Sharply higher depreciation resulting from its recent sale-and-leaseback activity saw AirAsia Group report a 53% slide in operating profit to MYR207 million ($49 million) for the second quarter.
Revenue for the April-June period was up 20% to MYR3.14 billion, aided by higher passenger numbers and unit passenger revenue. RPKs across the group grew 16%, slightly lower than its 17% increase in ASKs, leading to a one-point decline in load factor to 85%.
The airline noted that it was impacted by a MYR160 million charge for higher maintenance provisions on its leased aircraft, stemming from recent sale-and-leasebacks of its fleet to BBAM and Castlelake, and changes in accounting standards.
Net profit fell 85% to MYR46.8 million as the company reported a MYR19.9 million loss on foreign exchange. It also recognised MYR147 million in previously incurred losses from AirAsia India, resulting from a change in its investment in the company.
Across its airline operations, earnings before interest, tax, depreciation and amortisation (EBITDA) fell 14% to MYR436 million, as weaker results from its Thai unit offset stronger performances in Indonesia, the Philippines and India.
Indonesia AirAsia turned around its operating performance during the quarter, reporting positive EBITDA of Rp351 billion ($24.6 million), while revenue swelled 69% to Rp1.66 billion. AirAsia noted that the airline turned profitable "faster than expected" thanks to rising RASK and cost control efforts.
Philippines AirAsia's EBITDA rose nearly six-fold to Ps1.58 billion ($30.2 million), driven by a 22% rise in revenue to 7.51 billion. Load factor improved four points to 91%, while CASK ex-fuel for the unit was down 3%.
Thai AirAsia's EBITDA fell 35% to Bt755 million ($24.6 million) as revenue rose 6.1% to Bt9.6 billion. The group pointed to lower average fares due to weakening tourism and higher competition as the major causes for its decline.
AirAsia India reported positive EBITDA of Rs1.13 billion ($79.2 million), reversing its Rs485 million loss for the previous corresponding quarter. Revenue climbed 39% to Rs9.05 billion, aided by higher passenger numbers and stronger yields.
AirAsia Japan reported a net loss of Y1.45 billion ($13.7 million) for the quarter.
At 30 June the company had MYR3.23 billion in cash and cash equivalents, up by MYR65 million from the start of the year. That was aided by strong operating cash inflows and proceeds from the sale of aircraft.
Earlier in the month, AirAsia Group re-organised its executive structure, with group chief executive Tony Fernandes temporarily stepping across to run the airasia.com travel business. Deputy group chief for airlines Bo Lingam has been appointed president of the airlines unit.
"On the airline outlook, we plan to continue our growth strategy and to strengthen our position, particularly within the Asean region," says Lingam.
"We have planned for a net fleet growth of 20 aircraft across six AOCs this year, with nine aircraft expected to be delivered to AirAsia India. We also expect to receive in November our first A321neo, which is more fuel efficient, has a longer flight range and holds an additional 50 seats."