Jump in fuel cost drags AAX Q1 earnings down

Maybank Research said AirAsia

PETALING JAYA: AirAsia X Bhd’s (AAX) profit for the first quarter ended March 31 was dragged down by higher expenses such as aircraft fuel cost, which had ballooned by 55% from a year earlier.

AAX, whose expenses are mostly denominated in US dollars, said that it had posted a 43% year-on-year (y-o-y) drop in operating profit to RM60.3mil, mainly due to an overall 6% depreciation of the ringgit against the greenback.The long-haul, low-cost airline told Bursa Malaysia that net profit fell to RM10.34mil from RM179.49mil previously.

Aircraft fuel expenses, the single largest operating cost, swelled to RM377.69mil from RM243.06mil a year earlier. Aircraft operating lease costs rose to RM70.82mil from RM45.64mil previously.

This was despite a healthy growth in passengers carried - up 33% to 1.4 million in the first quarter on the back of a higher available seat capacity - that led to a 22% jump in revenue y-o-y to RM1.18bil. Load factors were two basis points higher at 84% compared with the same quarter in 2016.

Ancillary revenue per passenger remained constant at RM150, while freight and cargo revenue grew by 5.9% to RM32.8mil in the quarter under review. Revenue per available seat kilometer was down 6% y-o-y from 15.11 sen to 14.20 sen during the quarter under review.

AAX said the marginal drop was due to the expected increase in capacity on core existing routes as per its strategy to grow market share and therefore pressuring yields.

In a press statement, it said Malaysia AirAsia X (MAAX) registered a healthy load factor of 84%, up two percentage points (ppts). Thailand AirAsia X outperformed despite regulatory constraints by posting a US$5.5mil net profit in the first quarter. It recorded a strong 94% load factor, an increase of five ppts from 89% in the same period last year.

As for Indonesia AirAsia X, the A330s service was still temporarily suspended in the first quarter as part of a network restructuring aimed at improving operational efficiencies. However, it has resumed the A330 operations with the introduction of two new routes this month.