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Business

AirAsia to add 29 planes to meet robust demand

Q1 revenue up 31%, company bullish as it focuses on India, China expansion

KUALA LUMPUR -- AirAsia intends to add 29 planes this year in an aggressive pace of expansion to meet growing demand, the region's largest budget carrier by fleet size said in a filing to the stock exchange Thursday.

Growth will also be accelerated by low fuel prices and a favorable foreign exchange environment, enabling the carrier to expand its existing network from bases in Indonesia, Thailand, India, the Philippines and its home country, Malaysia.

In the first three months of the year, the group carried 15.2 million passengers, 9% more than the same period last year. Load factor, a gauge of how well an airline fills its seats, grew 3% on the year to 89%. During the quarter, it added six planes, bringing its total fleet size to 176 aircraft.

At least 10 new routes were launched and frequency added across the group's associate companies, connecting capitals to second-tier and smaller cities.

AirAsia projects its load factor will increase to 91% in the second quarter, with demand coming from the upcoming Ramadan Muslim festive season, school holidays, and expanded network in South Korea, China and the Philippines.

The extra 29 planes, which will be acquired through financing and leasing, are the most added in the last four years, demonstrating the company's confidence despite the competitive environment, said Tony Fernandes, the group chief executive, in a press release.

The carrier will focus on expanding its footprint in India's domestic market, as well as ramping up the Chinese market in the second quarter. In March, it signed a joint venture in Vietnam, and more recently in China, aiming to capture domestic markets currently dominated by local companies. If successful, AirAsia will add two more Air Operator Certificates on top of the existing six in the region.

The bullish projection came despite a decline in profit in the first quarter on higher fuel prices. Net profit fell 30% to 615 million ringgit ($144 million), while revenue grew 31% to 2.23 billion ringgit, as aircraft fuel costs swelled 81%.

Philippines was the best performer with 41% growth in revenue, while Malaysia and Thailand increased 3% and 2%, respectively.

The group said it remains "optimistic" about the rest of the year.

Shares of AirAsia ended 6.46% higher at 3.13 ringgit on Thursday, while the benchmark FTSE Bursa Malaysia KLIC closed up 0.17%.

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