AirAsia eyes growth after 46% profit boost

AirAsia eyes growth after 46% profit boost

Low fare Far East carrier AirAsia has signalled further expansion in the region on the back of a 46% jump in first quarter operating profits.

The Malaysia-based airline recorded an improved operating profit of £40 million over the same three months last year despite high fuel prices. Income from ancillaries went up by 31% to more than £10 per passenger as the carrier maintained an 80% load factor.

Group chief executive Tony Fernandes said ancillary income will continue to be the catalyst for AirAsia to grow further, citing a joint venture struck with Expedia in the quarter. “We are focused on growing our ancillary income and explore any opportunities to further monetise these businesses so AirAsia can ride on its upside benefits,” he said.

Fernandes added: “We are still anticipating the launch of our AirAsia Philippines in the second half and I am just excited on the progress to get this venture started. We are also re-looking into Vietnam and hopefully an exciting announcement will follow soon. These moves will further strengthen our presence in the ASEAN skies.”

Fernandes emphasised the group’s “laser-like” focus on keeping costs down. “This is what ultimately helps us to offer the low fares that we do,” he said.

With surcharges helping deflect some of the rising cost of fuel, there is also a determined effort to push load factors higher on key profitable routes and to capture further market share from competitors, he added.

The group has hedged approximately 17% of its fuel requirements for the second half so far for this year. “We are monitoring oil prices very closely and the moment we perceive an opportunity, we will not hesitate to add to our hedges,” said Fernandes.

Reflecting on the first quarter, he said higher operating profit margins demonstrated that the company was maintaining tight control of costs even as revenues are grown.

“Yes, fuel prices shot up – but that is something beyond our control,” said Fernandes. “Our response is not to wring our hands and moan, but to use our creativity to address the issue and find ways to overcome this challenge.”


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