Aireen Omar: The strategies we have set out previously to increase our cash and to reduce borrowings proved to be working
KUALA LUMPUR: AirAsia Bhd posted earnings of RM243.03mil in the second quarter ended June 30, 2015, which was 33.8% lower from the RM367.15mil a year ago following the unrealised foreign exchange loss on borrowings of RM43.59mil and one-off costs related to the sale of leaseback of aircraft.
At the net operating level, the low-cost carrier said on Thursday it was higher by 75.6% at RM123.96mil compared with RM71.01mil.
However, forex losses on borrowings of RM43.59mil resulted in profit before tax slump to RM48.76mil from RM255.31mil a year ago when there were forex gains of RM202.92mil then.
AirAsia said the unrealised foreign exchange loss on borrowings was due to the adverse movement in the exchange rate on US dollar denominated borrowings.
“The foreign exchange loss is merely an accounting valuation which was the result of the changes in the closing forex on-year (RM:USD – 3.6717 as at June 30, 2015 as compared to RM:USD – 3.2298 as at June 30, 2014),” it said.
The forex loss on borrowings resulted in lower earnings despite higher deferred taxation of RM208.73mil compared with RM115.10mil in deferred taxation a year ago.
Its revenue increased just 1% to RM1.324bil from RM1.311bil. Earnings per share were 8.70 sen compared with 13.20 sen.
In the second quarter financial performance, AirAsia posted revenue per available seat kilometre (RASK) of 14.56 sen (down 5% on-year).
“This was expected following the slight impact on the absence of marketing on 2Q15 forward sales and the removal of fuel surcharge starting from Jan 26, 2015 as the Company decided to pass on the benefit of lower fuel price to the consumers.
“This led to a slight drop in average fare at RM141 but ancillary income per pax however saw an increase of 2% on-year to RM46. If excluding fuel surcharge, RASK for 2Q15 would have been up 6% on-year,” it said.
AirAsia Bhd CEO, Aireen Omar said: “The decrease in RASK was anticipated following the impact of non-marketing activities in the first quarter on the forward sales in 2Q15 as well as the removal of fuel surcharge which resulted in lower average fare.
“However ancillary revenue as a whole has increased by 9% on-year with the highest contributor coming from baggage (up 2% on-year), followed by cargo (up 3% on-year) and insurance (up 45% on-year).
“Highest growth is seen in online advertising (up 733% on-year) and aircraft advertising (up 149% on-year). These led to the 2% increase in ancillary income per pax to RM46 this quarter.”
“The company’s cost, measured in terms of cost per available seat kilometre (CASK) was 11.88 sen, down 11% on-year due to lower aircraft fuel expenses (down 13% on-year) on the back of 25% lower average fuel price at US$85 per barrel,” she said.
Aireen said the reduction in operating expenses along with the increased contribution from associates were able to widen the RASK-CASK spread by a good 31% on-year allowing it to book good profitability this quarter – 40% increase in operating profit and 75% increase in net operating profit.
On balance sheet, Aireen said: “The strategies we have set out previously to increase our cash and to reduce borrowings proved to be working.
“At the end of Q2, FY15, the company’s total debt has reduced by 6% from the previous quarter and cash on the other hand has increased by 15% to RM1.84bil following the sale and leaseback exercises on the ten aircraft in 2Q15 on top of growing cash from operations itself. This resulted in 0.26 points or 11% drop in the Company’s net gearing ratio to 2.21 times at the end of 2Q15.”
In the first half, its earnings were at RM392.36mil, which were 22.6% lower compared with the RM506.87mil in the previous corresponding period. Its revenue rose 0.4% to RM2.62bil from RM2.61bil.
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