AirAsia Malaysia posts strong results – affiliates struggle
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AirAsia Malaysia reported marginal performance gains and cost cutting exercises through Q2, which yielded positive financial results for the Malaysian company.
The number of passengers carried grew 1% y-o-y to 5.57 million which matched capacity growth of 1%, thereby maintaining a load factor of 80%, in line with the Company’s quarterly target.
This supported 5% y-o-y growth in revenues to RM1.31 billion, supported by strong 13% annual growth in ancillary revenues.
AirAsia also cut costs having embarked on a route rationalisation exercise through Q2, cancelling and cutting down frequencies on selected routes where the company felt were diluting yields
Cost per Available Seat Kilometre (“CASK”) came in at 13.32 sen, up from the 12.48 sen recorded the same quarter last year was mainly due to the increase in average fuel price of 9% y-o-y.
“Our non-fuel cost items remain under control as CASK ex-fuel was recorded at 6.50 sen, unchanged y-o-y,” said CEO, Aireen Omar.
The Company’s revenue, measured in terms of revenue per available seat kilometre (RASK), was reported at 15.36 sen which saw an increase of 2% y-o-y.
Looking to its international subsidiaries however, AirAsia witnessed continued challenges to profitability.
The second quarter saw an operating loss THB464.91 million at Thai Air Asia, which led to a 164% decrease in profit after tax at THB317.61.
AirAsia Indonesia reported a Q2 loss after tax was IDR340.34 billion, down from a profit after tax of IDR51.66 billion last year.
Commenting on the results, AirAsia Group CEO Tony Fernandes said: “Despite losses in affiliate operations, I am very optimistic that the current losses is short lived as most are due to external factors like the weakening of local currencies, geo-political climate and the fluctuations of fuel prices. Our other investee companies posted healthy profits…”
Fernades is also expecting to see a change in price structure across the region, saying that competitors were underpricing fares to be competitive, but this was simply not sustainable.
With regards to Malaysia operations, he said: “There have been improvements in terms of fare movements. Our average fare is on a positive upward trend as competitors have started to become rational again. We foresee capacity in Malaysia reducing and there will be re-alignment of business strategy by competitors to ensure sustainability.”
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