AirAsia swings to Q3 profit

In comparison, it posted a net loss of RM465.5 million a year ago due to one-off provisions for contracts tied to fuel hedging and trades held by now-bankrupt investment bank Lehman Brothers.

"Despite the third quarter traditionally being our weakest quarter, we did well and our Indonesian operation has turned profitable," said AirAsia group chief executive officer Datuk Seri Tony Fernandes.

Speaking to analysts during a conference call yesterday, Fernandes said the airline was looking at a strong fourth quarter as underlying passenger demand remained positive.

"We are well-placed and have seen good sales, especially with the latest one million free seats campaign. We are almost up 40 per cent each day since the campaign," he added.
However, ticket prices for the fourth quarter are expected to be lower than the same period last year due to the challenging global economy.

For the three months to September 30 2009, the airline's revenue grew 4 per cent to RM740 million driven by higher ancillary and other operating incomes.

Fernandes said the airline's ancillary income would grow further in the next six to 12 months, having jumped some 57 per cent to RM36.2 per passenger for the third quarter.

While passenger volume increased 19 per cent to 3.59 million passengers, AirAsia's load factor remained the same at 75 per cent from a year ago.

The average fare was lower by 27 per cent at RM142 compared with RM195 in the third quarter 2008.

If fuel prices continue to rise, AirAsia expects to be impacted negatively in the fourth quarter.

It has taken partial fuel hedges to mitigate the volatility, with 20 per cent of the group's fuel (jet kerosene) requirement in the fourth quarter hedged at a fixed swap rate of US$75 (RM255) per barrel.

Fernandes added that the group may reimpose a fuel surcharge if prices escalate above US$100 (RM340) per barrel.

Meanwhile, AirAsia Indonesia posted a profit after tax of RM21.2 million compared with a loss of RM4.3 million from a year ago. The unit performed well due to its international routes to Australia and Singapore and utilisation of new fuel-efficient aircraft.

However, AirAsia Thailand saw its losses widening to RM40.4 million from RM24.6 million a year ago, due to weaker consumer sentiment and lower fares.

"We are confident of the Thai operations' ability to produce profits and its fourth quarter looks good," said Fernandes.