AirAsia profits drop 95% but still in the black

AirAsia has been the next victim of soaring fuel costs. The Malaysian budget carrier has posted a 95% slump in net profits for the second quarter compared to a year ago.
The region’s biggest low-cost carrier posted net profits of US$2.3m for the three months to June 08, compared to US$45.3m a year earlier.“This is a commendable performance given that unit fuel price increased by 65 percent to 142.5 dollars per barrel,” said chief executive Tony Fernandes, adding that Malaysia’s weakening currency led to a loss of US$18 million.
Fernandes added that revenues increased 41 percent in the quarter to US149m, with a 20 percent increase in passenger load and a 16 percent rise in fares.
AirAsia said it was benefiting from the global economic slowdown, as more travellers - including corporate customers - switched from full-service carriers to budget airlines.
It said a new fee for checked-in baggage introduced in the quarter has helped to compensate for some of the higher fuel cost without reducing customer demand.
Load factor fell to 76.4 percent from 80.7 percent a year earlier as capacity rose 33 percent with the introduction of two Airbus A320s to the fleet.
The carrier had 43 aircraft by the end of the reporting period, up from 34 a year earlier.
AirAsia said its Thai operations “endured a challenging period due to escalating domestic political uncertainty.”
“At a time when most airlines are cutting back on capacity and carrying fewer passengers, AirAsia continues to grow the business and expand the route network successfully,” he said.