India drags AirAsia profit down by 95%

AirAsia is Asia's largest low-cost carrier by passenger volume.

AirAsia Group Bhd’s net profit for the second quarter that ended 30 June 2019 dropped 95 percent—RM17.94 million (about $1.7 million) from RM361.81 million (about $85 million)—chalked up in the same period last year.

Revenue, however, increased sharply to RM3.14 billion from RM2.62 billion previously, the airline group said in its filing with Bursa Malaysia today.

In a separate statement, AirAsia said the strong growth in revenue was driven by an 18 percent year-on-year (y-o-y) increase in passengers carried to 12.8 million.

“Revenue per available seat kilometer (RASK) grew by four percent to 15.40 sen in Q2, driven by firm demand, with load factor remaining strong at 85 percent despite a substantial 17 percent increase in available seat kilometers (ASK).

“Ancillary revenue also grew by 39 percent y-o-y, recorded at RM687 million for the consolidated group, driven by both traditional airline ancillary and non-airline ancillary streams,” the airline said.

AirAsia said its earnings before interest, taxes, depreciation, and amortization (EBITDA) decreased nine percent y-o-y to RM473 million in the quarter under review, primarily due to share of prior years’ losses at AirAsia India that was previously not recognized amounting to RM147 million.

It was also due to the additional cost related to building up RedBeat Ventures entities, 105 percent higher maintenance and overhaul expenses on the back of higher maintenance provisions of approximately RM160 million following a higher number of leased aircraft due to the recent aircraft monetization exercise, and RM10 million fine from the competition watchdog.

On the outlook, AirAsia planned to continue its growth strategy and strengthen its position, particularly within the Southeast Asia region.

“We have planned for a net fleet growth of 20 aircraft across six air operator’s certificate (AOCs) this year, with nine aircraft expected to be delivered to AirAsia India.

“We also expect to receive in November our first A321neo, which is more fuel-efficient, has a longer flight range and holds an additional 50 seat worth of capacity,” it said.

AirAsia continues to expect all Asean AOCs to be profitable for 2019, with a target group load factor of 85 percent.

Meanwhile, sister company, AirAsia X’s net loss expanded to RM207.11 million, against RM57.46 million posted a year ago, while revenue slipped to RM1.01 billion from RM1.06 billion previously. (Bernama/Malay Mail)