AirAsia bucks aviation woes

It is not all doom and gloom for the aviation industry as low-cost Malaysian carrier AirAsia announced better-than-expected first quarter results.Strong demand and a 10% increase in its average fare helped it avoid the woes sweeping the industry. It reported a US$49.7 million net profit that represented an 86% improvement year on year year-ago.

The airline claimed that the current industry downturn may even afford certain advantages. A spokesperson said: “A consumer slowdown is not necessarily a bad thing because low-cost carriers traditionally benefit from a consumer slowdown. Passengers who would normally take a full-service carrier are likely to trade down and fly with a low-cost carrier.”

AirAsia can point to first-quarter passenger growth of 21% and a 30% year-over-year rise in sales. Overall revenue climbed 32% to MYR535.3 million and operating profit inched up 1% to MYR73.4 million.

While it admitted that fuel price will have an impact on profitability, moving forward it is confident it will remain profitable throughout 2008. It said: “We are confident of driving our cost down further through rationalization of our three airlines, the replacement of the 737 aircraft and negotiating the airport deals around the region.”
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