Airasia reported a net loss of RM466 million

Airasia has announced its results for 3Q2008 ended 30/9/2008. It reported a net loss of RM466 million on a turnover of RM658 million. The poorer results are attributed to the following:

1. lower operating margin of 15.8% as compared to 36.2% for 3Q2007;
2. Higher Financial costs, which in turn is due to Forex loss of RM212.5 million (3Q2007: Forex gain of RM26.5 million) and higher interest expenses of RM85.8 million (3Q2007: RM40.5 million); and
3. Exceptional items totaling RM215 million, which is due to the cost of unwinding fuel derivative contracts and the likely non-recovery of margin deposit held by Lehman Brothers.

The lower operating margin is probably due to competitive pressure and the need to attract customers in the present difficult economic environment. It is noted that Airasia's Load Factor has slipped by 3.9 ppt from 79.3% in 3Q2007 to 75.4% in 3Q2008.



Airasia has broken above its medium-term downtrend line in July. A tentative short-term uptrend line can be drawn, with support at RM1.00. As at 4.00 pm today, Airasia is trading at about RM0.99.


Chart: Airasia's weekly chart as at Nov 28, 2008 (source: Quickcharts)

Based on poor financial performance & precarious technical outlook, I think one should avoid Airasia for now.