AirAsia Q1 profit slides to RM96.1m on higher maintenance, overhaul cost

KUALA LUMPUR: Higher maintenance and overhaul cost has dragged down AirAsia Group Bhd’s earnings for the first quarter of this year.

Its net profit plunged 91.5 per cent to RM96.09 million in the quarter ended March 31, from RM1.14 billion in the same quarter a year ago.

AirAsia said in a statement yesterday the lower net profit was due to higher maintenance and overhaul cost.

“This was on the back of more non-cash maintenance provisions of approximately RM100 million, given the higher number of leased aircraft.

“There is a differing accounting treatment for major overhaul costs for owned and leased aircraft, where the latter impacts the income statement more negatively than the former but cash outlay over the asset’s useful life is the same,” it said.

Revenue for the quarter, however, increased 12.8 per cent to RM2.88 billion from RM2.56 billion, driven by strong year-onyear growth in passengers, up 18 per cent to 12.5 million.

This has surpassed the 17 per cent in additional capacity resulting in stronger load factor of 88 per cent up one percentage point.

The group’s ancillary revenue also grew by 29 per cent year-onyear to RM664 million for the quarter under review.

“We kick-start the year with substantial increase in capacity, in line with our strategy to gain market share. There were 18 additional aircraft for our consolidated group since the first quarter of last year as we strive to meet the strong air travel demand in Asean.

“Most of the seats added were sold, as seen in our growth in passenger traffic of 18 per cent year-on-year coupled with higher load factor of 88 per cent,” said AirAsia deputy group chief executive officer (airline) Bo Lingam.

He said with this, the group’s Asean air operator’s certificates remained on track to turn profitable this year.