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Tuesday, May 23, 2017

AirAsia X 1Q net profit plunges 94.2% on higher operating expenses, lower forex gain

theedgemarkets.com / theedgemarkets.com
May 23, 2017 19:24 pm MYT

KUALA LUMPUR (May 23): AirAsia X Bhd (AAX), the long-haul, low-cost affiliate of AirAsia Bhd, saw its net profit plunge 94.2% to RM10.34 million or 0.2 sen a share in the first quarter ended March 31, 2017 (1QFY17) from RM179.49 million or 5.3 sen a share a year ago, on higher operating expenses including fuel prices, which rose to US$66 per barrel compared with US$64 per barrel in 4QFY16.

Total operating expenses rose 27.6% to RM1.12 billion in 1QFY17 from RM879.05 million in 1QFY16. Out of this total, aircraft fuel expenses amounted to RM377.69 million in 1QFY17, up 55.4% from RM243.06 million a year ago.

The airline also realised considerably lower foreign exchange gain of RM3.41 million in 1QFY17 compared with RM122.19 million in 1QFY16.

Quarterly revenue, however, rose 21.6% to RM1.18 billion from RM970.67 million in 1QFY16, on strong passenger numbers, which grew by 33% year-on-year (y-o-y) on the back of a 28% y-o-y increase in seat capacity.

In a filing with Bursa Malaysia today, AAX said its load factors were 2 basis points higher at 84% in 1QFY17 from 82% in 1QFY16.

However, it saw average base fare fall by 4% to RM544 in 1QFY17 from RM566 in 1QFY16, while ancillary revenue per passenger remained constant at RM150 for both 1QFY17 and 1QFY16.

"Freight and cargo revenue also increased 5.9% to RM32.8 million in 1QFY17 from RM31 million in 1QFY16, due to higher tonnage transported in the current period under review, as well as the introduction of RedBox courier services in May 2016," said AAX.

It added that its aircraft operating lease income rose 16.7% to RM120.3 million in 1QFY17 from RM103.1 million in 1QFY16 due to additional aircraft leased to an associated company in March 2016. However, this was offset by lower revenue from its charter flights, which fell 31.3% to RM56 million in 1QFY17.

On prospects, AAX said based on the current forward booking trend, its forward loads and average fares are trending better than the previous year.

However, it warned that the relative weakness of the ringgit remains a key concern as a large portion of the airline's borrowings and operating costs are denominated in US dollars.

"Barring any unforeseen circumstances, including but not limited to terrorist attacks, natural disasters, epidemics, economic downturn, fuel price hike and fluctuation in foreign currencies against the ringgit, the airline expects its prospects to remain positive," it added.

AAX shares rose 0.5 sen or 0.94% to a two-year closing high of 53.5 sen today, bringing a market capitalisation of RM2.22 billion.

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