May 28, 2015 / 12:16 PM / 3 years ago

UPDATE 1-AirAsia first-quarter net up 7 pct on lower fuel, operating costs

* Q1 net 149.3 mln ringgit vs year-ago 139.7 mln

* Passenger volume for Indonesia down 26 pct after December crash

* Demand to recover with peak season, branding efforts

* Gains from lower fuel prices offset by weaker Asian currencies (Adds detail, background)

KUALA LUMPUR, May 28 (Reuters) - Malaysian budget carrier AirAsia said its first-quarter net profit rose 7 percent from a year ago, due to lower fuel and operating costs.

AirAsia earned a net 149.3 million ringgit ($41 million) against 139.7 million in the same period a year ago, it said on Thursday, having in the fourth quarter made a loss of 429.4 million, its first net loss since 2008.

The results are the carrier’s first since its Indonesian affiliate was hit by an air disaster at the end of last year when 162 people were killed in a plane that crashed en route from the city of Surabaya to Singapore.

Its Indonesian unit saw passenger volume decline 26 percent alongside a 19 percent drop in capacity.

“Indonesia AirAsia was on a good turnaround track in the last two quarters of 2014 but unfortunately was faced with a tragedy that impacted its turnaround timeline,” group CEO Tony Fernandes said in a statement.

Demand in Indonesia will remain “moderated” following the tragedy but is expected to improve leading up to the peak season for travel and as promotional efforts launched in April take effect, said AirAsia.

A stronger performance in Malaysia and Thailand offset weakness in its other markets.

AirAsia said it would increase capacity in Malaysia to meet stronger demand in the second quarter, which will also see more passengers from China.

The carrier will open a new hub for its Indian operations in Delhi in the second quarter and looks to introduce new routes and boost frequencies to build its presence there.

The benefits of lower fuel prices in the second quarter were partly offset by a weakening of Asian currencies against the U.S. dollar, it said.

It will continue to generate more cash by reducing costs and managing capacity through the sale of older aircraft, AirAsia said in a statement.

Its long-haul arm AirAsia X separately announced a sixth quarterly net loss, undermining prospects of meeting an objective to be profitable by this year.

AirAsia said earlier it would accelerate cost-cutting measures by taking fewer deliveries of new aircraft compared with previous years and selling older planes.

Shares of AirAsia have lost 16 percent over the past year, underperforming the benchmark index’s 11 percent fall. ($1 = 3.6410 ringgit) (Reporting By Al-Zaquan Amer Hamzah; Editing by David Evans and David Holmes)

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