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Quarterly passenger traffic rises 17% on year in five key markets

KUALA LUMPUR (NewsRise) - Asia's largest budget airline by fleet size, AirAsia reported a 17% increase in passenger traffic in the first three months of this year as demand for air travel rose in key markets.

AirAsia carried 13.94 million passengers between January and March compared to 11.88 million passengers in the same period last year, the company said in a statement. Load factor - a measure of how full planes are with paying passengers - rose nine percentage-points to 86% year-on-year as traffic growth outpaced a 6% increase in capacity.

Analysts say the preliminary operating statistics indicate robust demand in five key markets-Malaysia, Indonesia, Thailand, the Philippines and India--while lower fuel prices will help boost earnings in the first quarter.

"We think that the realisation of fundamental improvements will continue to re-rate the stock upwards," said AllianceDBS Research analyst Marvin Khor. He kept a Buy rating on the stock ahead of AirAsia's first-quarter financial results announcement due in two weeks.

Apart from the strong passenger figures, spot jet fuel prices bottomed in the first quarter and averaged $43.4 a barrel, or 36% lower year-on-year. That could help to turn around loss-making Indonesian and Philippines affiliates, Khor added.

The company, which operates 170 aircraft that flew more than 90,000 flights at the end of March, added seven new routes during the quarter. However, AirAsia said it will suspend its three-times-a week flights from Kuala Lumpur to India's Goa beginning June 7.

Load factor in Malaysia and in the Philippines rose 10 percentage-points each to 85% and 87% respectively in the first quarter, AirAsia said. In Thailand, load factor rose five percentage points to 88% while AirAsia's Indian operations saw seven percentage-points increase in load factor to 86%.

AirAsia likely benefitted from Malaysia Airlines's capacity cuts, while new direct flights from cities other than Kuala Lumpur probably paid off, MIDF Amanah Investment Bank analyst Tay Yow Ken said.

Load factor at Indonesia AirAsia, which suffered heavy losses after one of its planes carrying 162 people crashed in December 2014, rose nine percentage-points to 80% during the first quarter.

"However, the strong operational numbers was not a surprise to us as last year's first-quarter performance was dragged by the QZ8501 incident," said Public Investment Bank analyst Nur Farah Syifaa' Mohamad Fu'ad, referring to the fatal crash.

Separately, AirAsia X, the long-haul associate of AirAsia said passenger load factor expanded eight percentage points to 82% in the January-March period, boosted by higher traffic demand in China and Australia. The airline carried 1.05 million passengers in the three months ended March 31, 15% more than 914,970 people a year earlier.

Shares of AirAsia rose 5.4% to close at 2.16 ringgit while AirAsia X shares advanced 1.3% to end at 0.38 ringgit. The benchmark FTSE Bursa Malaysia KLCI rose 0.53%.

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