago, primarily due to share of prior years’ losses at AirAsia India previously not recognised amounting to RM147 million.
In addition, there was an additional cost related to building up RedBeat Ventures entities, 105% higher maintenance and overhaul expenses due to higher maintenance provisions of RM160 million on the back of higher number of leased aircraft following the recent aircraft monetisation exercise as well as a RM10 million fine from the competition watchdog.
Its revenue was at RM3.14 billion, up 19.7% from RM2.62 billion, driven by an 18% increase in passengers carried to 12.8 million.
For the six-month period, AirAsia’s net profit plunged 92.7% to RM110.2 million from RM1.50 billion, while revenue rose 16.3% to RM6.02 billion from RM5.18 billion.
The low-cost carrier said positive operating cash flow (excluding operating lease) was generated in the first half of the year amounting to RM267 million.
AirAsia president (airlines) Bo Lingam said despite expanding capacity by 19%, load factor remained strong at 85%.
“In terms of profitability, we are excited to see the turnaround of AirAsia Indonesia and the improved performance of AirAsia Philippines. In Q219, AirAsia Indonesia returned to profitability, demonstrating strong operational results, including a 58% increase in passengers carried, a 6% increase in revenue per available seat kilometre (rask) and 16% decline in cost per available seat kilometre (cask).
“For AirAsia Philippines, profit after taxation in the second quarter increased more than eight fold following a 4ppts increase in load factor to 91%, a 22% increase in passengers carried and a 5% increase in rask. With our performance so far this year, we are positive on our target for all our Asean air operator’s certificate (AOCs) to be profitable this year,” he said in a statement.
AirAsia’s cask including fuel increased to 15.77 sen in Q2 19, 15% higher than 13.77 sen in Q2 18, mainly due to higher maintenance and overhaul provisions. Its costs were further put under pressure due to the depreciation of the ringgit and rupiah, which fell 4.5% and 1.3% against the greenback, respectively.
Speaking of the airline’s outlook, Lingam said the group has planned for a net fleet growth of 20 aircraft across six AOCs this year, with nine aircraft expected to be delivered to AirAsia India.
“We expect to receive in November our first A321neo, which is more fuel efficient, has a longer flight range range and holds an additional 50 seats worth of capacity. We are also working on driving down costs through our investments in digitalisation, which we believe will help reduce overall costs in the long run.”
He expects all Asean AOCs to be profitable for 2019, with a target group load factor of 85%.
To reduce risk to fuel price volatility, he said AirAsia has hedged a considerable amount of its fuel requirements.
“We have hedged 70-85% of 2H2019 requirements at US$60-62/bbl Brent prices and 69-82% of FY2020 requirements at US$60/bbl. We are also focused to recuperate AirAsia Thailand, which reported a loss in Q2 19 as it was negatively impacted by the sluggish growth of tourism and the baht appreciating, by recreating demand with more marketing.”
source https://www.thesundaily.my/business/india-operations-drag-down-airasia-s-q2-earnings-MB1311169
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