Challenges mount for Asia’s airlines – TravelMole true

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Challenges mount for Asia’s airlines

Sunday, 03 Mar, 2009 0

KUALA LUMPUR – The impact of fuel hedging, foreign currency losses and weakening demand continues to drag down the results of both low-cost and legacy airlines.

AirAsia reported a 2008 net loss of US$128.3 million, but insisted its 2009 outlook is strong because its low-fare model is attracting new traffic and it has “unwound” fuel hedges that weighed down second-half earnings.

The third and fourth quarters of 2008 marked the LCC’s first unprofitable reporting periods since it went public in 2004, but it blamed the losses on “exceptional charges” related to fuel hedging and aircraft financing that it said will not apply going forward.

CEO Tony Fernandes explained that the company made the “bold decision” of unwinding remaining fuel hedges and interest rate swaps related to aircraft term loans, taking charges that hurt 2008 earnings but allowed it to “begin 2009 with a substantially clean balance sheet”.

AirAsia filled 75 percent of seats in the last quarter compared with 79.3 percent a year earlier, an AirAsia statement said.

Thai Airways posted a huge loss of 21.3 billion baht (US$592 million) in 2008 because of high fuel prices and protests that briefly shuttered Bangkok’s airports, the company said.

The airline made a profit of 4.4 billion baht in 2007, and last year’s plunge was the company’s first annual loss in 43 years.

Finance Minister Korn Chatikavanij has insisted the airline must submit a detailed recovery plan before it receives taxpayer funds.


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