- Weaker ringgit spurs budget travel, boosts Malaysia's appeal
- Half of 2016 jet fuel needs hedged at average $59 a barrel
AirAsia Bhd., Southeast Asia’s biggest budget carrier, returned to profit last quarter after flying more passengers on higher fares and benefiting from lower fuel prices.
Net income was 554.2 million ringgit ($132 million) in the three months through December, compared with a net loss of 428.5 million ringgit a year ago, the company said. Revenue rose 47 percent to 2.17 billion ringgit. Its long-haul arm AirAsia X Bhd. also swung to a fourth-quarter profit.
AirAsia is getting a boost from new routes and capacity cuts by domestic rival Malaysia Airlines Bhd. amid mounting regional competition. The ringgit’s 19 percent depreciation against the U.S. dollar last year also spurred budget travel and made the Southeast Asian nation more appealing to tourists, countering AirAsia’s losses at its airline associates in Indonesia, the Philippines and Japan.
“In Malaysia, we are benefiting from the weaker currency environment that has led to local consumers trading down when going on their travel and other nationalities looking at Malaysia as a value for money holiday destination,” Group Chief Executive Officer Tony Fernandes said in a statement Friday. “We saw a great end to 2015 with record profitability and look to 2016 with a positive light.”
The carrier says the fare environment in Malaysia is improving and first-quarter demand is strong. AirAsia began services from Kuala Lumpur to Maldives, China’s Changsa and Colombo in Sri Lanka last quarter. The group has hedged 52 percent of its 2016 fuel needs at an average cost of $59 per barrel of jet kerosene, Fernandes said.
The average fuel price dropped to $75 per barrel in the three months through December, from $95 in the same period a year earlier, AirAsia said. The average fare rose to 177 ringgit in the fourth quarter, from 171 ringgit the year before. Its Malaysian operations saw a 10 percent year-on-year increase in passengers carried to 6.5 million.
AirAsia dropped 3.5 percent to 1.39 ringgit on Friday. The shares have slumped 49 percent in the past year, while AirAsia X has fallen 52 percent. The two companies were among the worst performing airline stocks in the region last year after a series of crashes in 2014 involving Malaysian carriers dented confidence. AirAsia was also hurt by a GMT Research report in June questioning the carrier’s accounting.
AirAsia X said net income was 201.6 million ringgit in the three months through December, compared with a 168.5 million net loss the year before. AirAsia X has hedged half of its 2016 oil requirements at about $60 a barrel and could hedge further if oil prices fall to about $20 to $25, CEO Benyamin Ismail said last month.