AirAsia net profit up 43% for 2Q2010; Air New Zealand expanding services to Japan

19 August 2010

AirAsia (-1.8%) declined for Wednesday (18-Aug-2010) despite reporting a 43% year-on-year improvement in net profit for the three months ended 30-Jun-2010 to USD63.2 million. The result came as revenues rose 26% for the quarter to USD298.8 million, while the cost of sales rose 33.6% to USD167.2 million.

The Group also reported strong yields for the period, with revenue per ASK (RASK) for Malaysian operations up 15% to USD 5.03 cents. AirAsia Thailand reported a 8% rise in RASK, to USD 4.74 cents, while AirAsia Indonesia RASK was up 19%, to USD 4.74 cents.

CEO, Tony Ferndandez, stated forward bookings are “looking very good”, with the fourth quarter traditionally its strongest. As a result, the carrier is in a “fantastic position” heading into its strongest season, following improved results in the first and second quarters.

See related report: AirAsia perspective

See related CAPA Profile: Financial Results

Capital Group increases shareholding in Qantas

Qantas (+2.8%) ended the day higher after news The Capital Group Companies Inc purchased 28.9 million shares in Qantas for AUD71.1 million between 07-Jun-2010 to 16-Aug-2010, increasing its stake from 8.25% to 9.53%.

The carrier has been edging higher after improved financial results for FY2009-10 and talk of plans to expand operations as demand, particularly in business markets, returns.

Air New Zealand expands services to Japan

Air New Zealand announced during trading it has more than tripled the number of charter flights it will be operating from Japan to New Zealand this summer in response to a resurgence in demand from this high-spending tourism market. Between 26-Dec-2010 and 03-Apr-2011, Air New Zealand will operate 14 return charter flights to Auckland from nine departure points across Japan. General Manager Japan, Edward Overy, stated the carrier is deliberately focusing on new tourists from key regions across Japan including Nagoya, Fukuoka, Sapporo, Okinawa, Sendai, Kumamoto, Hiroshima, Miyazaki and Kagoshima. These visitors will complement those already travelling on Air New Zealand's 12 scheduled services from Tokyo Narita and Osaka Kansai each week. The charter flights will utilise 230-seat B767 aircraft.

Indian airlines report improved passenger numbers for Jul-2010

Kingfisher Airlines (+4.4%) advanced, despite the Indian Ministry of Civil Aviation reporting a 1.7% year-on-year decline in the carrier’s domestic passenger numbers for Jul-2010 to 815,000. The carrier had a load factor of 79.3% for the month.

The carrier reportedly plans to sign a codeshare agreement with British Airways in Sep-2010. Kingfisher is due to join the oneworld alliance in 2011 with BA, one of the alliance’s founders, serving as sponsor.

Jet Airways (-0.6%) slipped, despite reporting a rise in passenger numbers of 14.8% for the month to 782,000. LCC subsidiary, JetLite also experienced an improvement in passenger numbers, up 15.8%, to 308,000. Load factors were 73.8% and 76.6%, respectively.

SpiceJet (-0.3%) was also down. The carrier reported a 20.3% increase in passenger numbers for Jul-2010 to 540,000, while load factor totalled 76.8%.

See related CAPA Profile: Traffic and Capacity

Elsewhere, China Airlines (-2.1%) and Malaysia Airlines (-1.8%) ended the session in negative territory, while Skymark Airlines (+6.0%) was the day’s biggest gainer.

Asia Pacific selected airlines daily share price movements (% change): 18-Aug-2010

Source: Centre for Asia Pacific Aviation, Reuters & Financial Times

AirAsia faces battle against rival LCCs

18 August 2010

KUCHING: Thai AirAsia is expected to face a number of new potential rivals on its position as Thailand’s leading low-cost carrier (LCC).A joint venture of low-fare airline AirAsia Bhd (AirAsia) and Thailand’s Asia Aviation, Thai AirAsia is currently the sole low-cost airline operating both domestic and international flights from Suvarnabhumi Airport.

However, Thai Airways and Tiger Airways had announced earlier this month that they intended to start a new LCC in Thailand to compete against Thai AirAsia. The new airline, which will be 51 per cent owned by Thai Airways and 49 per cent by Tiger Airways, would be called Thai Tiger Airways (TTA) and operate from January or February next year.

CIMB Investment Bank Bhd (CIMB Investment) reported that the added competitive pressure from TTA was undoubtedly negative as it could force Thai AirAsia to lower its fares and give up several percentage points in profitability

However, the latter had the benefit of incumbency, a well-recognised brand, a wide and well-connected network through links with the larger AirAsia group in Malaysia and Indonesia, both of which provided for customer convenience and a larger fleet with greater economies of scale.

“As a result, we expect Thai AirAsia to survive the onslaught relatively well. TTA, on the other hand, must be prepared for at least two years of losses as it attempts to wrest market share through promotional offerings and heavy marketing,” said CIMB Investment in its research note.

