AirAsia X posts record annual profit despite forex hit

FILE PHOTO - Flight attendants of the long-haul carrier AirAsia X watch a performance during the launch of the company's prospectus in Kuala Lumpur June 10, 2013. REUTERS/Bazuki Muhammad/File Photo

KUALA LUMPUR: AirAsia X Bhd reported a record profit in 2016 as more people took to the skies, but results fell short of analysts’ estimates as volatile foreign exchange markets dragged earnings down by a whopping 80% in the fourth quarter.

The airline expects its prospects to remain positive based on current booking trends, but said the depreciation of the Malaysian ringgit remains a key concern as a large portion of the company’s borrowings and operating costs are denominated in US dollars.

Previously, the airline saw the weaker ringgit, which has taken a beating over the past two years, as a boon because it made Malaysia a value-for-money destination among travellers, increasing passenger traffic.

AirAsia X chief executive Benyamin Ismail said in a statement on Wednesday the company would look to reduce the impact of foreign exchange rates by intensifying sales from stronger currency markets such as the Australian dollar to offset US dollar bills.

“As we foresee the industry’s challenging environment persisting owing to currency volatility, the management will continue to look for avenues to mitigate forex risk via hedging,” he said.

The airline has already added capacity in Australia and is increasing frequency on other routes where demand is high to shore up its results, having been in the red for the past two years.

Last month, the airline said it had become Asia’s first low-cost carrier to receive approval to operate scheduled passenger flights to any US destination. 

It is considering flights to several US states, including Hawaii.

Benyamin said the airline was also looking to cut costs.

AirAsia X posted a net profit of RM39mil for the October-December quarter, lower than the RM197.4mil recorded a year ago. For the full year, profits came in at RM230.5mil, versus an average estimate of RM236mil from 10 analysts polled by Thomson Reuters.

Revenue rose 39% to RM1.17bil for the quarter, versus RM841.1mil in the same period last year.

The airline reported a 40% year-on-year growth in the number of passengers carried.

In its operating statistics, the airline said its passenger load factor for the final quarter fell 2 percentage points to 81% from a year ago, but passenger traffic jumped 40% to 1.38 million.

AirAsia X shares closed unchanged at 41.5 sen, having risen 15.3% in the year-to-date. - Reuters