AirAsia profit slumps 62%

AirAsia, Asia's largest low-cost carrier by fleet size, said Wednesday its net profit slumped 62 percent in the second quarter due to higher operating expenses and foreign-exchange losses on borrowings. Net profit was 58.35 million ringgit ($17.75 million) in the three months ending June 30, falling year-on-year despite a 5.5 percent rise in revenue, according to a filing with Malaysia's stock exchange. It said challenges remained due to high prices for oil and aviation fuel. "However, barring any unforeseen circumstances, the directors remain positive for the prospects of the group for the third quarter and the remainder of 2013," it said. The airline had reported a 39 percent year-on-year drop in profit in the first quarter. Rapidly growing AirAsia has set up subsidiary budget carriers in Indonesia, the Philippines and Thailand. It said each of the fledgling airlines saw significant revenue increases in the quarter. AirAsia has grown from two planes, when flamboyant boss Tony Fernandes bought the then-struggling airline in 2001, to a total fleet of more than 120 A320s. "Our traffic numbers show that the AirAsia brand is strong and that we are still able to stimulate demand and retain loyalty among our existing passengers through our low fares and extensive network across the region," Fernandes said in a statement. The airline, one of the biggest customers for European aircraft maker Airbus, is expecting nearly 360 more aircraft to be delivered up to 2026. AirAsia is planning to launch a no-frills joint venture in India later this year. But it was announced in June that it would terminate a joint venture with Japan's All Nippon Airways to set up a Japanese budget carrier, citing management differences.