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AirAsia CEO Fernandes says aims for 85 percent load factor in two years

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[May 22, 2014]  By Siegfrid Alegado and Rosemarie Francisco

MANILA (Reuters) - AirAsia Bhd <AIRA.KL>, Southeast Asia's biggest budget airline, aims to increase its load factor to 85 percent in the next two years, its chief executive said on Thursday.

Following years of expansion and franchising, the airline is rationalising its fleet through aircraft sales after a slowdown in Indonesia and delays in its entry into India.

"My goal would be to try to move to 85 percent" from the current 81 percent seat-load factor," Tony Fernandes told Reuters in an interview at the sidelines of the World Economic Forum on East Asia in Manila. Load factor refers to a measure of plane occupancy.

"These next two years, we have the ability to enter up to 85 percent," he said, adding the airline sees growth opportunities in the Philippine, Indian and Japanese markets.

Fernandes also said AirAsia will likely start servicing India in the third quarter after winning an operating permit from a Delhi court this month.
 


PLANE SALES, PROFITS

AirAsia plans to sell 12 planes this year, a move that will bring in around 500 million ringgit ($156 million) in net profit.

"Our planes are well sought for," he said, citing demand from airlines outside Asia. "Right now, as of today, we've got the right number of planes. We're not selling more."

On Tuesday, AirAsia reported its first-quarter net income rose 33 percent to 139.7 million ringgit ($43.47 million) on improved passenger numbers, foreign exchange gains and deferred taxes.

Fernandes said the airline remains "moderately positive" it will book "strong" earnings growth in the second half of the year and into 2015. AirAsia saw profit slump by 55 percent last financial year amid volatile currency moves and stiff competition.

The airline's Philippine and Indonesian units are seen turning around from losses in the second half as they rationalise routes and cut costs, he added.

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AirAsia is also looking at raising investments in its Philippine unit from an initial $100 million once it gets congressional clearance for acquiring nearly full control of its local partner, said Fernandes.

"We're ready to invest. We're ready to build," he said.

Fernandes said AirAsia wants to add more planes to its current fleet of 16 and mount more routes to boost its presence in the Philippine market, which saw unprecedented consolidation including Cebu Air Inc's acquisition of Tiger Airway Holdings Ltd's Manila unit.

AirAsia shares were up 4.49 percent on Thursday, outperforming Kuala Lumpur's main index which closed 0.11 percent lower.

($1 = 3.2140 Malaysian ringgit)

(Reporting by Siegfrid Alegado and Rosemarie Francisco; Editing by Christopher Cushing and Matt Driskill)

[ 2014 Thomson Reuters. All rights reserved.]

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