AirAsia Berhad announced net profits of RM549 million ($162 million) for the full year 2009 despite what is described as the worst year in aviation history.
While globally passenger demand fell by 3.5%, AirAsia grew its passenger numbers by 21% to 14.25 million for the Malaysian operation. The combined Malaysian, Thailand and
Indonesian operations forming the AirAsia Group increased passenger numbers 24% to 22.7 million.
AirAsia CEO Tony Fernandes said
“We have successfully grown market share in every market we serve, opened up four new bases (Penang, Bandung, Phuket and Surabaya), launched new routes and amassed RM748 million cash in the balance sheet as a bulwark against any contingencies that may arise.”
AirAsia Thailand has captured substantial market share and delivered a core operating profit of THB334 million (RM34.1 million). Passenger numbers grew 23% and capacity measured in Available Seat Kilometres (ASK) and sales measured in Revenue Passenger Kilometres (RPK) both grew 26% year on year.
“The demand for air travel in Thailand has recovered after a prolonged period of challenges. The outlook for the first quarter remains strong with high passenger traffic, strong load factor and better yields. The Thai operation is enjoying the cost benefits of the increased number of Airbus A320 aircraft in its fleet,”
On AirAsia Indonesia, Fernandes said
“Indonesia is in the final stage of its aircraft renewal programme and this will help to enhance operational reliability, increase capacity and substantially reduce operational cost. As Indonesia receives more Airbus A320 aircraft, it will replicate the cost advantages in Malaysia and is on course to deliver sustainable profits for the full year 2010.”
Key Performance Indicators
While full details are in the enclosed document, some KPIs for fiscal 2009 are revealing.
- Passenger seat load factors dipped marginally 0.4% to 75%.
- ASKs grew 17% to 21,977 mn and RPKs grew 14% to 15,432 mn.
- The average fare declined 17% to RM168.2 ($47.70) but ancillary revenue increased a whopping 46% to RM29.1 ($8.25) cushioning the fall of per passenger revenue down 12% to RM197.3 ($55.96).
- Revenue per ASK declined 8% to RM0.1354 ($0.0384) and cost per ASK (CASK) declined 19% to RM0.1041 ($0.0295). However CASK without fuel grew 14% to RM0.0616 ($0.0174) and this can spell trouble for AirAsia as fuel prices are beginning to rise as Asian economies recover.
Fernandes is optimistic on the outlook for 2010. The recovering economy he claims will permit increases in fares.
“There are early signs that the global economy is stabilising and the benefits are already visible in the aviation industry. Passenger traffic is growing, particularly in the LCC segment. The supply-demand conditions are favourable to upward revision of fares in certain sectors.”
However, input costs, salaries, and other inflationary pressures which were suppressed during the economic slowdown are re-asserting themselves as the economic revival speeds up across Asia and the fiscal reports show AirAsia has not been successful in controlling its costs during 2009.
AirAsia claims to have identified nine new routes which will be launched soon and is projecting passenger growth of 11%~14% in 2010.
AirAsia indicated will re-examine its operations to extract greater cost savings.
“We’re fine tuning the current route network to extract higher yields. We’re also set to become an all-Airbus fleet throughout the Group by the third quarter – which will help lower operational costs, increase capacity and give us a clear edge over the competition,” he said. In addition, AirAsia’s joint collaboration with Australia’s Jetstar (and Jetstar’s parent, Qantas) in operational aspects such as procurement, engineering and ground handling is expected to contribute substantial savings
However an increase in costs during an extreme economic downturn makes Fenandes’ claim a little hard to accept at face value.