More Lunatic And Cheap Talks From AirAsia?

Blogged recently, AirAsia: Lunatics And Cheap Talks?

Is the demand for cheap talk really so great?

It really makes me wonder.Let me show you an example again today.

Published on Associated Press Malaysia: Budget Airline AirAsia Can Stay Profitable Even If Oil Hits $200 A Barrel, CEO Says

For some the headline is already plain cheap talk!

You see, as stated in the article itself..

• Airlines have been struggling to contain costs this year as oil prices stay above US$130 a barrel. Scores of startup carriers have gone out of business and several major carriers have raised fuel surcharges, cut capacity and deferred plane orders or shed jobs.

Other airlines are struggling big time with oil prices staying above US130 per barrel.

And here, our local CEO, decides to boldly announce that his airlines can stay profitable even if oil hits US$200 per barrel.I wonder if the word humble ever exist?

Do read again what was posted in that blog posting first, AirAsia: Lunatics And Cheap Talks?

Crude Oil has not gone past US150 per barrel and today, AirAsia reported its earnings.
Quarterly rpt on consolidated results for the financial period ended 30/6/2008

It wasn't pretty and in fact it was a shocker!

Losses before taxes were around 46.9 million and if not for that much questionable, debatable and controversial 'deferred taxes' grant ( see past posting AirAsia's deferred taxes issue. and More on AirAsia's Deferred Tax Issue ) of 57 million, Air Asia would had been buried deeply in losses. And because of the tax grant, Air Asia managed a gain of 9.4 million.

And crude oil did not even go higher than US150 per barrel.

So much for cheap talks!

So crude now has gone down.

Got chance for Air Asia?

See page 12 of their earnings pdf file attached on their earnings report,
Quarterly rpt on consolidated results for the financial period ended 30/6/2008

Can you see how their forex gain of 86 million reported in their previous quarterly earnings report has now turned into a loss of 76/8 million!!!!

And lately the ringgit has gone down lower. So looks like the lower oil impact will be offset by the much weaker ringgit!

Is there no end to their problems?

Perhaps the company would learn the meaning of the word humble.

However, this is not to be.

Published on Dow Jones newswire:

• KUALA LUMPUR (Dow Jones)--Malaysia's AirAsia Bhd. (5099.KU) Thursday said its net profit declined 95% on year in the April-June quarter with high fuel costs and foreign exchange losses hurting margins.
  
  Asia's biggest budget airline by fleet size posted a net profit of MYR9.4 million for the second quarter ended June 30, compared with MYR185.1 million a year earlier.
  
  The airline is changing its year-end to Dec. 31 from the previous June 30 - so the MYR185.1 million figure was for last year's fiscal fourth quarter.
  
  The second quarter net profit of MYR9.4 million is substantially below an average MYR50 million estimate taken from forecasts by three analysts polled by Dow Jones Newswires.
  
  The analysts had said that a lack of clarity over the size of a possible deferred tax component and fuel speculation made projection difficult.
  
  The company said second-quarter revenue was MYR608.4 million against MYR432.2 million a year earlier as passenger numbers rose 20% to 2.8 million and fares increased 16%.
  
  Load factor - the proportion of seats filled - decreased to 76.4% from 80.7% a year earlier as capacity surged 33% to 4.51 billion available seat kilometers, or ASK, following the introduction of two Airbus A320s to the fleet, AirAsia said.
  
  The carrier had 43 aircraft as of June 30, up from 34 a year earlier.
  
  AirAsia said also that unit costs excluding fuel improved by 19% on year because of productivity gains and more Airbus A320s inducted into the fleet. However, when fuel cost is included, the unit cost was 3.57 US cents per ASK, 10% higher than a year ago.
  
  In a statement, AirAsia Chief Executive Tony Fernandes said the second quarter results are "commendable, given that unit fuel price increased by 65% to US$142.5 per barrel."
  
  He said the Malaysian ringgit has weakened and this has resulted in a translation loss of MYR77 million.

Commendable????? How about the word POOR or TERRIBLE?

AirAsia said also that ancillary income - or income from insurance and checked baggage - surged 60% on year.

For the first half, net profit was MYR170.7 million, down 37% from MYR272.3 million a year earlier, despite revenue rising 38% on year to MYR1.14 billion.

AirAsia said its loss from 49%-owned associate Thai AirAsia was MYR21.7 million while loss from another 49%-owned associate, PT Indonesia AirAsia, was MYR12.2 million.

AirAsia isn't paying a dividend for the quarter.

The airline said the third quarter will be challenging on seasonal factors, compounded by the fact that jet fuel prices spiked to record levels in July.

"Despite the added challenge for the third quarter, we are confident that we will remain profitable for the full year accounted," AirAsia said, without giving a numerical forecast.

Fernandes said "there are some months we hedged up to 200,000 barrels (of fuel)" but on the whole the company is "largely unhedged as our view is that (crude) oil prices will fall further."

He also said the airline is on track to grow its capacity as measured by ASK, by 25% to 30% in the current year.

The airline, he said, will also commence its first flight to India in September, without giving a specific destination.

Hmmm.... in the previous posting AirAsia: Lunatics And Cheap Talks?

• AIRASIA Bhd, Asia's biggest discount carrier by fleet size, will stop making bets on the price of oil, after incorrect forecasts contributed to a 16 per cent slide in shares over the last month.
  
  "It's a nightmare because the volatility is crazy," chief executive officer Datuk Tony Fernandes said in a Bloomberg Television interview on Thursday. "We took a bet that oil won't go above US$90 a barrel and it has and it's staying there."

How?