AirAsia sees continued growth in the horizon

AirAsia Bhd, which has reported record earnings, expects growth in its performance to continue as it adds new routes, increases frequencies on existing routes and rolls out fuel-efficient new planes.

“We now have the youngest fleet in Asia,” said CEO Datuk Tony Fernandes, referring to the airline's all-Airbus fleet.

In earlier years, the airline had leased older aircraft that consumed more fuel and required more maintenance. Its all-new Airbus fleet has reduced operating costs and is generating a lot of cash flow for the group, he told StarBiz on Saturday.

Fernandes pointed out the company has about RM1bil in cash and deposits for aircraft purchases, and that's equivalent to eight months with zero revenue.

AirAsia had a strong balance sheet and the cash position would continue to strengthen, he added.

“When we announced our fleet purchase of Airbus, people were bewildered, whether we could fill the planes. But now, we're short of planes,” he said. AirAsia had placed an order for 150 planes with options for 50 more.

“We're going to exercise the options for 25, and increase the options back to 50,” he said.

He pointed as an example the “huge success” of the route to China, which is going to be expanded. “Our new KL-Shenzhen route has a 95% load factor, and we're going to put in a second flight (each day),” he added. AirAsia will also introduce flights to Shenzhen from Kota Kinabalu and Johor Baru, in addition to planning new routes to other southern Chinese cities like Guangzhou, Guilin and Kunming.

The company announced on Thursday a record operating profit of RM185mil for its fourth quarter ended June 30, 2007, which is 206% higher than previous corresponding period. Fernandes attributed three factors for this surge in performance namely, capacity growth, a younger fleet and maturity in its routes.

“We invested a fortune in developing new routes over the last five years. Now, we are reaping the benefits,” he said.

AirAsia operated with an average of 28.6 planes in its 2007 financial year (FY) compared with an average of 21.8 in FY06. It would deploy an average of 41 planes in FY08.

As routes mature and new planes join its fleet, AirAsia increased the frequencies of its flights, offering customers more choice.

“Three years ago, we flew to Kota Kinabalu four times a day, we fly 10 times a day there now. We had one flight a day to Bangkok three years ago, now, we fly six times a day,” he said.

Source : STAR
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