AirAsia posts 46% operating profit increase for 1Q11

AirAsia has recorded a growth in operating profit in 1Q11, in what Group CEO Tony Fernandes hailed as “excellent despite high fuel prices.”

In terms of actual numbers for the Group, 1Q11 registered revenue of RM1.05 billion; profit after tax of RM171.93 million; revenue/ASK up 12% (y-o-y) for Malaysia AirAsia, up 13% for Thai AirAsia and 10% for Indonesia AirAsia. EBITDAR margins for MAA, TAA and IAA rose to 38%, 22% and 37% y-o-y, respectively.

“What is particularly significant for us is that our operating profit margins were also significantly higher year-on-year, demonstrating that we are maintaining tight control of costs even as we grow revenues. Yes, fuel prices shot up – but that is something beyond our control. Our response is not to wring our hands and moan, but to use our creativity to address the issue and find ways to overcome this challenge. And our Q1 results indicate that we are on the right path,” said Fernandes.

Fernandes said that a deliberate “load active” strategy meant that while average fares declined, the payoff came in the form of higher passenger load factors of 80%, up 17% y-o-y. “At AirAsia, our focus is on keeping operating costs the lowest in the industry, and on growing ancillary income. Thus, we are not as dependent on our fares as others are. The strategy is to increase passenger loads, and monetize this increase. This helped us push RASK for MAA by 12%. Our unit revenue is up 2%, showing that our strategy is working and this proves that AirAsia has a very robust operating model,” he said.

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