Thursday May 29, 2008 MYT 5:47:08 PM

AirAsia Q1 net profit at RM161.27m

By Joseph Chin

KUALA LUMPUR: AirAsia Bhd’s net profit for the first quarter surged ended March 31 surged to RM161.27mil from RM86.87mil, boosted by deferred taxation of RM51.54mil and higher passenger volume.

Announcing the results Thursday, the low-cost carrier said group profit before tax improved by 156% to RM110.17mil from RM43.07mil a year ago in 1Q07. Revenue rose 32% to RM535.15mil from RM406.22mil a year ago. Earnings per share was 6.8 sen from 3.7 sen.

“The positive growth in results was attributed to higher passenger volume achieved and higher contribution from ancillary income,” it said.

AirAsia said passenger volume rose by 21% in Q1 from Q1 last year. Average fare was higher by 10% at RM189 as compared to RM171 achieved a year ago.

“The higher average fare achieved reflects the robust demand for our services and maturity of certain routes in the network,” it said.

It said the load factor was 4.4 percentage points lower to 72% due to significant capacity addition, initial underperformance of new routes and some routes experienced decline in load factors due to specific local issues such as snowstorms in China.

On the outlook, it said the airline industry was facing one of the toughest challenges, with record jet fuel prices, tightening of the credit market and a slower world economic growth.

“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,” it said. AirAsia said it was driving this consolidation process as it continued to offer irresistible fares, stimulate new markets, encourage price sensitive customers and expand to new destinations.

“No one is certain how long this situation will persist, but it is inevitable that weaker competitors will have to reduce capacity and disappear eventually. In this period of uncertainty, there is only one assurance – and that is low cost airline will prosper,” it said.

AirAsia said in the end, it would emerge “even stronger reflecting our brand, our sound business model, our unmatched cost advantage, efficient fleet, strength of our route network and our hardworking people”.