AirAsia Bhd's (AIRA.KL) second-quarter net profit jumped more than five times on foreign exchange gains, the deferment of taxes and a small increase in passengers.
Asia's largest budget airline by passengers reported net profit for the three months through June increased to 367.16 million Malaysian ringgit ($116 million). Revenue rose to 1.31 billion ringgit from 1.25 billion.
Without foreign exchange gains and deferred taxes, AirAsia's net operating profit fell 17 percent. The company attributed this to its Thailand unit posting a quarterly loss for the first time.
AirAsia said political unrest in Thailand kept loads and fares low, and that the situation is expected to persist until September. It had expanded capacity in Thailand by 23 percent during the quarter; passenger growth fell short at 16 percent despite a 14 percent cut in the average fare.
AirAsia Indonesia saw an operating loss of 271.8 billion rupiah ($23.23 million) compared to an operating profit of 87.7 billion rupiah a year ago, as operational costs increased and the rupiah weakened. The airline will be cancelling a number of loss-making routes in Indonesia, it said in a press statement.
Philippines saw its net loss narrow to 12.4 million ringgit from 24 million ringgit. "I am very optimistic the worst is over as our turnaround plan has been put into place," CEO Aireen Omar said in the statement.
AirAsia said the operating environment in the two countries remains challenging for the remainder of the year.
Group CEO Tony Fernandes said the airline will see its capacity growth return to a "realistic" level.
"We foresee capacity in Malaysia reducing, and there will a re-alignment of business strategy by competitors to ensure sustainability," he said.
It will add eight A320 planes in the third quarter: four in Malaysia, three in Thailand and one in India. It will also dispose of two older aircraft.
The company had seen net profit slide 54 percent in the last financial year, hit by volatile currency moves and price competition in its home market from Malindo, an affiliate of Indonesia's Lion Air and Malaysian Airline System (MASM.KL).
The stock is down almost 25 percent over the past year, versus a 4.1 percent rise in the broader index .KLSE.
(1 US dollar = 3.1660 Malaysian ringgit)
(1 US dollar = 11,698.0000 rupiah)
(Reporting By Al-Zaquan Amer Hamzah and Yantoultra Ngui; Editing by David Holmesand Michael Urquhart)
Reuters
