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AirAsia issues oil price warning

Fast growing low cost carrier AirAsia has issued a caution over the impact of unrest in North Africa and the Middle East on oil prices.


Chief executive Tony Fernandes, revealing 2010 operating profit was up by 83% to £167 million, acknowledged that external factors beyond the company’s control could impact some plans for this year.


In particular he referred to the geopolitical developments in the Middle East and North Africa and the uncertainties in the global economy. “These could have an effect on the price of oil. We’re monitoring the situation very closely,” said Fernades. “We already have short term [fuel] hedges in place up to the second quarter of 2011, and we will add more if the situation warrants it.


“We are determined to keep fares low, and have the option of imposing a fuel charge or raising fares. Thanks to our ancillary initiatives, we are in a better position than our competitors when it comes to making these decisions, as we have a lot more latitude than they have,” he said.


Fernandes emphasised the increased contribution from ancillary income to the bottom line, and said the growth in ancillary income (39% to £8.30), in pace with rising passenger loads, was a “strong affirmation” of a strategy looking beyond just air fares to strengthen revenues.


“AirAsia is in the best position, financially, than it has ever been in – providing a strong foundation for further expansion and growth in 2011,” he added. “With our plans to further expand our route network, supported with the delivery of eight new Airbus A320s, and the opening of three hubs we can position ourselves to expect increasing load factor and yields.”


The potential listings of Thai AirAsia and Indonesia AirAsia are planned together with the launch operations in the Philippines.  


 

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