AirAsia net income jumps sixfold as China spurs fleet expansion

AirAsia has reported an almost sixfold jump in quarterly profit.
AirAsia has reported an almost sixfold jump in quarterly profit.PHOTO: ST FILE

KUALA LUMPUR (BLOOMBERG) - AirAsia Bhd, Southeast Asia's biggest budget carrier, reported an almost sixfold jump in quarterly profit amid plans to expand its fleet in a region projected to surpass the United States as the world's biggest air-travel market in two decades, led by China.

The company said net income in the quarter through March climbed to 877.8 million ringgit (S$298.03 million) from 149.3 million ringgit a year earlier, topping the average 149 million ringgit predicted by analysts in a Bloomberg survey. Revenue rose 31 per cent to 1.7 billion ringgit, aided by growth in passenger volume and an 11 per cent increase in average fares, the carrier said in a filing.

"Barring unforeseen circumstances, the directors remain positive for the prospects of the group in 2016," it said in a statement.

AirAsia Chairman Kamarudin Meranun said in an interview in Kuala Lumpur Wednesday that the airline is looking to add five aircraft this year and as many as 10 more in 2017 "depending on demand."

The company, which has 170 planes in its fleet, is also planning to increase the number of destinations in China from 18 and frequency of its flights in the world's second-biggest economy, he said.

AirAsia is among airlines in the region adding more aircraft as economic growth and rising incomes make air travel affordable to more people. Last month, Xiamen Airlines Co, a unit of China Southern Airlines Co, ordered 10 single-aisle jets worth about US$851 million from Boeing Co., while the US planemaker and its European rival Airbus Group SE split a US$9.9 billion order for wide-body jetliners from China Eastern Airlines Corp.

"We see the strongest growth in China," Mr Kamarudin said.

International visitor demand into the Asia Pacific region is forecast to grow at an average rate of 4.6 percent each year to more than 657 million by 2020, according to a report released last month by Pacific Asia Travel Association.

Southeast Asia will continue with its dramatic increase in foreign arrivals, improving its relative share from just under 20 per cent in 2015 to around 22.5 per cent by 2020, when it will rival the share of the Americas at that time, the report said. By 2034, one in five passengers in the world will be traveling to, from, or within China, according to the International Air Transport Association.