Forex losses eat into AirAsia X profit

by **Cals** Wed 20 Nov 2013, 18:39

Business & Markets 2013

Written by Charlotte Chong of theedgemalaysia.com

Wednesday, 20 November 2013 10:26

KUALA LUMPUR: AirAsia X Bhd’s net profit plunged nearly 46% to RM26.4 million in the third quarter ended Sept 30 of 2013 financial year (3QFY13) from RM48.9 million a year ago, despite registering higher revenue.

Revenue climbed to RM601.5 million, an increase of 23.6% year-on-year from RM486.6 million previously. Earnings per share dropped to 7.4 sen from last year’s 18.3 sen.

The long-haul arm of the
AirAsia group said in a filling with Bursa Malaysia yesterday that due to the strengthening of the US dollar against the ringgit in the quarter under review, the company recognised unrealised foreign exchange losses on borrowings of RM24 million, which consist primarily of unfavourable fair value movements from cash flow hedges of RM18.2 million, as compared to unrealised foreign exchange gain of RM48.0 million on its USD-denominated borrowings in 3QFY12.

It also pointed out that as a result of promotional campaigns for both mature and newly launched routes, revenue per available seat kilometre (RASK) decreased 1.6% from 12.15 sen in 3QFY12 to 11.95 sen in 3QFY13. As for its nine-month period ended Sept 30 (9MFY13), the airline registered a net profit of RM44.3 million, a jump of 124.5% from RM19.8 million a year earlier. Revenue also increased to RM1.6 billion compared with RM1.4 billion last year.

AirAsia X said RASK improved by 7.3% from 11.54 sen in 9MFY12 to 12.38 sen in 9MFY13, as a result of the route network consolidation exercise it had undertaken.

It also pointed out that the increase in revenue per passenger seat sales was due primarily to an improvement in available seat kilometres (ASKs) and revenue passenger kilometres (RPKs) by 9% and 7.2% respectively, from 12.2 billion and 10.3 billion respectively in 9MFY12 to 13.3 billion and 11 billion respectively in 9MFY13.

AirAsia X said the airline’s positioning within the Asia Pacific region, which is projected to be robust and potentially surpassing North America as the world’s largest aviation market, allows it to benefit from the region’s growth and tap the large and attractive feeder market for its long-haul routes.

Maybank Investment Bank analyst Mohshin Aziz said in a note yesterday that AirAsia X’s performance year-to-date has been smooth and consistent with the statements made by the management during its IPO roadshow earlier.

“We are positive on the developments of the company as well as the insatiable demand for long-haul budget travel.”

He has maintained a “buy” call on the company with an unchanged target price of RM1.30.

AirAsia X shares have been trading below the IPO price of RM1.25 since the company made its debut on Bursa Malaysia in July. The stock closed at RM1.04 yesterday.

This article first appeared in The Edge Financial Daily, on November 20, 2013.