ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Nikkei Markets

AirAsia's 4Q traffic rose 16%, load factor fell

Analysts cautious on 4Q earnings, higher jet fuel prices weigh

The lower load factor in the fourth quarter was due to "significant capacity increase", AirAsia said, while available seat-kilometre grew 14% on year.    © Reuters

KUALA LUMPUR (Nikkei Markets) - Malaysian budget carrier AirAsia Group said Monday passenger traffic rose 16% from a year earlier in the seasonally strong fourth quarter although load factor fell due to increase in capacity.

The airline carried 12.11 million passengers through the three months ended Dec. 31 compared with 10.44 million in the same period last year, AirAsia said in a statement. Load factor, or the number of passengers carried as a percentage of capacity, fell four percentage-points to 84%, AirAsia said.

The lower load factor in the fourth quarter was due to "significant capacity increase", the airline said, while available seat-kilometre grew 14% on year. "This was in line with our strategy to continuously grow our market share," it said.

Analysts said AirAsia's load factor has remained strong at above 80% -- suggesting that the airline would have no trouble filling in the additional seats this year - though higher jet fuel prices may weigh on profitability in the fourth quarter.

"Fourth-quarter earnings will hinge on oil prices, which were relatively high year-on-year," said TA Securities Analyst Tan Kam Meng, noting that jet fuel prices rose to average $84 a barrel from $72.7 a barrel in the final quarter of 2017. "It may show a decline for fourth quarter."

Fuel typically accounts for about one-third of an airline's operating costs.

AirAsia's fleet size stood at 141 planes at the end of December and the airline operated 79,394 flights during the quarter. AirAsia and its long-haul affiliate AirAsia X are scheduled to announce its quarterly financial results by February-end.

Festivities and school holidays in the final quarter of the year usually drive up demand for travel, contributing to as much as 50% to AirAsia's annual profit.

"Capacity-wise, one of the sectors that we can look on for growth is the relaxation of visa requirements for tourists from China and India," said MIDF Amanah Investment Bank Analyst Adam Mohamed Rahim.

AirAsia X witnessed a 3% decline in passengers carried in the fourth quarter due to additional capacity coming on stream at its core markets for the year-end travelling season and some routes were also hit by natural disasters.

It carried 1.50 million passengers for the three months ended Dec. 31 compared with 1.55 million in the same period previous year, AirAsia X said in a separate statement. Load factor was down five percentage points to 78%, AirAsia X said.

AirAsia X's fleet size stood at 35 planes at the end of December and the airline operated 5,071 flights during the quarter.

Shares of AirAsia and AirAsia X ended unchanged at 3.09 ringgit and 0.29 ringgit respectively. The FTSE Bursa Malaysia KLCI closed 0.2% lower.

-- Gho Chee Yuan and Jason Ng

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends May 26th

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media