The FINANCIAL — AirAsia Bhd.’s first-quarter net profit rose 6.9% after the group reported a one-time gain from the partial divestment of a stake in an online travel venture, which offset foreign-exchange losses, according to Nasdaq.
Net profit was 149.3 million ringgit ($41 million), compared with 139.7 million ringgit in the same quarter of last year, the Malaysian discount carrier said in a regulatory filing. Revenue, however, fell 0.4%.
AirAsia reported a gain of 321 million ringgit after it sold a 25% stake in AirAsia Expedia Travel to its joint venture partner Expedia Inc. in February for $86.3 million.
However, it also reported a 350 million ringgit foreign-exchange loss on its borrowings, mainly because of the decline in the value of the local currency. The company pays for its fuel and aircraft, its biggest expense items, in U.S. dollars.
Fuel costs fell 9% on year to 482 million ringgit. Profit contributions from its associate airlines rose three-fold to 62 million ringgit.
AirAsia, the biggest discount airline group in Southeast Asia by passengers carried, is still recovering from the crash of an Airbus Group A320 jet flown by its Indonesian affiliate into the Java sea on Dec. 28 that killed all 162 passengers and crew. It was the first major accident involving an AirAsia plane.
AirAsia dropped fares by 9% in the first quarter to bring back passengers. The Malaysian parent airline carried 3% more passengers in the first quarter than last year, while its capacity grew 10%, leading to a drop in its seat load factor, or the portion of aircrafts filled, to 75% in the first quarter of this year versus 81% in the same period of last year.
The group also continues to grapple with intense competition in the region that has hurt all nine AirAsia-branded airlines across Indonesia, Thailand, the Philippines and India. While its Thai affiliate reported strong growth in passengers and revenue, demand at its Indonesian affiliate remains subdued after the crash.
Airlines across Asia aggressively added capacity in recent years as the region’s economies grew at a rapid clip. However, they now find that passenger growth didn’t keep pace with their expectation and airlines mushrooming across Asia are having to compete against each other to fill their planes.
Tony Fernandes, AirAsia founder and group chief executive, said a more rational market in Malaysia will be a ‘catalyst’ for the carrier.
“Airline operators in general are now a bit more disciplined in their capacity management, setting the stage for a better operating environment in 2015,” Mr. Fernandes said.
AirAsia, which has slowed its pace of expansion, said it won’t take delivery of any new aircraft in the current quarter and expects demand to pick up.
The company has also managed to keep its costs in check. Unit costs, measured in terms of cost per available seat kilometer, declined 13% on year to 11.35 Malaysian sen, AirAsia said.
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