AirAsia says associate carriers doing well

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Malaysian low-cost airline group AirAsia is reporting improvements in the operations of its Indonesian and Thai associate carriers, saying they have grown market share and produced better earnings reports.

AirAsia says in its recently issued earnings report for 2008 that its 49%-owned associates, Indonesia AirAsia and Thai AirAsia, both recorded profits during the period, although this is excluding their share of one-time charges the group booked as a result of the unwinding of derivative structures.

When including the derivative-related charges, both associates posted net losses, as did AirAsia itself. However AirAsia says the underlying performance of the group was positive in 2008 and things are looking up for 2009.

It says Thai AirAsia "produced a good set of results" in 2008 with an after-tax profit - excluding its share of derivative unwinding losses - of 83 million baht ($2.3 million).

"This was achieved against a very challenging environment marked by increased domestic political disturbance which has a negative impact on the sentiment to travel," it says.

"Nonetheless, the Thai operation has outperformed the industry significantly and has extended its domestic market share to 40% - up from 34% in the beginning of 2008."

AirAsia also says Indonesia AirAsia posted a full-year after-tax profit - before its share of unwinding losses - of 7.5 billion rupiah ($625,000).

"Average fares and yields have improved substantially [in Indonesia] as the industry has evolved to become more commercial friendly," it says.

"The competitive landscape has also favoured AirAsia as many passengers opt for low-cost, high value services."

AirAsia also says recently-established long-haul associate carrier AirAsia X is doing well, although it does not provide details.

It says its "associates are expected to contribute positively to the group in 2009".