Low-cost carriers AirAsia and AirAsia X surged in Kuala Lumpur trading after cheaper fuel and a weaker ringgit helped the airlines return to profit in the fourth quarter.
Long-haul carrier AirAsia X rose 11 percent to 25.5 sen as of 10:49 a.m., after advancing as much as 13 percent, its largest gain on record. AirAsia, Southeast Asia’s biggest budget carrier, climbed 3.6 percent to 1.44 ringgit, after earlier adding as much as 5.8 percent.
AirAsia on Friday posted fourth-quarter net income of 554.2 million ringgit ($131 million) compared with a net loss of 428.5 million ringgit a year earlier. AirAsia X reported its first profit in nine quarters with a net income of 201.6 million ringgit. A weaker currency led local consumers to seek out cheaper travel options, while visitors from other countries looked at Malaysia as a value-for-money holiday destination, group Chief Executive Officer Tony Fernandes said in a statement Friday.
“The core Malaysia AirAsia exceeded profit expectations on strong fourth-quarter yields,” Raymond Yap, an analyst at CIMB Group Holdings Bhd., who has an “add” rating on AirAsia, wrote in a report Monday. “The ingredients are in place for a re-rating of AirAsia’s shares.”
Shares of the two airlines have dropped more than 40 percent in the past year after crashes involving an Indonesian affiliate and Malaysia Airlines Bhd. dented consumer confidence in Malaysian carriers. Southeast Asian airlines, particularly budget carriers, also have suffered from a price war as they jostle for market share. Short-haul yields at Southeast Asian carriers will continue to be squeezed this year as airlines add capacity, according to Bloomberg Intelligence.
AirAsia said it flew more passengers on higher fares last quarter and benefited from lower fuel prices. The average fuel price dropped to $75 a barrel in the three months through December, from $95 in the same period a year earlier, AirAsia said. The average fare rose to 177 ringgit in the fourth quarter, from 171 ringgit a year earlier.
The group has hedged 52 percent of its 2016 fuel needs at an average cost of $59 a barrel of jet kerosene, Fernandes said.