AirAsia net loss in 2008 3rd quarter

AirAsia posts first loss since going public in 2004

AirAsia Bhd., the low-cost airline based in Sepang, Malaysia, and also the largest discount carrier in South-east Asia, has reported its first loss since it went public in 2004.

The airline reported its loss after being forced to liquidate its fuel hedging contracts and write off derivatives held by Lehman Brothers, the failed investment bank, at a cost of 215 million ringgit ($90 million).

In a statement, AirAsia said it suffered a net loss of 465.5 million ringgit ($129 million) in the three months ended September 2008, compared with a profit of 180 million ringgit a year earlier.

During the period, sales went up by 43% to 658.5 million ringgit.

“AirAsia had a charge of 215 million ringgit in the third quarter of 2008 from unwinding hedging contracts and the likely non-recovery of collateral for trades held by the now-bankrupt Lehman Brothers Holdings Incorporat4ed,” the statement explained.

AirAsia filled fewer seats for a fourth consecutive quarter after Tony Fernandes, the company’s chief executive officer, increased capacity even while rival airlines, including Malaysian Airline System, scaled back operations.

“The low-fare airline,” the statement added, “also provided for a foreign-exchange loss of 213-million ringgit as the weaker Malaysian currency increased the value of its dollar-denominated debt. AirAsia has overseas loans because it borrowed to buy Airbus SAS planes.”

Tony Fernandes told reporters at a news conference: “The debt is translated into local currency every quarter and the charges are paper losses. The airline has hedged 75% of its foreign currency requirements at an average rate of 3.2 ringgit to a US dollar and that would give a marked-to-market gain.”

AirAsia filled 75% of seats in the last quarter compared with 79.3% a year earlier, the statement said. Passenger numbers rose by 25% to 3 million.

Average ticket price rose to 195 ringgit in the quarter from 174 ringgit a year earlier.

AirAsia said it is adding newer, more fuel-efficient planes to its fleet and has imposed a charge for checked-in bags. Ancillary income, or non-ticket sales, rose by 88% to 69.7 million ringgit in the three-month period from a year earlier.

Thai AirAsia Company, AirAsia’s Thailand-based unit, suffered a loss of 250 million baht ($7 million), while AirAsia’s Indonesian unit posted losses of 12 billion rupiah ($991,735).

AirAsia, which started operations in 2001 with two aircraft, has ordered 175 planes from Airbus SAS, and took delivery of 50 of the single-aisle aircraft by the end of September 2008.