AirAsia profit dives 30%

Malaysian low-cost airline AirAsia Bhd reported a 30% drop in its quarterly net profit as higher fuel expenses overshadowed the effects of increased passenger numbers and an improvement in its load factor.

Asia’s biggest budget airline is expanding and expects to achieve double-digit fleet growth this year to cater for rising demand for cheap travel in Asia.

Net profit for the first quarter ended March 30 fell to 615.8 million ringgit ($144 million) from a year ago while revenue rose 31% to 2.2 billion ringgit.

In January-March, AirAsia carried 9.15 million passengers, 6% more year on year and ahead of a 1% rise in seat capacity.

The airline posted a load factor — a measure of how full planes are — of 89% for the period, four percentage points higher than a year ago.

It said in a statement yesterday that despite revenue growth, net operating profit fell mainly due to the approximately 20% rise in average fuel price from $56 per barrel a year ago to $67 per barrel this quarter. Profit was also hit by a strong US dollar during the quarter.

Additionally, total staff costs increased by 76.8 million ringgit from a year ago, due to the revised staff remuneration package introduced in the fourth quarter of 2016.

Group CEO Tony Fernandes said that the group’s plan to sell non-core assets was on track.

“We are currently in final negotiations and will materialise the sale of Asia Aviation Capital, our leasing arm, very soon,” he said.

Reuters reported in March that a littleknown South Korean group had been picked as the preferred bidder for the deal that values the leasing unit at $900 million.

Fernandes said plans to list AirAsia Philippines and Indonesia, and its training centre, AirAsia Aviation Centre of Excellence, were still on.