Malaysia’s AirAsia and AirAsia X fly back into profit in third quarter
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Malaysia’s AirAsia swung to a profit in the third quarter from a net loss a year earlier, mainly driven by an increase in aircraft operating lease income that boosted revenue during the quarter.
A 22 per cent tumble in the average fuel price to Us$62 per barrel from $79 per barrel a year earlier also contributed, the airline said.
Net profit for the three months ended September 30 was 353.9 million ringgit (Dh292.4m), versus a net loss of 405.7m ringgit a year earlier. Revenue rose 11.2 per cent to 1.69m ringgit, the company said.
The results were underpinned by a seat load factor of 89 per cent, a measure of how full planes are, up 7 percentage points from the same period last year.
The number of passengers carried rose 5 per cent, although capacity fell 3 per cent year-on-year, AirAsia said.
AirAsia X Berhad, AirAsia’s long-haul budget sister carrier, also recorded a net profit in the third quarter versus a year-ago loss as more capacity on flight routes led to a higher number of passengers for the airline.
AirAsia X, which is expected to report a profit for this year after two straight annual losses, embarked on a business and organisational restructuring in 2015. It has been adding capacity in Australia and increasing frequency on selected existing routes where demand is high to shore up its results.
“as a value-for-money holiday destination”
For the third quarter ended September, it reported net profit of 11.03m ringgit, versus a net loss of 288.2m ringgit a year ago.
Operations are benefiting from a weaker ringgit that has prompted customers to look at Malaysia “as a value-for-money holiday destination”, said the chief executive Benyamin Ismail.
The company recorded a passenger load factor of 78 per cent in the third quarter, 3 percentage points higher year on year, AirAsia X earlier said.
The airline increased its passenger carrying capacity by 34 per cent year on year over July to September.
“Strong demand from North Asia prompted AirAsia X to add frequencies to Beijing, Shanghai and Osaka while the Australian sector continued to improve with additions warranted for Gold Coast and Sydney,” MIDF Research said.
The company’s capacity expansion primes the airline for the peak travel season at the end of the year, it added.
“Based on the current forward booking trend, the expected number of passengers to be carried in the fourth quarter remains promising. Forward loads and average fares are trending better than the previous year,” AirAsia X said.
Parent AirAsia Group’s chief executive, Tony Fernandes, has said he wants AirAsia X to expand into new destinations in Europe, the United States and Africa.
Questions & Answers
Q.What were the main reasons for AirAsia's return to profit in the third quarter?
What were the main reasons for AirAsia's return to profit in the third quarter?
AirAsia's profit was primarily driven by an increase in aircraft operating lease income. A significant 22 per cent drop in the average fuel price also contributed to the improved financial results.
Q.How did AirAsia X manage to return to profit after previous losses?
How did AirAsia X manage to return to profit after previous losses?
AirAsia X returned to profit due to increased capacity on flight routes and higher passenger numbers. Its ongoing business and organisational restructuring, started in 2015, has also helped.
Q.Which regions are showing strong demand for AirAsia X flights?
Which regions are showing strong demand for AirAsia X flights?
There is strong demand from North Asia, prompting added frequencies to Beijing, Shanghai, and Osaka. The Australian sector is also improving, leading to additions for Gold Coast and Sydney.
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