AirAsia chief has energy for just one more 'biggie'

Tony Fernandes wants to spend more time on profit centres Malaysia, Thailand and Indonesia

PUBLISHED : Friday, 23 November, 2012, 12:00am
UPDATED : Friday, 23 November, 2012, 3:04am

AirAsia said it may add only one more major hub for expansion as it focuses on boosting profits from Malaysia, Thailand and Indonesia in the next three years.

The region's biggest discount carrier aims to increase annual profit from its three main markets to 1 billion ringgit (HK$2.53 billion) each, group chief executive Tony Fernandes, said in Kuala Lumpur.

Taiwan, South Korea, Vietnam and India are among the potential markets for a new base, he said. "We have three gold mines in Malaysia, Thailand and Indonesia, and I really want to capitalise on those three first," Fernandes said.

"I'm beginning to feel that I'd rather focus on these. On top of that, I still have energy for another biggie, and maybe a few small ones in Laos, Cambodia and Myanmar." Negotiations with Airbus on ordering 100 more A320s may be completed by the end of next month, Fernandes said, as the carrier expands to fend off rising competition.

Malindo Airways, a venture backed by Indonesia's Lion Mentari Airlines, is set to start low-cost flights in Malaysia next year as the region's economic growth spurs travel demand.

"The accelerated roll-out of aircraft in Malaysia to dominate routes ahead of the start up of Malindo Airways in March 2013 is a good defensive measure," Annuar Aziz, an analyst at Credit Suisse Group, wrote this week.

"Coupled with its strong branding, we expect AirAsia to withstand the challenge."

On Wednesday, AirAsia, which also operates ventures in the Philippines and Japan, posted its third consecutive increase in quarterly profit.

The stock has fallen 23 per cent this year, compared with a 5.5 per cent advance in the benchmark FTSE Bursa Malaysia KLCI Index.

Net income increased 3.6 per cent to 157.8 million ringgit in the three months to September 30 from 152.3 million ringgit a year earlier, the Sepang, Malaysia-based carrier said. Revenue rose 15 per cent to 1.24 billion ringgit.

Thai AirAsia posted a profit of 199 million baht (HK$50.2 million) in the quarter, while the Indonesian venture had net income of 74.5 billion rupiah (HK$59.8 million), AirAsia said.

AirAsia's main Malaysian unit carried 9 per cent more passengers and expanded capacity by 10 per cent.

The group, which has 112 Airbus A320s, plans to take delivery of 266 more planes by 2026.