* Profit drops on ringgit weakness, expenses charged in US$
* Passenger numbers rose 33 pct, load factor up 2 ppt
* Forward booking trends better than in 2016
(Updates with details on financial performance. Adds company
comments, outlook and background.)
By Liz Lee
KUALA LUMPUR, May 23 Profit at Malaysia's
AirAsia X fell sharply in the first quarter, with a
weak ringgit and higher fuel costs overshadowing higher
revenue at the long-haul budget airline.
AirAsia X's fuel and aircraft operating lease expenses are
denominated in U.S. dollars, as is much of its debt.
Some analysts had forecast that AirAsia X's headline
earnings for the quarter could underperform largely due to a 122
million ringgit foreign exchange gain a year ago.
But the airline's chief executive Kamarudin Meranun said in
a statement that it was worth taking the short-term pain.
"We believe the short-term earnings pressure arising from
weakening ringgit against the U.S. dollar as well as newly
introduced capacity will be well worth the long-term strategic
value as yields will rise as this new capacity matures."
The budget long haul airline said on Tuesday that for the
quarter ending in March, net profit was 10.3 million ringgit
($2.4 million), down 94.2 percent from 179.5 million ringgit a
year ago. However, AirAsia X said revenue rose 22 percent to 1.2
"The relative weakness 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," AirAsia X said
in a statement late Tuesday.
The airline noted that fuel prices have gone up from US$64
per barrel in the last quarter of 2016 to US$66 per barrel in
the first quarter this year.
While competition is set to mount in 2017 with regional
players expanding aggressively, analysts expect AirAsia X to be
able to weather the pressure given its cost competitiveness. The
company, which posted a record profit last year after two years
in the red, remains upbeat about its booking trends.
AirAsia X carried 1.4 million passengers over the three
months, 33 percent up from a year ago and ahead of a capacity
increase of 28 percent, as travel demand to Malaysia remained
firm given a cheap ringgit.
The airline has been adding capacity and is increasing
frequency on other routes where demand is high to shore up its
results. Just last week, parent company AirAsia Bhd
signed a joint venture agreement with China to establish a low
AirAsia X's load factor - a measure of how full planes are -
edged up two percentage points to 84 percent from a year ago in
the first quarter.
AirAsia X shares closed 0.94 percent higher at 0.535
($1 = 4.2920 ringgit)
(Editing by Himani Sarkar and Alexander Smith)