From a balance sheet point of view, if the competition became too fierce and operating cash flow at Thai AirAsia turned negative, AirAsia might have to continue financing the working capital requirements of its Thai unit.

“In our view, an increase in financial support will probably be unnecessary given that a recapitalisation of Thai AirAsia is on the cards upon its listing, which is slated by mid-2011,” added the research firm.

However, the presence of TTA might reduce the valuation multiples realised by TAA on its initial public offering (IPO) and lower the value of AirAsia’s equity in TAA.

Furthermore, potentially lower profitability at TAA due to competition might also reduce its operating cash inflows and slow the pace at which TAA’s debt to AirAsia was repaid. AirAsia would probably be receiving only partial repayment from TAA, given that some of its working capital loan could be capitalised into TAA equity before the IPO.

Moving away from the Thai AirAsia story and to something more positive, AirAsia’s efforts to defer the deliveries of the A320s would significantly reduce capital expenditure (capex) levels and gearing ratios.

“This is positive because in just three years, we expect the net debt-to-equity ratio to fall from 2.61 times in financial year (FY) 2010 to only 1.84 times in FY12. The lower capex (capital expenditure) may also allow AirAsia to consider paying its maiden dividend sometime this year or next,” the research firm said.

Meanwhile, Indonesia AirAsia had been adopting a niche strategy of international routes as it could not effectively compete against larger rivals like Lion Air in the domestic market.

“With fewer aircraft allocated to Thai AirAsia and Indonesia AirAsia, the associates will be able to use their operating cashflow to pay down related-party debt owed to AirAsia, rather than accumulate rising amounts of unpaid aircraft leasing charges,” said the research house.

Conclusively, the aircraft delivery deferrals would enable AirAsia to move away from aggressive topline growth in favour of profit growth as slower capacity growth could help lift yield and load factor.

BorneoPost

AirAsia X low fare promotion

16 August 2010

PETALING JAYA: Travelers are in for a real treat with the latest low fare campaign offered by AirAsia X.

The three-day campaign, from Aug 17 to 19 for travel from 1 April to 11 August, 2011, offers unbelievable low fares to all of its destinations except Korea.

Dubbed the X-traordinary low fare campaign, the offer is limited and available on a first-come, first-served basis and made exclusively online via www.airasia.com and mobile.airasia.com.

Besides offering free seats to Mumbai and New Delhi with guests merely paying airport tax from as low as RM25 one way, the airlines is also offering fares from as low as RM499 to London.

Australian destinations such as Gold Coast, Perth and Melbourne are available from RM199 whilst fares to China are offered from as low as RM99 to Tianjin and Chengdu and from RM149 to Hangzhou.

The fare to Taiwan is also offered from RM149.

AirAsia X has also revamped its economy class seats with new ergonomical, reclineable seats at 31 pitch equipped with comfortable adjustable headrests.

Guests will also have the opportunity to experience the new comfortable flatbed Premium seats on AirAsia Xs brand new A330 and A340 aircrafts with premium low fares from as low as RM449 to India, from RM499 to Taiwan, from RM549 to China, from RM899 to Australia and from as low as RM2,249 to London.

Premium seat guests will get to enjoy the following premium complimentary product and services: Pick A Seat, Priority Check-in, Priority Boarding, Priority Baggage, Baggage Allowance, Combo Meal and Comfort Kit made-up of a pillow and a blanket.

AirAsia X chief executive officer Azran Osman-Rani said the promotion was the best opportunity for guests to maximize on the airlines extensive route network to travel to more places with its amazing low fares.

“Our aggressive promo campaign on both our economy and premium class seats will allow guests a better flying option and choice of comfort.

“With our rapid expansion plans, AirAsia X is committed and poised to position Malaysia and Kuala Lumpur as its dynamic capital, as Asia's biggest low-cost hub,” said Azran.

He added guests could start planning and booking their flights for their next year travel plans and take advantage of Kuala Lumpur’s status as a gateway to Asia, Australia and Europe and connect globally.

Those flying on the AirAsia X network are also offered fares from as low as RM1 from Kuala Lumpur to Penang, Alor Star, Johor, Kota Bharu, Singapore, Begawan and Hatyai among others.

The offer, for the travel period as same as the international routes campaign, was kicked off on Aug 10 and will end on Aug 19.

Guests can also get online hotel deals and tour packages via AirAsiaGo at www.airasiago.com where they have wide choice tours, activities and accommodation in over 70,000 hotels worldwide.

All fares quoted are applicable for one-way travel only and is inclusive of airport tax.

By Wani Muthiah

The Star

AirAsia’s Q2 revenue expected to rise 16%

13 August 2010

KUALA LUMPUR: AirAsia Bhd’s revenue for the second quarter is estimated to rise 16% compared with the previous corresponding period and 4% higher quarter-on-quarter to RM928mil on higher fare and traffic, said stockbroking research company ECM Libra Investment Research.

It said this would make the first half revenue hit 50% of the budget airline’s RM3.6bil target for the current financial year ending Dec 31.

