Malaysia’s AirAsia Group Q3 operating profit halves as fuel costs bite

November 30, 2018 editor Air Asia, fuel

KUALA LUMPUR: AirAsia Group Bhd’s quarterly operating profit halved as higher fuel costs hurt the Malaysian flagship budget carrier.

Its operating profit came in at 253 million ringgit (US$60.50 million), compared with 494 million ringgit a year earlier.

Its net profit for the quarter ended September, however, soared about 81 per cent to 915.9 million ringgit (US$219 million), largely on a one-off gain from the sale of a business and reversal of deferred tax liabilities.

The airline sold its remaining stake in its joint venture unit with travel platform Expedia Group Inc for US$60 million, resulting in the one-off gain.

AirAsia said in its financial statement filed to the bourse that it also recorded a 515.4 million ringgit deferred tax asset linked to aircraft disposals during the quarter.

The airline’s average fuel price rose 50.1 per cent over the quarter to US$95 per barrel.

AirAsia said the operating environment in the fourth quarter was improving, in addition to the period being seasonally better for airlines due to holidays.

“All airline operators’ profitability have been affected by the higher global fuel prices this year,” it said.

The airline added it would maintain cost discipline in all areas, increase efficiency and “remain nimble in order to maintain healthy profit margins”.

It added that it was focused on turning around its Indonesia and Philippines operations in the fourth quarter and next year.

AirAsia has offshoots in Thailand, Indonesia, the Philippines, India and Japan in addition to its biggest operation in its home market.

In the third quarter, AirAsia filled 82 per cent of its seats, down from 87 per cent a year earlier, as it grew group capacity by 16 per cent in an attempt to gain market share.

Last week, its long-haul arm AirAsia X Bhd reported a larger loss for its third quarter due to higher fuel prices. The carrier said it was working to mitigate the increase by boosting ancillary revenue and capacity.

Source: ChannelNewsAsia