AirAsia swings to loss in the third quarter

KUALA LUMPUR: AirAsia Bhd swung to a third-quarter loss due to foreign exchange losses and a writedown at its lossmaking Indonesian associate as Asia’s biggest budget airline seeks to address market concerns over high debt and dues owed by its affiliates.

The Malaysia-based group booked prior-year unabsorbed losses of 469 million ringgit ($111 million) in July-Sept for its Indonesian associate, while the company’s foreign exchange losses soared to 436 million from 153 million a year ago.

For the third quarter, AirAsia reported a net loss of 406 million ringgit versus a net profit of 5.4 million ringgit a year ago.

Some of the losses were offset by oneoff gains.

The airline, which said last month its major shareholders were evaluating “all strategic options” however said it was positive of its prospects for the remainder of the year.

“We see a great end to the year and a light at the end of the tunnel for the Malaysian operations after a series of headwinds that affected our operations,” said founder and group CEO Tony Fernandes.

AirAsia’s l ong-haul arm AirAsia X Bhd on Wednesday reported its eighth consecutive quarterly net loss, mainly hurt by higher aircraft operating expenses and foreign exchange losses.

The carrier booked a loss of 288.2 million ringgit ($68.42 million) for July-September, wider than the 210.85 million ringgit of the same quarter a year earlier, a stock exchange filing showed.

Revenue rose 13.5% to 793 million ringgit mainly due to higher secured chartered contracts, freight and cargo sales.

To improve profitability, AirAsia X has paused the expansion of its fleet and opted to leverage existing routes rather than opening new ones.

The airline said it expected improved operational performance in the fourth quarter and continuing into next year.

“However, the depreciation of the Malaysian ringgit remains a key concern as a large portion of AirAsia’s X borrowings and operating costs are denominated in US dollars,” it said.

The ringgit has fallen nearly 20% this year due in part to weak global oil prices.

AirAsia X operates Airbus A330s mainly on routes to Australia, China and Japan.

Shares of the airline have lost 62% of their value in the year to date.