High oil prices may spark shake-out in aviation sector: AirAsia
- From: pluto <pluto@xxxxxxxxxxxx>
- Date: Thu, 01 Sep 2005 02:38:04 +0800
http://www.malaysiakini.com/link/eNrLKCkpsNLXLy8v1yvJT0mszM/LycxL1UvOz9VPLCrJTM5JLdY3szQ2s9BLLC4AAIOVEDY=
Business // Monday, August 29, 2005
High oil prices may spark shake-out in aviation sector: AirAsia
Time is GMT + 8 hours
Posted: 29-Aug-2005 14:28 hrs
A banner promoting Asia's top budget carrier AirAsia in Kuala Lumpur.
Southeast Asia's leading discount carrier AirAsia has warned that surging
oil prices could force a shake-out in the aviation industry
Southeast Asia's leading discount carrier AirAsia has warned that
surging oil prices could force a shake-out in the aviation industry.
..
"I think high oil prices will sort out the efficient and non-efficient
players in the airline industry," chief executive officer Tony Fernandes
told AFP.
..
"Players who do not operate on a cost efficiency model will have to
restructure or just go out of business," he said.
..
Asia's low-cost airline industry is seen as particularly ripe for a round
of mergers and failures, due to high costs, government restrictions, and
intense competition created by a host of start-up operations.
..
However, AirAsia's chief financial officer Raja Mohmamad Azmi Raja Razali
said the carrier was cushioned from the impact of high oil prices by its
twin policy of hedging and insurance.
..
"The impact on us is less. Besides a hedging policy we have an insurance
cap on oil prices at 70 dollars a barrel," he said.
..
Azmi predicted oil prices would continue to rise, adding that "AirAsia will
study if there is a need to review its fuel surcharges on passengers."
..
In July it imposed a fuel surcharge on its flights for the first time as
part of efforts to combat spiraling fuel costs.
..
Fernandes has also said that the airline is planning other strategies to
compensate for rising costs, including boosting the load factor from the
current 70 percent up to 80-90 percent.
..
AirAsia last Friday posted inaugural annual net profits of 111.63 million
ringgit (29.6 million dollars), 30.2 percent lower than forecast in its
initial public offering last year, due to higher fuel prices and an
aircraft shortage.
..
Jet fuel represents 43 percent of AirAsia's total operating costs.
..
Malaysia-based AirAsia was the first regional carrier to offer discount
fares, and has spawned a host of imitators. It has since spread its wings
with joint-venture operations in Thailand and Indonesia.
..
It operates a fleet of 30 Boeing 737-300s and flies to 52 destinations in
Malaysia and six internationally, and has announced plans to establish new
routes to Brunei, Cambodia and Vietnam in the near future.
..
In the financial year to June, AirAsia carried 4.4 million passengers, 55
percent more than a year earlier, and it plans to boost passenger numbers
to about 8.0 million next year.
..
Oil prices hit new record highs Monday, crossing 70 dollars a barrel in
Asian trade as powerful Hurricane Katrina threatened the crude-producing
Gulf of Mexico region in the United States. ? AFP
=====================================================
cheers
pluto
.
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