AirAsia's FY09 Q3 Results

[Sing Yew 1]

From The Edge:

 

AirAsia records net profit of RM130m in 3Q

 

KUALA LUMPUR: AIRASIA BHD [] posted net profit of RM130.07 million in the third quarter ended Sept 30, 2009 (3Q09) a turnaround from the net loss of RM465.53 million a year ago (3Q08) as revenue improved and it also benefited from a foreign exchange (forex) translation gain.

 

The low-cost carrier reported on Nov 20 that revenue rose 4% to RM739.67 million from RM707.91 million while earnings per share were 5.30 sen versus loss per share of 19.6 sen. However, when compared with the second quarter ended June 30, 2009 (2Q09) which reported net profit of RM139 million, there was a slight reduction.

 

AirAsia said 3Q09 revenue growth was due to higher ancillary income and from other operating income.

 

"Passenger volume grew by 19% in 3Q09 as compared to 3Q08. Average fare was lower by 27% at RM142 as compared to RM195 achieved in 3Q08. Load factor was constant at 75% as compared to the same period last year," it said.

 

The group reported core operating profit of RM34 million, a reversal from a loss of RM82 million in 3Q08. The strengthening of the ringgit against the US dollar has resulted in a translation gain of RM102 million during the quarter.

 

AirAsia said its Malaysian operations in 3Q09 recorded a 19% increase in passengers carried at 3.59 million from 3.02 million a year ago.

 

Other performance indicators showed average fare fell 27% to RM141.6 in 3Q09 from RM195.1 in 3Q08 but this was partly offset by higher ancillary income per pax of RM36.2, up 57% from RM23. Unit passenger revenue slipped 18% to RM177.8 from RM218.2.

 

Cost/available seat kilometre excluding-fuel was 6.51 sen compared with 5.38 sen. Fuel consumed rose 16% to 940,400 barrels from 813,641 barrels while unit fuel price fell to US$79.3 per barrlel, down 51% from US$162 per barrel.

 

On AirAsia Thailand, it recorded revenue of 1.953 billion baht in 3Q09, this is 15% lower compared to 3Q08.

 

"The third quarter is the seasonally weakest quarter for Thailand and it underwent significant challenges in the form of weaker consumer sentiment and intensified competition," it said.

 

The Thai operations carried 1.25 million passengers in 3Q09; up 19% from 3Q08 and the seat load factor was roughly constant to the levels achieved last year. The average fare however reduced by 32% to 1,373 baht.

 

However, it posted net loss of 403 million baht (RM40.29 million) in 3Q09 compared with net loss of 249.81 million baht (RM24.62 million) a year ago.

 

As for AirAsia Indonesia, it reported a turnaround with net profit of 59.74 billion rupiah (RM21.61 million) in 3Q09 versus net loss of 11.9 billion rupiah (RM4.31 million) a year ago.

 

"AirAsia Indonesia has achieved significant passenger growth of 55% as compared to 3Q08 with stable load factor of 77%. However, average fare was lower by 18% due to the significant capacity addition of 69% in the period.

 

"The Indonesian operation is performing well, the realignment of network capacity to focus on international routes to Australia and Singapore has proven to be immensely beneficial. Yields have improved substantially and the induction of new Airbus A320 aircraft has helped to enhance operational reliability and reduce operational cost," it said.

 

On the prospects, AirAsia said its strategy to continuously conduct aggressive promotions and provide superior customer service has been successful to drive strong traffic growth.

 

However, it expressed concerns about the rising fuel prices.

 

"The price of fuel has been on an increasing trend since September and assuming this trend continues, it will impact the group negatively in the fourth quarter.

 

"The group has taken partial fuel hedges to mitigate the impact of fuel price volatility. Approximately 20% of the Group's fuel (jet kerosene) requirement in the fourth quarter has been hedged at a fixed swap rate of US$75 per barrel. All other cost items are expected to remain low due to efficiency initiatives implemented and benefits of economies of scale," it said.

