AirAsia Group Bhd`s higher maintenance and overhaul cost has dragged the low cost carrier`s earning for the first quarter (Q1) of 2019.

Net profit plunged 91.5 per cent to RM96.09 million for Q1 ended March 31, 2019 from RM1.14 billion recorded in the same quarter a year ago.

In a statement today, the low cost carrier said the lower net profit recorded for the quarter was due to higher maintenance and overhaul cost.

"This was on the back of more non-cash maintenance provisions of approximately RM100 million given the higher number of leased aircraft.

"There is a differing accounting treatment for major overhaul costs for owned and leased aircraft, where the latter impacts the income statement more negatively than the former but cash outlay over the asset`s useful life is the same," it said.

Revenue for the quarter however increased 12.8 per cent to RM2.88 billion from RM2.56 billion driven by strong year-on-year growth in passengers carried, up 18 per cent to 12.5 million.

This has surpassed the 17 per cent in additional capacity resulting in stronger load factor of 88 per cent up one percentage point (ppt).

The group`s ancillary revenue also grew by 29 per cent year-on-year recording at RM664 million for the quarter.

"We kick-start 2019 with substantial increase in capacity, in line with our strategy to gain market share. There were 18 additional aircraft for our consolidated group since Q1 2018, as we strive to meet the strong air travel demand in Asean.

"Most of the seats added were sold, as seen in our growth in passenger traffic of 18 per cent year-on-year coupled with higher load factor of 88 per cent," AirAsia deputy group chief executive officer (airline) Bo Lingam said.

He said with this Q1 2019 results, the group`s Asean air operator`s certificate (AOCs) remain on track to turn profitable this year.

"All our ASEAN AOCs reported positive in earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter, demonstrating strong load trend of above 87 per cent.

"AirAsia Indonesia showed tremendous improvement with it narrowing losses by 54 per cent year-on-year on the back of strong demand, with a seven ppts improvement in load factor, 10 per cent improvement in revenue per available seat kilometre (RASK) and 11 per cent decline in cost per available seat kilometer (CASK)," he said.

https://www.nst.com.my/business/2019/05/492503/airasias-q1-net-profit-down-92pct-higher-maintenance-and-overhaul-cost

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