“Revenue is expected to be sustained at 21.5 sen per km in the first quarter of the current financial year, higher by 33% year-on-year. We expect overall cost/available seat kilometres to rise year-on-year to 11.5 sen/available seat kilometres mainly on higher jet fuel,” it said in a statement yesterday.

The company also said it expected AirAsia to record 5% year-on-year higher adjusted net profit of RM135mil (up 22% quarter-on-quarter), assuming that non-fuel cost remained unchanged on a quarterly basis.

– Bernama

AirAsia tickets sell like hot cakes

12 August 2010

PETALING JAYA: Over half a million AirAsia tickets were snapped up within a day when the airline’s “Mind Blowing Fare” promotion of RM1 per seat started on Tuesday.

AirAsia also recorded its highest number of sales in an hour, selling 36,871 seats, which is a 47.5% increase from the previous record of 25,000.

The campaign offers flights to selected domestic and Asean desti­nations at RM1, including Alor Setar, Johor Baru, Langkawi, Penang, Singapore, Bandung (Indo­­­nesia), Phnom Penh (Cam­bodia) and Krabi and Phuket in Thailand.

The RM1 fare is applicable for one-way travel only and does not include taxes.

AirAsia group chief executive officer Datuk Seri Tony Fernandes said the low-cost airline credited a newly implemented system for expanding its booking capacity.

“With the new booking system New Skies, AirAsia can now accept up to almost one million flight bookings a day,” he said in a statement yesterday.

Booking for the RM1 air fare campaign is open until Aug 15, 2010 and is valid only for travelling next year between April 1 and Aug 11.

When asked about the return ticket price, AirAsia communications executive Daphne Cheah said “our fares are based on a tier system.”

“We (AirAsia) might say return fares are from RM50, but if it’s all snapped up and people can’t find it, we would be branded liars.

“We try not to put return fares as it may mislead people,” she said, adding that AirAsia kept to its practice of displaying one-way fares.

The Star

AirAsia conquers Hong Kong with major branding campaign

10 August 2010

AirAsia, the world’s best low cost airline, which is synonymous to the word innovation, continues to paint Hong Kong skies red with a major branding campaign which includes a series of activities across Causeway Bay, Central, major beach areas and MTR trains.

The Hong Kong public can expect AirAsia giant floating billboards across major beach areas such as Stanley, Repulse Bay, South Bay and Clear Water Bay from 7 Aug with fun and exciting promoters at the beach clad with iPads for instant registration to sign up for AirAsia’s RedA!ert email and AirAsia’s Hong Kong Facebook Page. The public can also stand a chance to win a surprise from AirAsia when they snap photos with the AirAsia team throughout this campaign by the beach.

The AirAsia brand will be hard to miss with its exciting and vibrant billboards around Hong Kong. AirAsia is bringing its presence in Hong Kong to the next level as it flies to five sexy destinations in Asia – Sabah (daily), Penang* (daily) and Kuala Lumpur (3x daily) in Malaysia; as well as Phuket (daily) and Bangkok (2x daily) in Thailand with a total of 56 flights a week from Hong Kong.

*Flights from Hong Kong to the pulsating island of Penang will be increased to DAILY from 4x weekly effective 7 September 2010.

AirAsia offers an array of services which is world-class with affordable fares. The relatively young airline, who will be turning nine in December this year has been awarded the World’s Best Low Cost Airline by Skytrax for two consecutive years for both 2009 and 2010, which has been voted by over 18 million air travelers.

This branding campaign is also in conjunction with AirAsia’s gear-up to celebrate its 100,000,000th guest flown. The great 100 million guests milestone is proof that AirAsia caters to every market including locals and expatriates throughout the region, including Hong Kong.

TravelBlackboard

AirAsia X notches record sales for Seoul route

10 August 2010

PETALING JAYA: Long-haul budget airline AirAsia X has set a new sales record for its new destination Seoul, South Korea, with over 80,000 seats snapped up.

The airline recorded over RM20mil in introductory sales for its RM99 fare to Seoul through bookings on its web portal, surpassing those for London, Melbourne and Taipei.

Flights on the new route between Kuala Lumpur and Seoul will start on Nov 1.

Its chief executive officer Azran Osman-Rani said the airline was thrilled about flying more tourists to Malaysia from Seoul, following the Government’s approval for its flight to Incheon International Airport.

“We are confident that the route will also deliver strong new passenger traffic, similar to the significant growth rates we have recorded for the Melbourne, Perth and London routes which grew by 41%, 66% and 31% respectively last year,” he said.

The airline, he added, expected over 100,000 passengers for its daily Seoul service in the first year of operation.

Azran said AirAsia X had also received overwhelming interest from the Korean public, who were keen to take advantage of the low fares it offered to travel to Malaysia during winter.

“Tourists from Malaysia and other neighbouring countries will also be able to enjoy South Korea during the winter season and opt for a skiing holiday as there are many ski resorts in the country,” he said.

Azran said the airline would also work with the Korea Tourism Organisation and Tourism Malaysia to launch campaigns and offer travel packages to lure in tourists from South Korea.

The Star