AirAsia reports big jump in profit, warns on surcharge

[flee 5]

Here is the AirAsia presentation and review:

http://www.airasia.com/iwov-resources/my/common/pdf/AirAsia/IR/AA_4Q10_Analyst_Presentation.pdf

[flee 5]

In the Bursa Malaysia Q4 announcement, AirAsia has stated that it does not have any outstanding fuel hedging positions. So it is buying all its fuel at spot prices now.

Correction - this info from the Analyst presso, which is more up to date:

 

Proven active measures to counter any spike in fuel prices

 

 Record PAT of RM1.06 billion in 2010 at average fuel price of US$92/barrel at fleet size of 90 aircraft

 

 AirAsia was the first airline to be able to remove fuel surcharge in November 2008.

 

 Counter measures amongst others:‐

‐ Re‐introduce fuel surcharge

‐ Ancillary initiatives ‐ every RM1/pax spent provides approximately US$1/barrel of buffer

‐ Higher aircraft capacity enables costs to spread across more passengers

 

 Current oil hedging position

‐ Hedged up to 21% for up to 2Q11 at average of US$92.31/barrel (fixed swap WTI)

‐ Hedges have no margin calls impact

‐ Huge lines with several institutions for oil hedging

‐ Ability to hedge through financial markets or physically with oil suppliers

 

 Projected sensitivity analysis shows every ‐/+ US$1/barrel on fuel movements will impact

approximately ‐/+RM15 million in EBITDA and PAT.

[flee 5]

It looks like AirAsia is on target for a good first Q1 2011 too. Here is Tony Fernandes' Tweet:

Finalizing budget. Best budget airasia has done. Planning 5 year strategy meeting. 1st quarter looking good. All on forecast.Shows strength

[flee 5]

AK mentioned in their presentation to analysts recently that the 3 new A320s scheduled to be delivered this year will go to FD (1 A320) and QZ (2 A320s). So we are not sure from where the aircrafts for AirAsia Philippines will be sourced from.

Azizul,

I am taking the liberty of quoting your A.Net post on AK's results.

 

Airbus is scheduled to deliver 8 A320s to AirAsia in 2011. Five will be allocated to AirAsia Phillipines.

 

FD has received HS-ABT CN4557 Delivered: 05-01-2011

 

QZ has received two of them:

 

PK-AXP CN4571 Delivered: 02-02-2011

PK-AXQ CN4582 Delivered: 10-02-2011

 

AK is not due to receive any aircraft this year.

[Mohd Azizul Ramli 2]

Thanks for that flee. The data that I have is conflicting. The AK presentation to analyst mentioned 3 aircrafts in 2011, the data from Maybank Investment report on MAHB mentioned 4 aircrafts in 2011 as mentioned in my reply in this thread of yours. http://www.malaysianwings.net/forum/index.php?showtopic=15525

[flee 5]

The data that I have is conflicting. The AK presentation to analyst mentioned 3 aircrafts in 2011, the data from Maybank Investment report on MAHB mentioned 4 aircrafts in 2011

Yes I have a hard time tracking the numbers too, with them constantly rescheduling their deliveries...

 

On Slide 10 of the AK presentation they mentioned, Financing for 8 aircraft to be delivered in 2011 is secured

 

Correction: 3 to 5 aircraft will go to AirAsia Philippines. I guess if 3 aircraft goes there, then AK will have to take the other 2.

[flee 5]

Some analysis from The Star: http://biz.thestar.com.my/news/story.asp?file=/2011/3/1/business/8158634&sec=business

 

PETALING JAYA: On the back of year-end school holidays and festive seasons, the last three months of 2010 have proved to be another bumper quarter for the local aviation industry, with national carrier Malaysian Airline System Bhd (MAS) and budget airline AirAsia Bhd both reporting passenger growth that helped boost their financial results.

 

It seems clear, though, that AirAsia's business model continues to thrive, and gives the company a performance that outshines the national carrier, be it in terms of passenger growth or earnings.

 

AirAsia's net profit for the fourth quarter (Q4) of last year jumped more than eight-fold to RM316.5mil, compared with only RM33.9mil in Q4 2009, while full year earnings doubled and hit RM1.1bil, driven by strong passenger numbers and yields. This was despite the increase in fuel costs, after the average fuel prices surged 35% year-on-year (y-o-y) to US$92 per barrel in 2010.

 

MAS, on the other hand, could not effectively avert the effects of higher fuel prices. The company saw its net profit for Q4 2010 fell 65% y-o-y to RM226mil, on account of higher fuel costs, which rose 13% y-o-y, as well as other operational costs such as sales and commission expenses. Its full-year earnings of RM234.5mil were in line with management's guidance.

 

During the quarter in review, AirAsia carried one billion more passengers than MAS. Passenger volume growth was also stronger at AirAsia, with the number growing 11.1% y-o-y and 10% quarter-on-quarter (q-o-q) to 4.44 billion in Q4, while that of MAS grew only a marginal 1.4% y-o-y and 3.9% q-o-q to 3.44 billion. In terms of passenger load factor, AirAsia's rose three percentage points to 82% in Q4, while that of MAS increased a mere 0.9 percentage point to 77.4%. AirAsia attributed its Q4 revenue growth of 32.7% y-o-y to RM1.2bil mainly to higher ancillary income and average fares, while MAS, which reported a revenue growth of 8.9% y-o-y to RM3.6bil in Q4 2010, attributed its topline growth to strong passenger traffic as well as higher fuel surcharges and average fares.

 

It was obvious that MAS' passenger business was still lagging behind AirAsia's. For instance, MAS' yield for the segment, as measured by revenue per RPK (revenue passenger kilometer), grew 5.4% y-o-y to 24.3 sen, while that of AirAsia grew 10% y-o-y to 22.3 sen.

 

Revenue per ASK (available seat per kilometer) for AirAsia in Q4 2010 stood at 18.4 sen, up 29.6% y-o-y, while MAS' stood at 18.8 sen, up 6.5% y-o-y. In terms of cost management, MAS seemed to perform better. During the quarter in review, MAS' cost per ASK (including fuel) fell 3.4% y-o-y to 27.2 sen; excluding fuel, cost per ASK fell7.3% y-o-y to 17.8 sen.

 

“This is an area whereby MAS is the top performer. Revenue is volatile, but cost reduction is structural,” Maybank Investment Bank Bhd said in its report. AirAsia's cost per ASK rose 4.6% y-o-y to 11.85 sen; excluding fuel, cost per ASK rose 1.2% y-o-y to 7.31 sen.

 

The shares of both AirAsia and MAS were presently trading above their book value, of RM1.31 and RM1.05 per share respectively.

 

Yesterday, AirAsia shares closed at RM2.52, a gain of three sen, while MAS shares closed at RM1.89, a loss of three sen from last Friday.

[JuliusWong 0]

In a related development, US AIRLINES INCREASE FARES AND SURCHARGES

 

http://news.airwise.com/story/view/1299539786.html

 

I cannot go back home already due to the fuel surcharges...KUL-BWN return: BI: RM550, MH: RM734 and AirAsia: *dun mention* <_ src="%7B___base_url___%7D/uploads/emoticons/default_sad.png" alt=":(">