Thursday 28 Mar 2024
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KUALA LUMPUR (Nov 24): AirAsia Bhd, which registered its fourth consecutive net profit in the third quarter ended Sept 30, 2016 (3QFY16), said bids are coming in for its leasing arm Asia Aviation Capital Ltd, worth some US$1 billion, with eventual sale of the unit to take place in early 2017.

This is part of the airline's plans to dispose of non-core businesses.

In a statement today, AirAsia group chief executive officer Tan Sri Tony Fernandes revealed that the largest low-cost carrier (LCC) in Asia will also go to the markets with two potential initial public offerings, namely its flight crew training centre AirAsia Academy on Bursa Malaysia and Asean Holding Co on the Hong Kong stock exchange.

"In 2017, we also hope to break ground on new low-cost airports across Asean. We are working closely with local governments to build dedicated facilities for LCCs in a number of cities with the aim of alleviating congestion and driving higher traffic across our network and bring more tourists into these hubs. Once we get the necessary permissions we can deliver a fully operating airport in less than a year," he added.

The LCC reported a net profit of RM353.89 million or 12.7 sen per share in 3QFY16 compared with a net loss of RM405.73 million or 14.6 sen loss per share in 3QFY15, supported by a 5% year-on-year (y-o-y) increase in number of passengers carried to 6.63 million for the three-month period.

Revenue rose 11.3% to RM1.69 billion from RM1.52 billion. The airline's revenue per available seat kilometre (RASK) also grew 8% y-o-y to 14.42 sen.

For the cumulative nine months (9MFY16), the airline swung to a net profit of RM1.57 billion compared with a net loss of RM13.37 million a year ago, while revenue increased 20.9% to RM5 billion in 9MFY16 from RM4.14 billion in 9MFY15.

AirAsia's net gearing ratio also fell to 1.47 times as at end-3QFY16 compared with 1.64 times as at 2QFY16.

"We have repeated yet another quarter of strong earnings growth. Our Malaysia operations grew revenue by 11% and net operating profit by 165%, helped by higher aircraft lease income and fuel expenses that were 21% lower. Stronger-than-expected demand drove up seat load factor to a record high of 89%, while the average fare per passenger increased by RM7 or 4% year-on-year to RM164," said Fernandes.

He noted that loss-making Indonesia Airasia (IAA) has turned itself around in 3QFY16, following a "well-executed turnaround strategy which include disciplined capacity management working in tandem with our cost-saving measures".

"We are well on track to deliver on our earlier promise to stakeholders to be firmly in the black in the second half of 2016. The successful turnaround of IAA was due to a decision we took to right-size the fleet and network. We moved aircraft that would be better utilised at other associates out of IAA's fleet, numbering seven in total.

"As a result, aircraft operating lease expense is down by 55% year-on-year. Cost per available seat kilometre (CASK) has fallen by 17% year-on-year and without counting fuel costs, CASK ex-fuel is down 13% year-on-year," he added.

Going forward, Fernandes said the airline is investing heavily in digitalisation, which is expected to boost ancillary income to its RM60 target from RM46 currently. It has been growing its family of digital services with BIG Duty Free, BIG Pay, BIG Loyalty, Touristly, Rokki onboard Wifi and Xcite inflight entertainment.

"Some of the initiatives include dynamic pricing of baggage allowance and Tune Protect insurance, offering an extra-seat option to our customers and enhancing our inflight meal options," he said.

"We remain beneficiaries of the low fuel price, with all associates observing lower aircraft fuel expense, leading to lower CASK for the group. For 4QFY16 we have hedged 70% of our fuel requirements as a group at an average cost of US$59 per barrel jet kerosene.

"Meanwhile, we have hedged approximately 74% of our 2017 fuel requirements at an average cost of US$60 per barrel jet kerosene," he added.

On consolidation of accounts for the whole group, Fernandes said AirAsia's auditors are attempting to revisit their opinion on this matter.

"We are hopeful that the group will be allowed to consolidate and therefore present a fairer view of the group's performance and financial position," he said.

On prospects, Fernandes said AirAsia's airline operations in Malaysia continues to show strong demand up until the end of the year, and it is expected to report another record load factor of around 90%.

"With the weakening of the ringgit, we see consumers trading down and travelling within the country or around the region rather than to Europe or America. Malaysia is also becoming a cheap destination for tourists coming in," he said.

"Our plan is to continue our focus on promoting international routes, where we have market leadership and can leverage on the strength of our AirAsia brand across the Asean region," he added.

AirAsia shares closed up two sen or 0.74% at RM2.71 today, bringing a market capitalisation of RM7.54 billion.

 

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