AirAsia Profit Slides On Higher Fuel Costs

Malaysia’s AirAsia posted a lower net profit for the first quarter as higher revenue was cancelled out by increased fuel and staff costs.

Net profit in the quarter to end March was MYR615.8 million ringgit (USD$144 million), a 30 percent drop from 1Q16’s MYR877.8 million. Net operating profit was down 33 percent to MYR267.1 million.

AirAsia boosted its revenue by 31 percent to MYR2.23 billion as passenger numbers increased, but operating costs rose at a higher clip. Fuel expenses jumped by just over 80 percent to MYR680.8 million, as the average fuel price rose 20 percent to USD$67 per barrel. The strength of the US dollar against the ringgit was also a factor.

Staff costs also increased markedly, up 73 percent at MYR363.5 million, mainly due to an improved staff remuneration package introduced in the final quarter of 2016.

AirAsia carried 9.15 million passengers in the quarter, a 6 percent increase on the previous year. Passenger capacity rose 1 percent, giving a seat load factor of 89 percent, up 4 percentage points.

RPK traffic was up 7 percent on an ASK capacity increase of 2 percent. Revenue per available seat km (RASK) edged up 3 percent, but cost per available seat km (CASK) rose 14 percent. Ex fuel costs, CASK was up 9 percent.

AirAsia said it was projecting an increase in load factor to 91 percent in the second quarter, with strong demand expected from the Hari Raya festival season.

Fleet expansion will continue, the LCC said, with the addition of 29 aircraft to its fleet this year.

AirAsia and China’s Everbright Group signed a memorandum last week to establish a low cost airline in China.