AirAsia Q2 net profit soars on forex gain

PETALING JAYA: AirAsia Bhd posted a 529.25% jump in net profit for the second quarter ended June 30, 2014 (Q2 FY14) to RM367.16 million from RM58.35 million a year ago due to foreign exchange gain on borrowings.
Its Q2 FY14 revenue rose 5.19% to RM1.31 billion from RM1.25 billion a year ago on the back of a 1% growth in number of passengers carried at 5.57 million, matching capacity growth of 1% year-on-year while seat load factor remained at 80%.
Its operating profit for the quarter fell 17% to RM174.19 million due to its affiliate Thai AirAsia's first quarterly loss, which saw AirAsia equity accounting a share of net loss of RM13.6 million.
"The decline in gap of the company's average fare has narrowed to -1% year-on-year to RM157 with trend moving upwards in the second half of 2014 (2H 2014) as we see irrational pricing of competitors is diminishing.
"Despite the fall in average fare, ancillary income continued to outperform adding to the company's first positive performance in revenue per available seat kilometre (RASK), since the start of irrational pricing same quarter last year. Earnings before interest and tax (EBIT) margin however, remained solid at 13%," it said in a statement yesterday.
RASK was reported at 15.36 sen which saw an increase of 2% year-on-year while ancillary income per pax rose 13% to RM45 from RM40 a year ago.
"With our lean operations and cost conscious culture that aims to optimise profitability, the company embarked on a route rationalisation exercise in Q2 FY14, cancelling and cutting down frequencies on selected routes where the company felt were diluting yields.
"Our cost per available seat kilometre (CASK) at 13.32 sen, slightly up from the 12.48 sen recorded the same quarter last year was mainly due to the increase in average fuel price of 9% year-on-year. Our non-fuel cost items remain under control as CASK ex-fuel was recorded at 6.50 sen, unchanged year-on-year," said AirAsia CEO Aireen Omar.
Thai AirAsia posted a revenue of THB5.46 billion in Q2 FY14, up 2% from a year ago. It posted an operating loss of THB464.91 million which led to a 164% decrease in net profit at THB317.61.
"Our decline in operating profit was due to the lower revenue as average fare declined by 14% year-on-year mainly due to drop in passenger travel caused by the political situation, depreciation cost of taking aircraft into our own balance sheet and spending on public relations and marketing as the political demonstration in Bangkok continues into the second quarter of this year," said AirAsia group CEO Tan Sri Tony Fernandes.
Thai AirAsia's load factor for the quarter stood at 78% while ancillary income per pax rose 8% year-on-year to THB341. CASK rose slightly by 2% to THB1.62 due to the 10% increase in average fuel price.
Indonesia AirAsia's revenue rose 8% to IDR1,507.82 billion from IDR1,398.23 billion last year. It posted an operating loss of IDR271.75 billion from an operating profit of IDR87.66 billion last year.
Its Q2 FY14 net loss of IDR340.34 billion, compared with a net profit of IDR51.66 billion last year, was due to the weakening of the Rupiah currency and the increase in dollar-denominated cost such as fuel, maintenance and lease expense which led to a 33% increase in CASK at IDR606.16 from IDR456.19 year-on-year.
For the six-months period ended June 30, 2014 (1H FY14), its net profit jumped 210.70% to RM506.87 million from RM163.14 million while revenue grew 2.60% to RM2.61 billion from RM2.55 billion.
Fernandes said fare movements have improved and capacity in Malaysia is expected to reduce.
He expects its operations in Indonesia and the Philippines to return to the black in 2H 14 following the turnaround plan for both operations which will be rolled out from the third quarter onwards.