Higher fuel, operating lease expenses push AirAsia into the red in 4Q

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KUALA LUMPUR (Feb 27): Higher fuel prices and operating lease expenses pushed AirAsia Bhd into the red with a net loss of RM394.97 million in its fourth quarter ended Dec 31, 2018 (4QFY18), despite higher revenue.

Average fuel price came in at US$92 per barrel for the quarter under review, versus US$69 per barrel a year earlier, AirAsia said in a bourse filing today. Operating lease expenses rose due to completion of the group's sale and leaseback transaction, whereby the group sold its aircraft and leased them back.

The group posted a net profit of RM372.65 million in the previous year’s corresponding quarter, when revenue came in at RM2.66 billion. Revenue grew 6.2% to RM2.82 billion in 4QFY18, after a 16% increase in total passengers carried. 

However, the group's load factor in 4QFY18 fell to 84% from 88% previously, as the increase in total passengers carried was lower than the increase in capacity of 21%.

For the full-year period (FY18), its net profit rose 21.5% to RM1.98 billion from RM1.63 billion in the previous year, while revenue rose 9.2% to RM10.6 billion, from RM9.71 billion in FY17.

Looking ahead, it said the hard work done in 2018, such as the One AirAsia, cost cutting and organisational restructuring initiatives, will contribute to its prospects in 2019.

“AirAsia is becoming a harmonised ASEAN carrier with airlines in India and Japan as well. Demand remains strong and we are number one in market share in ASEAN,” the group said.

Cost will be the main driver of the group moving forward, with the group putting in place various digitalisation initiatives, it added.

The airline expects airport costs to go down and said fuel prices is a major cost factor of its operations.

“For 1QFY19, the group will continue to grow our market share for each of the countries. Malaysia will continue to be the market leader, with 58% market share and the target load factor of 87%,” it said.

AirAsia hopes to turn around its operations in the Philippines by focusing on the North Asia-Philippines leisure market, with a target load factor of 90%, while the Indonesian operations will expand its route to serve new and underserved leisure destinations, targeting a load factor of 90%.

In Thailand, the group expects the recovery in Chinese and Indian tourist arrivals to push load factor to 90%, as a result of the no-fee visa on arrival scheme by the government.

“Barring any unforeseen circumstances, the board remains positive that overall results of the group in 2019 will be better than 2018,” the group said.

AirAsia closed down 6 sen or 1.94% at RM3.04 today, giving it a market capitalisation of RM10.16 billion.