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  • AirAsia boosts third-quarter profit 5% amid strong revenue rise

AirAsia boosts third-quarter profit 5% amid strong revenue rise

AirAsia Group's third-quarter profit rose 4.6% to more than MYR264 million ($63.3 million) as revenue and passenger numbers increased.

Revenue for the quarter ended 30 September was up 18% at MYR3.07 billion. Group-wide traffic likewise grew 18%, slightly lower than the 19% increase in capacity. This resulted in a two-point load-factor decline, to 84%.

Expenses related to staff, maintenance and user charges rose amid expansion. Depreciation costs meanwhile grew, reflecting the adoption of a new accounting standard on leases.

AirAsia made a net loss of MYR67.5 million as it took hits from foreign exchange and fair-value losses on derivatives. The previous year, it had made a MYR804 million net profit in the third quarter.

On a nine-month basis, AirAsia's operating profit halved to MYR707 million, despite a 17% lift in revenue to MYR9.09 billion. Net profit shrunk 96% to MYR99.5 million.

Across the airline operations, third-quarter EBITDA more than doubled to MYR662 million. The group's overseas units in Indonesia, Philippines and Thailand all improved their performance, while the one in India narrowed its losses.

Thai AirAsia's EBITDAR rose 20.5% to Bt1.32 billion ($43.7 million), while revenue grew 5.3% to Bt9.42 billion. The airline attributes a Bt761 million loss after tax to exchange-rate effects and notes that unit revenue is under pressure as a result of competitors' low pricing.

Indonesia AirAsia's third-quarter EBITDA was narrowly positive at Rp415 million ($29,000); revenue swelled 72% to Rp1.83 trillion. Net profit came in at Rp61.2 billion, reversing a Rp214 billion net loss in the same period last year.

Philippines AirAsia's EBITDA came in at nearly Ps1 billion ($19.7 million), reversing a Ps1.32 billion loss in the same quarter of 2018. Revenue jumped 40% to Ps6.23 billion, and the operation's net loss narrowed to Ps367 million.

AirAsia India narrowed its EBITDA loss to Rs1.2 billion ($16.8 million), as revenue climbed 58% to Rs7.24 billion. Loss after tax were flat at Rs3.1 billion. AirAsia says the unit's costs grew in line with capacity increases.

Meanwhile, AirAsia Japan made a net loss of Y3.71 billion ($33.9 million).

As of 30 September, the AirAsia Group had MYR2.18 billion in cash and cash equivalents – some MYR4.43 billion less than it had on the same date last year.

AirAsia Group says newly delivered Airbus A321neos will be deployed on routes with high demand and constrained infrastructure, in an effort to reduce unit cost.

In 2020, the group will make a net addition of 12 aircraft to its fleet. Malaysia AirAsia will not take any aircraft, while Thai AirAsia will remove three jets. Indonesia AirAsia and AirAsia Japan will each receive three jets, and Philippines AirAsia two. The bulk of the growth will be at AirAsia India, which will add seven aircraft.

The airline group foresees a "positive… core performance" during the fourth quarter. It says: "As the group repositions the business to adapt to the evolving business environment along with new accounting treatment and restructured aircraft ownership, we look forward to a better year in 2020."

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