November 22, 2016 / 10:47 AM / 3 years ago

Malaysia's AirAsia X swings to third quarter profit on higher passenger numbers

KUALA LUMPUR (Reuters) - AirAsia X Berhad (AIRX.KL) flipped to a net profit in the third quarter, versus a year-ago loss, as a weaker ringgit and more capacity on flight routes led to a higher number of passengers for the Malaysian long-haul budget airline.

Flight attendants of the long-haul carrier AirAsia X watch a performance during the launch of the company's prospectus in Kuala Lumpur June 10, 2013. REUTERS/Bazuki Muhammad/File Photo

The carrier, which is expected to report a profit for this year after two straight annual losses, embarked on a business and organisational restructuring in 2015. It has been adding capacity in Australia and increasing frequency on selected existing routes where demand is high to shore up its results.

For the third quarter ended September, it reported on Tuesday a net profit of 11.03 million ringgit ($2.50 million), versus a net loss of 288.2 million ringgit a year ago. This is a fourth consecutive quarter of profits for the company.

Revenue climbed 23.9 percent to 982.4 million ringgit, driven by increases in seat capacity, ancillary revenue, aircraft operating lease income and freight and cargo revenue, the company said in a statement.

Operations are benefiting from a weaker ringgit MYR= that has prompted customers to look at Malaysia "as a value-for-money holiday destination", Chief Executive Benyamin Ismail said.

The company recorded a passenger load factor - a measure of how full planes are - of 78 percent in the third quarter, 3 percentage points higher year on year, AirAsia X earlier said in a statement detailing its preliminary operating statistics.

The airline increased its passenger carrying capacity by 34 percent year on year over July to September.

“Strong demand from North Asia prompted (Malaysia AirAsia X) to add frequencies to Beijing, Shanghai and Osaka while the Australian sector continued to improve with additions warranted for Gold Coast and Sydney,” MIDF Research said in a recent note. The company’s capacity expansion primes the airline for the peak travel season at the end of the year, it added.

“Based on the current forward booking trend, the expected number of passengers to be carried in the fourth quarter remains promising. Forward loads and average fares are trending better than the previous year,” AirAsia X said.

Parent AirAsia Group’s (AIRA.KL) CEO, Tony Fernandes, has said he wants AirAsia X to expand into new destinations in Europe, the United States and Africa.

AirAsia Group, Asia’s largest budget airline, is scheduled to report its quarterly results after market close on Thursday. Shares of both AirAsia X and its parent have more than doubled this year, after sharp losses in 2015.

($1 = 4.4130 ringgit)

Reporting by Liz Lee; Editing by Himani Sarkar

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