Fantastic Year Despite Fuel Fluctuations: Airasia

[peter991]

Fantastic year despite fuel fluctuations: AirAsia

AirAsia has just reported a 73% lift in profits for the quarter ending December 2007, amounting to MYR245.72 million (USD77 million), due to higher yields and contained unit cost.

“This has indeed been a fantastic year for our airline, highlighted by robust growth, record profits, industry leading performance and award winning standards,” said Tony Fernandes, AirAsia CEO.

“Our humble beginnings took flight six years ago, and after 24 consecutive profitable quarters later, we are now the highest profit margin airline in the world.”

AirAsia revenue for the quarter was MYR633 million, an increase of 43% compared to the same period last year, and was attributed to passenger volume lifting by 21%.

“For the full 12 months of 2007, AirAsia’s total revenue was MYR1.9 billion. The operations performed well, load factors was at 79% with average fare of RM184. The profit margins achieved for the full year was the highest of any airline in the world,” Mr Fernandes said.

Looking ahead, 2008 will be the first year the company implements a December end, with forecasted further passenger growth of 20%.

Much of the new capacity coming online will be injected into international routes.

The only cloud on the horizon appears to be the price of fuel, to which Mr Fernandes has said, “The escalating and volatile fuel price remains as our principle challenge for the year.”

“Assuming WTI prices remains above USD90/barrel, 30% of our fuel requirements are hedged for the period of January to June at an equivalent price of USD79.50/barrel.”

Peter

Comment: I think the last sentence, which I have underlined is the clincher. Do most airlines hedge their fuel costs?

[jingjoe]

“Assuming WTI prices remains above USD90/barrel, 30% of our fuel requirements are hedged for the period of January to June at an equivalent price of USD79.50/barrel.”

Peter Comment: Do most airlines hedge their fuel costs?

Too bloody right they do.

Good luck to Air Asia, I hope they go from strength to strength.

I DO wonder however if their 24 x consecutive profitable quarters will end abruptly once they fork out for their new planes? Or are they paying them off to avoid lump sum one-off payments?

Edited March 3, 2008 by jingjoe