AirAsia upbeat about Q4; to take delivery of 12 A320s

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AirAsia will be taking delivery of 12 Airbus A320s in its fiscal fourth quarter.

The low-cost carrier’s Malaysia unit will take eight of the 12 incoming aircraft, while five aircraft in its current fleet will be redeployed to the Philippines. This will result in a net gain of three jets in Malaysia, bringing its fleet to 69 aircraft.

Thai AirAsia will take the remaining four incoming aircraft, bringing its fleet to 35, translating into a full year capacity increase of 25%.

AirAsia is expecting demand to be strong in both Malaysia and Thailand for the fourth quarter.

Indonesia AirAsia will also see a 30% year-on-year capacity increase, as it takes three additional aircraft redeployed from the now dissolved Japan AirAsia this quarter. These aircraft will be deployed in Bali, Bandung and Jakarta.

AirAsia says it is expecting "double-digit growth" in passenger numbers in Indonesia this quarter, in line with the capacity increase. The unit will continue to expand both its domestic and international networks in the fourth quarter.

“Indonesia being the largest market thus far in terms of population, we remain upbeat with our operations there as we invested heavily in our branding and distribution channel to ensure we are competitive with larger players there,” says group chief executive Tony Fernandes.

AirAsia is, meanwhile, “cautiously optimistic” about the outlook of Philippines AirAsia, where it expects a seasonal increase in passenger demand during the Christmas period. Its notes, however, that it is unclear how the recent devastation of the typhoon in the country will dampen economic growth.

AirAsia Zest, which AirAsia has a 49% stake in, meanwhile will have a net increase of two aircraft this quarter and will increase increase frequencies on several routes from Manila. Three new domestic services from Cebu to Cagayan de Oro, Davao and Puerto Princessa will also be launched.

“PAA, on the other hand, will be a long term story and our goal is ensuring they are on the right path similar to other associates to make money by rationalisation of routes and resources, maximising the slots in Manila and improve operational efficiency,” says Fernandes.

He adds that while he will remain in the regional office in Indonesia to focus on Asean, co-founder Kamarudin Meranun will return to Malaysia to ensure the company is "a step ahead" in dealing with local stakeholders, government bodies and also handle issues related to KLIA2.

Earlier this month, the carrier announced significant changes to its senior management team with Fernandes and Kamarudin resuming greater roles in the operations of the group’s Malaysia unit. AirAsia is facing yield pressure in its home market with both new entrant Malindo Air and flag carrier Malaysia Airlines slashing fares.

“The future of AirAsia Group is the associates where one day it will be larger than AirAsia Berhad in terms of profits and aircraft as the growth potential in their countries will be phenomenal,” says the carrier.