AirAsia profits up, more red ink at Malaysia Air

Asia's biggest budget airline AirAsia said on August 23 it managed a second-quarter net profit despite high fuel costs, while the red ink kept flowing at its rival-turned-ally Malaysia Airlines.
AirAsia posted a 104 million ringgit ($35 million) net profit, down 47 percent from the same period in 2010, but the airline called it "commendable" amid fuel price volatility, rising costs and global economic uncertainty.
"The second quarter is traditionally one of our weaker quarters. But despite the challenging environment in the industry, the team has come through again," AirAsia CEO Tony Fernandes said in a statement.
Revenue increased 15 percent year-on-year to 1.08 billion ringgit in the April-June period. Meanwhile, Malaysia Airlines posted a quarterly net loss of 527 million ringgit, with the airline also citing higher fuel costs as a factor. It had recorded a loss of 535 million ringgit in the second quarter of last year.
"The board of Malaysia Airlines does not anticipate to make a profit for the second half of 2011, although the anticipated losses will not be as severe as the first half of 2011," the national carrier said in a statement.
The two airlines earlier this month announced a surprise alliance aimed at eliminating their increasingly head-to-head competition so that each can focus on their core markets.
Analysts have hailed the deal, saying AirAsia will be able to concentrate on offering low-cost journeys, while Malaysia Airlines caters to more upmarket travellers.
The move, which gives AirAsia's Fernandes a voice in the national carrier's business decisions, has been widely seen as a bid by the Kuala Lumpur government to stem Malaysia Airlines' recurring losses. Fernandes acquired AirAsia a decade ago when it was losing money and has since turned it into one of the airline industry's biggest success stories.
AirAsia's full-year net profit for 2010 nearly doubled to 1.07 billion ringgit compared to 2009, although times have been leaner of late. Fernandes said he was bullish for AirAsia in the rest of the year and sought to soothe concerns that the partnership with Malaysia Airlines would weigh on his own firm.
"Forward bookings are looking very strong," he said. "I believe there is no conflict or loss of focus but simply the opposite (due to the tie-up)." Despite its losses, Malaysia Airlines said it would push ahead with a fleet renewal plan, including an order for six A380s.