AirAsia's Profit is Halved, Despite Rise in Net Profit This Year, Why? | WMA 富道学院

AirAsia’s Profit is Halved, Despite Rise in Net Profit This Year, Why?

AirAsia’s Profit is Halved, Despite Rise in Net Profit This Year, Why?

Malaysia’s largest low fare airline AirAsia Group Bhd reported yesterday that its operating profit for the third quarter halved to RM252.72 million from RM494.34 million a year ago. The reason for it is higher fuel expenses. However, the budget airline still recorded an impressive 81.2% jump in net profit to RM915.88 million. Which is also the company ’s highest quarterly net profit in six years, thanks to a one-off gain from the sale of Expedia of RM170.88 million. And the recognition of a deferred tax asset of RM515.43 million that arose from aircraft disposals. AirAsia shares slid one sen, or 0.33%, to close at RM2.98 yesterday, valuing the stock at RM9.96 billion.

AirAsia Has Declared A ‘Special’ Dividend.

The company has declared a bumper special dividend of 40 sen a share as its net profit soared burnished by the proceeds from the sale of a unit to Expedia Inc. The special dividend will go ex on Dec 12 and AirAsia had announced the disposal of its leasing unit, Asia Aviation Capital Ltd, to BBAM Ltd Partnership for US$1.18bil (RM4.619bil). At that point, analysts were speculating a windfall for shareholders in the region of 60 sen to 70 sen a share. The sale to BBAM, the world’s third-largest aircraft lessor, will see AirAsia raking in proceeds of RM3.8bil. The deal involves the sale of 182 current and future aircraft with engines.

AirAsia is Still Positive Despite the Halve in Profit.

AirAsia CEO, Tony Fernandes at a press conference yesterday.

In a filing with Bursa Malaysia yesterday, the CEO of the low-cost carrier said that they are optimistic about the prospects for the remainder of the year. They believe the operating environment in the fourth quarter of 2018 would improve as compared to the third quarter, coupled with the year-end holiday season being around the corner. Plus, the company hopes the drop in fuel price in December to contribute positively to December’s operational results Their domestic market share for Malaysia is now at 58% while all the other countries have also grown domestically. So, overall they seem to be on track to achieve a group load factor target of 85% for this year. The group is also expanding beyond air transport and digitalising its operations and processes to become more efficient, like via its partnership with Google Cloud. This, they believe will impact further revenue generation with the use of accurate data forecasting and targeted marketing to drive stronger demand.