KUALA LUMPUR: AirAsia X Bhd’s (AAX) profit for the first quarter (Q1) ended March 31, 2017, was dragged down by higher expenses such as aircraft fuel cost, which ballooned by 55% from a year earlier.

AAX, whose expenses are mostly denominated in the US dollar, said it posted a 43% year-on-year 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 on Tuesday 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. 

Its profit took a hit despite a healthy growth in passengers carried - up 33% to 1.4 million in Q1 on the back of a higher available seat capacity - that led to a 22% jump in revenue year-on-year to RM1.18bil.

Load factors were 2 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 (RASK) was down 6% year-on-year 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 2 percentage points (ppts).

Thailand AirAsia X outperformed despite regulatory constraints by posting US$5.5mil net profit in Q1. It recorded a strong 94% load factor, an increase of 5 ppts from 89% in the same period last year.

As for Indonesia AirAsia X, the A330s service was still temporarily suspended in Q1 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.

On its prospects, the AirAsia group affiliate said that based on the current forward booking trend, forward loads and average fares were trending better than the previous year.

However, it added, the relative weakness of the Malaysian ringgit remained a key concern as a large portion of the company’s borrowings and operating costs - including fuel expenses and aircraft operating lease exprnses - are denominated in US dollars.

“Barring any unforeseen circumstances, including but not limited to terrorist attacks, natural disasters, epidemics, economic downturn, fuel price hike and fluctuation in foreign currencies against the Malaysian ringgit, the company expects its prospects to remain positive,” it said.

In the press statement, MAAX chief executive officer Benyamin Ismail said: “Moving forward for the rest 2017, AirAsia X will focus on strengthening our market leadership through a number of strategies.

“We hope to stretch our aircraft utilisation rate further with more incremental frequencies on high yield point-to-point routes and new routes in the second half of 2017. We have also set targets in ensuring the company remains lean through various cost initiatives and maximise the operational synergies between AirAsia and AirAsia X.”

Read more at http://www.thestar.com.my/business/business-news/2017/05/23/airasia-xs-profit-hit-by-higher-fuel-expenses/