AirAsia Bhd. (AIRA), the budget airline that reported a 19 percent drop in fourth-quarter earnings, plans to propose a dividend for last year, Group Chief Executive Officer Tony Fernandes said.
The carrier’s board will stick with a previously announced policy of paying an annual dividend of 20 percent of net operating profit, Fernandes told Bloomberg TV’s Rishaad Salamat today. After a meeting to review earnings yesterday, the company told the stock exchange in Kuala Lumpur that “the directors do not recommend any dividend for the quarter ended Dec. 31.”
“The dividend policy remains in place,” Fernandes said. “We are confident of paying that dividend out.”
AirAsia’s board will propose a payout when it meets in April after a final audit of last year’s accounts, Fernandes said today. The Sepang, Malaysia-based budget carrier, which sold shares in an initial public offering in 2004, adopted the dividend policy in February last year to give more certainty to its shareholders, the company said then.
The carrier started distributing profits in 2011 after retaining earlier earnings to finance expansion. It proposed a special dividend of 18 sen per share, in addition to a final payout of 6 sen a share at the same time it released 2012 fourth-quarter earnings last February. The two previous dividends were paid in July 2012 and the same month a year earlier, according to data compiled by Bloomberg.
The shares gained 0.4 percent to 2.39 ringgit as of the 12:30 p.m. break in Kuala Lumpur trading today and have advanced 8.6 percent this year, after dropping 20 percent in 2013.
AirAsia’s net income dropped to 245.4 million ringgit ($75 million), or 8.8 sen per share, in the three months ended December from 303.4 million ringgit, or 10.9 sen, a year earlier, according to yesterday’s stock exchange filing. The carrier also reported a foreign-exchange loss on borrowings.
The airline is confident of a “good” 2014 and aims to cut costs by 5 percent this year, Fernandes said today. Passengers carried grew 14 percent to 5.91 million in the fourth quarter from a year earlier, exceeding capacity expansion of 10 percent, AirAsia said in separate statement yesterday.
The carrier has ordered more planes to accelerate expansion. AirAsia already has about 140 A320 planes in operation plus 335 on order.
“There’s been so much talk about capacity,” Fernandes said. “We are kind of done with what we’ve wanted to do and we see capacity rolling out. So we are taking a little bit of a backseat now. We’ve deferred a lot of planes -- we are deferring seven planes this year and 12 planes next year. That gives us enough for growth.”
AirAsia plans to start an airline in India with partners including the Tata Group, following similar ventures in the Philippines, Thailand and Indonesia. AirAsia is confident of getting its India license “imminently,” Fernandes said.
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