AirAsia is looking at reducing rollout to match cash flow as it wants to maintain its current gearing level, says chief executive officer Datuk Seri Tony Fernandes
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AIRASIA Bhd (5099) is in talks with aircraft manufacturer Airbus to slow down delivery of its A320s.
"We are looking at reducing rollout to match cash flow. We want to maintain our current gearing level," AirAsia Bhd chief executive officer Datuk Seri Tony Fernandes told analysts in a teleconference of its first quarter results yesterday.
He said 12 per year is an ideal number for the airline to receive.
Net gearing ratio as at March 31 2010 stood at 2.25 times.
So far, AirAsia has received 70 of its A320 aircraft on order, with another 105 aircraft to be delivered through to 2015.
According to this timeline, AirAsia would be looking at delivery of an average of 22 aircraft per year.
Fernandes said no penalty would be incurred with the reduction in rollout.
AirAsia has already deferred delivery of its aircraft twice so far.
The airline is also currently looking at ways to fund its Thailand and Indonesian associates' operations independently, and to transfer the debt of the two operations from Malaysia into the respective countries.
Fernandes said listing the respective companies in its home base is an option.
"In the next few months, there will be some announcements which will give much more clarity on AirAsia and its position with its associates as well as AirAsia X," Fernandes said.
The airline saw a 10 per cent jump in its first-quarter net profit, thanks to foreign exchange gains.
It recorded a net profit of RM224.1 million for the quarter ended March 31 2010 compared with RM203 million the year before.
The carrier expects to see another three strong quarters for the rest of the year.
Revenue for the quarter was 10 per cent higher thanks to growth in passenger volume of 17 per cent for the quarter.
However, average fare was 13 per cent lower at RM173 compared with RM198 achieved in the first quarter of 2009.
This resulted in profit from operations to fall by almost a third to RM299.8 milion compared with RM410.7 million in 2009.
The other major highlights of the quarter were the turnaround in the group's Thailand and Indonesian operations, with both making profits, and a 31 per cent jump in ancillary income.
Ancillary income contributed 16 per cent to the group's total revenue, with its best-ever performance that easily surpassed the contributions in each of the previous four quarters.
By Presenna Nambiar
Business Times
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