AirAsia profit plunges as fuel costs climb

AirAsia, Asia's biggest discount carrier, posted a 48 per cent fall in second-quarter profit as higher fuel costs eroded gains from carrying more passengers. Rising expenses also pushed Malaysian Airline System into its second consecutive loss.Net income at the Sepang, Malaysia-based AirAsia declined to 104 million ringgit (Dh128.5 million), or 3.7 sen per share in the three months ended June 30, from 199 million ringgit, or 7.2 sen, a year earlier, the company said in a statement on Tuesday. Revenue rose 15 per cent to 1.08 billion ringgit. AirAsia chief executive officer Tony Fernandes said he was bullish for the rest of the year as "forward bookings are looking very strong." That contrasts with Malaysian Air's forecast expecting to incur losses in the second half and is slowing capacity expansion. "They are very different businesses altogether," said Mohshin Aziz, an analyst at Maybank Investment Bank. "Credit to AirAsia as they are very cost-efficient. Malaysian Air is nowhere near as their cost structure is high." AirAsia fell 4.7 per cent to close at 3.45 ringgit in Kuala Lumpur Tuesday, its biggest drop since August 10. The stock has risen 36 per cent this year, compared with a 3.3 per cent decline in the benchmark FTSE Bursa Malaysia KLCI Index and Malaysian Air's 25 per cent drop. Malaysian Air fell 4.9 per cent to 1.56 ringgit, its lowest close since August 2. Fernandes agreed on August 9 to swap a ten per cent stake in the airline for 20.5 per cent of Malaysian Air, forging ties between the nation's two largest carriers. The low-cost carrier has held talks with Airbus to extend an existing order of 200 A320neo aircraft following the tie-up with Malaysian Air, Fernandes, a director at both the companies, said last week. Malaysian Air, which was dislodged as the nation's biggest by market value by AirAsia last year, will focus on long-haul and full-service operations following the deal with the discount carrier. The companies will look to work together in areas including cargo, plane-purchasing and opening new routes.In the second quarter, Malaysian Air, based in Subang, Selangor, posted a loss of 527 million ringgit compared with 535 million ringgit a year earlier. Revenue rose 8.5 per cent to 3.49 billion ringgit. Fuel costs gained 41 per cent, it said. Fuel costs "continued to have the greatest impact on the group's operations," Malaysian Air said in the statement. The airline expects weaker demand in the second half because of concerns over Europe's debt crisis and US economy. Still, the loss won't be as severe as in the first half, it said. From / Gulf News