February 23, 2017 / 11:52 AM / 5 months ago

Malaysia's AirAsia posts 16 percent drop in fourth - quarter profit

4 Min Read

AirAsia planes sit on the tarmac at Kuala Lumpur International Airport, Malaysia August 28, 2016.Edgar Su/Files

KUALA LUMPUR (Reuters) - AirAsia Bhd posted a quarterly profit for 2016, despite a fall in aircraft operating lease income, and annual earnings hit a record high on increased passenger traffic through most of the year.

AirAsia reported a fall in operating lease income of 48 percent for the quarter and profit after tax fell to 465.3 million ringgit ($105 million) in the fourth quarter ended December, from 554.1 million ringgit a year ago. Revenue slid to 1.94 billion ringgit ($436 million), from 2.17 billion ringgit. The average of two analysts' forecasts was for a smaller profit of 143.6 million ringgit, Thomson Reuters data shows.

The airline's full-year profits also beat the 1.56 billion ringgit average estimate from 20 analysts polled by Thomson Reuters. AirAsia recorded 2.04 billion ringgit in full-year profits, versus 540.9 million ringgit in 2015.

The airline's full-year results were underpinned by a 6 percentage point increase in load factor, a measure of how full planes are, to 86 percent in 2016.

The number of passengers carried rose 12 percent year-on-year to 56.6 million, outstripping the 4 percent increase in seat capacity.

Group CEO Tony Fernandes said in a statement on Thursday that the group's fleet will grow to more than 200 aircraft this year, add new routes within the region and ramp up flights on trunk routes.

"Now that all our ASEAN airlines are on stable footing we want to further our plans to combine our Malaysia, Thailand, Indonesia and Philippines operations under a single, listed ASEAN holding company," Fernandes said.

The airline also urged ASEAN governments to relax ownership restrictions and "consider ASEAN investors as equivalent to local investors".

In November last year, the airline announced plans to list a holding company in Hong Kong that will house all its ASEAN operations, to reach a wider investor base. AirAsia also intends list its flight crew training centre in Kuala Lumpur.

Fernandes, who has grown AirAsia from a two-plane operation a decade ago to more than 170 planes now, did not indicate how much the IPOs are intended to raise. He has, however, said the plan is to first list AirAsia's Indonesia and Philippines units this year before listing the ASEAN holding company.

AirAsia is also selling a majority stake in its aircraft leasing unit, valued at $1 billion. In December, Reuters reported the airline had received a dozen bids for Asia Aviation Capital, mostly from Chinese firms.

The bidders include the leasing arms of China Merchants Bank and Ping An Insurance Group, sources said.

On Wednesday, the group's long-haul unit, AirAsia X Bhd, posted a record profit for 2016, but results fell short of analysts' estimates as volatile foreign exchange markets dragged earnings down by 80 percent in the fourth quarter.

Shares of both AirAsia X and its parent almost doubled in 2016 and have extended their gains further so far this year, after sharp losses in 2015.

AirAsia closed Thursday's trade 2.47 percent lower to 2.76 ringgit.

($1 = 4.4470 ringgit)

Reporting by Liz Lee; Editing by David Goodman/Ruth Pitchford

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