AirAsia Q1 net profit rises on gain from AirAsia Expedia stake sale

PETALING JAYA: AirAsia Bhd saw a 7% rise in first quarter ended March 31, 2015 net profit on gains from the disposal of its 25% stake in its AirAsia Expedia joint venture.
Net profit for the quarter stood at RM149.3 million, compared with RM139.7 million for the same period in 2014.
This was on flat revenue of RM1.3 billion for the quarter.
Operating profit for the quarter was 20% higher at RM273.43 million from RM227.03 million for the same period in 2014, on higher other income and share of associates results.
The group made RM62 million from other income which came from brand licence fees, commission and advertising income and RM33.2 million from its share of associate results.
In the current financial period, the board of AirAsia approved the sale and leaseback of 16 vintage A320 aircraft in view of the expected retirement of the group's fleet at 12 years and the incoming delivery of Airbus A320neo aircraft.
A provision of RM38.6 million was made for the anticipated losses related to these transactions in the current financial period.
In addition to the expected reduction in borrowings by RM1.1 billion, a total of RM202.5 million net cash proceeds is also expected to be generated as a result of the transactions.
Revenue for the quarter was supported by a 3% growth in passenger volume while the average fare was down 9% at RM150 as compared to RM164 achieved in 1Q14.
Ancillary income per passenger increased by 2% to RM47 year-on-year, while seat load factor was at 75%, 6 percentage points lower than the same period last year.
Commenting on the AirAsia Malaysia's operations, group CEO Tan Sri Tony Fernandes said one of the main catalysts is a more rational market here.
"The restructuring of Malaysia Airlines will bring about a healthier competition environment which will be good for all industry players and for the consumers themselves. Airline operators in general are now a bit more disciplined in their capacity management setting the stage for a better operating environment in 2015," he said.
Fernandes said it will continue efforts to drive its ancillary revenue up through a combination of improvements on existing offerings and the introduction of new products, and double spend per head on food & beverages through rebranding and new products such as brewed coffee onboard.
On a more favourable cost environment, he said, "As seen in 1Q15, we are beneficiary of the low fuel price. Taking advantage of this, the group has hedged 50% of its fuel requirement for 2015 at an average cost of US$88 per barrel on jet kero and remain unhedged for 2016. We also continue to lobby for lower airport charges across the region and we have seen some good progress with Langkawi in Malaysia and Singapore and positive signs for Indonesia, Thailand and the Philippines."
Fernandes said AirAsia has no plans to raise money from the equity market but plans for its associates include recovery of debt from Indonesia AirAsia and Philippines AirAsia through initial public offerings (IPOs), monetising of investment from adjacency businesses (e.g. divestment in AirAsia Expedia joint venture with a gain of RM320 million), and capacity management.