 

AirAsia said the strengthening ringgit against the US dollar since Sept 30, 2009 and should this trend continue, it may have a positive impact on the company.

 

It was upbeat for its fourth quarter, which is traditionally its strongest quarter and based on current forward booking trend, the underlying passenger demand remains positive.

 

However, it added ticket prices were expected to be lower than the same period last year. The challenging global economy was making consumers very price sensitive and this necessitates lower fare in order to stimulate demand and maintain high passenger traffic.

 

On AirAsia Thailand, it said the outlook for the fourth quarter is positive, the number of passenger growth is satisfactory and the operation has continued to gain market share. In addition, the Thai operation is enjoying the cost benefits of the increased number of Airbus A320 aircraft in its fleet.

 

It was also positive for AirAsia Indonesia in the fourth quarter with strong passenger growth, improving yields and unit cost reduction. The migration of route network to international destinations has proven to be successful as seen by higher load factors and higher average fares achieved.

 

The operational reliability and operational cost have improved significantly due to the increased number of Airbus A320 aircraft in its fleet.

 

 

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Financials from Filing to Bursa Malaysia:

 

Financials

[KK Lee 5]

AirAsia eyes Thailand for dual listing

 

By Kevin Brown in Singapore and Tim Johnston in Bangkok

 

Published: November 21 2009 02:00 | Last updated: November 21 2009 02:00

 

AirAsia, south-east Asia's largest low-cost airline, is considering seeking a secondary listing in Thailand, its chief executive said yesterday.

 

Tony Fernandes, founder of the Malaysia-based carrier, said discussions were at an early stage but the listing plan could eventually lead to a merger of the main carrier and its Thai and Indonesian affiliates to create a large Association of Southeast Asian Nations stock.

 

"Our ideal answer would be to have AirAsia as a dual listing and then put AirAsia Thailand into that dual listing," Mr Fernandes said. "Then we could do that in Indonesia and you would have an Asean stock that is traded on three Asean stock exchanges."

 

Mr Fernandes said the goal was "to portray that we are not just a Malaysian airline, and that you can buy AirAsia and invest in a company that is operating throughout the Asean region".

 

AirAsia has a long standing goal of expanding in the 10 country Asean grouping, which has a population of about 580m and a combined economy bigger than India's.

 

He said AirAsia also had a long-term goal of operating in the Philippines and Vietnam, both of which are also members of Asean.

 

The airline, which is listed in Kuala Lumpur, has asked CIMB, Malaysia's second largest bank, to advise on the listing.

 

CIMB has also said it plans to seek a listing on the Thai exchange in the first half of next year, selling as many as 35m shares. If the listing goes ahead, CIMB would become one of the three largest companies on the Thai exchange by market capitalisation.

 

There has been increasing interest in cross-listings in south-east Asia , not just from companies looking for a deeper investor base, but also from exchanges that hope large dual listings will increase volume and smooth some of the volatility that has plagued them in the past.

 

Chanitr Charnchainarong, who handles listings for the Stock Exchange of Thailand, said that there had been a strong response since the recent removal of regulatory hurdles blocking dual listings, particularly from regional banks, which see a local listing as a way to get closer to their clients.

 

"We have been talking to many multinationals for a long time, but they have been reluctant to submit themselves to double regulation. With this dual listing, they don't need to bother with double regulation, we will accept the regulation of their home listing," he said.

 

Mr Chanitr said he had not had a formal approach from AirAsia.

 

AirAsia yesterday forecast a further recovery in air travel demand after reporting a profit in the third quarter, helped by higher sales of non-ticket items.

 

AirAsia booked a net profit of M$130m (US$38.4m) in the July to September quarter, against a loss of M$465.5m for the comparable quarter a year earlier.

 

Airlines everywhere have struggled as the economic crisis has sapped demand for travel and trade, but budget carriers have largely outperformed the full service sector as passengers seek to cut costs.

 

AirAsia closed down 2 per cent at M$1.28 in Kuala Lumpur yesterday, while the benchmark FTSE Bursa Malaysia KLCI index fell 0.2 per cent.

 

 

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