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Malaysia’s AirAsia posts sharp rise in profit

KUALA LUMPUR, Malaysia - Malaysia’s AirAsia is close to flying to Singapore, one of the region’s busiest aviation hubs, its chief said on Tuesday, after the budget carrier reported a 143 percent on-year surge in net profit in the quarter through June.

“Singapore is very much in our picture. We are not too far away from flying to Singapore,” AirAsia chief executive Tony Fernandes said in a conference call on the airline’s earnings.

He said he would be meeting with Singapore Transport Minister Raymond Lim on Sept. 5 but declined to elaborate.

AirAsia, Southeast Asia’s biggest and only publicly listed low-cost carrier, previously failed to secure landing rights in Singapore. It has accused the city-state of blocking it from servicing the lucrative Kuala Lumpur-Singapore route to protect its own Singapore Airlines.

The airline said it posted a net profit of 39.1 million ringgit (US$10.6 million; Ð8.9 million) in the fiscal fourth quarter to June, up from 16.1 million ringgit in the same period a year earlier.

Sales in the quarter rose 21 percent on-year to 241.7 million ringgit (US$66 million; Ð55 million), it said.

It attributed the surge in earnings to a 5.7 percent increase in average fares and a higher load factor of 83 percent, compared with 80 percent in the previous quarter.

For the full year that ended June 30, AirAsia said its net profit rose 14 percent to 126.9 million ringgit (US$34.6 million; Ð28.8 million), mitigated partially by higher depreciation and finance charges after it took delivery of new aircraft.

AirAsia, which has about 40 planes now and has ordered 100 Airbus 320 planes for its fleet expansion, said it has received seven of the new aircraft up through the end of June.

The carrier said it has net tax incentives of 11.4 million ringgit (US$3.1 million; Ð2.6 million) for the fiscal year just ended for the purchase of new aircraft, compared with a tax charge of 14.3 million ringgit a year earlier.

In the 2007 fiscal year, AirAsia said it faces challenges from increased competition, lower yields due to aggressive promotional fares and unpredictability of fuel prices.

The board does not “anticipate fuel prices falling significantly and is of the view that they will remain at high levels in the short-term,” it said, adding that it will be putting in place a hedge of its future fuel requirement to mitigate the risks.

Despite the volatile industry, AirAsia said it remains “positive on the long-term business outlook.”