AirAsia net profit dips on unfavourable forex and higher finance cost

The Star/Asia News Network

PETALING JAYA - AirAsia Bhd's net profit dropped 19.13 per cent to RM245.36mil (S$750mil) due to unfavourable foreign exchange (forex) rates and higher finance cost for the fourth quarter to Dec 31, 2013. This was on the back of unchanged revenue of RM1.35 bil.

Earnings per share dropped to 8.8 sen from 10.9 sen previously.

The lower net profit was due to the effects of the changes in the closing forex rates in the fourth quarter, which weakened to US$3.21 from US$3.04 in the fourth quarter of 2012. Forex losses for the quarter amounted to RM39.04mil from a previous gain of RM58.42mil.

"The adverse movement in the exchange rates resulted in unrealised forex losses on US dollar denominated borrowings that are translated at the closing rate of each reporting date. This does not represent the financial performance of the business but merely an accounting entry," said AirAsia in a statement.

Meanwhile, finance cost increased to RM110.33mil from RM97.23mil previously. A look at its operating profit for the fourth quarter showed a 2 per cent decline to RM315.01mil. This was mainly due to the increase in routine aircraft C-check and lower fares.

"AirAsia posted operating margins of 23 per cent on the back of its continuous cost reduction exercise to ensure the airline remain a cost leader in an irrational competitive environment," said AirAsia. For the full year, net profit dropped by 53.89 per cent to RM364.07mil on the back of a 4.91 per cent increase in revenue to RM5.19bil. Again this was due to forex losses of some RM385.33mil and higher finance costs of RM432.38mil.

AirAsia also announced that it was proposing to seek shareholders' approval to purchase up to 10 per cent of the issued and paid-up share capital of the company. There are presently 2.78 billion AirAsia shares in the market.

Meanwhile, AirAsia's passengers grew 14 per cent year-on-year (y-o-y) to 5.91 million which overtook capacity growth of 10 per cent. Load factor was at an all-time record high of 85 per cent y-o-y.

AirAsia chief executive officcer Aireen Omar said in a statement that AirAsia's cost reduction exercise for the fourth quarter achieved a 10 per cent lower cost per available seat kilometre (CASK) of 12.77 sen from 14.11 sen.

The CASK-ex fuel was reduced by 14 per cent from 6.63 sen to 5.73 sen.

Thai AirAsia posted strong revenue of 6.5 billion baht (S$200mil) in the fourth quarter, up 16 per cent from the same period last year. Operating profit was down by 52 per cent to 444.01 million baht which led to a 40 per cent decrease in profit after tax at 425.44 million baht.

Indonesia AirAsia (IAA) posted an increase of 25 per cent in revenue to 1,527.4 billion rupiah (S$1.6bil) for the fourth quarter. IAA posted an operating loss of 369.09 billion rupiah (RM104.13mil) from an operating profit of 160.72 billion rupiah. IAA's fourth quarter loss after tax was 429.32 billion rupiah, down 446 per cent y-o-y.

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