AirAsia foreign shareholdings over limit

Major shareholders of AirAsia had trade a lot recently, T. Rowe Price Associates disposed, EPF acquired and Nomad Investment Partnership just joined the list of major shareholders of AirAsia.

Refer to the announcement of May 14, 2008, T. Rowe Price Associates last disposal is on May 20, 2008 and it remained 7.06% shares of AirAsia compare to 7.29% shares at April 1, 2008.

EPF had trade many time in recent month, it increase share of AirAsia to 5.42% by May 26, 2008 (announcement at May 27, 2008), compare to 4.99% share held at beginning of May 2008.

Nomad Investment Partnership, a new foreign shareholder of AirAsia had acquired 5.05% of share at May 26. Due to the acquisition of Nomad Investment Partnership, the percentage of foreign shareholding as AirAsia at 28 May 2008 is 47.87% of the issued and paid-up share capital of AirAsia and it had over the limit 45% of AirAsia’s share which can hold by foreigners.

AirAsia airport service charges issue

According to Malaysia Airports Holdings Bhd (MAHB), AirAsia owe it RM110.4 million for service charges were accumulated from 2002 until March 31, 2008. The interesting part is AirAsia started her operation at 2002, which means AirAsia had pay zero for the service charges.

The MD of MAHB told media that AirAsia had made request to the government for sub-consideration for reduction and for incentives and he emphasized the rates of service charges are determined by government and not by them.

The problem is how long already AirAsia did the request. If long enough, why still no response from government. If just did that request, why MAHB only now raise the issue out. I cannot commend much because I do not know the detail on the payment of service charges.

I just want to show how significant of the service charges as a cost for AirAsia. The service charges should categorize as operating expenses and it should affect the operating profit. Refer to AirAsia annual report 2007, the operating profit for financial year ended 31June2007 is RM262 million. I assume AirAsia operated 7 years from 2002 until March 31, 2008, and then the service charges are average RM15.8 million per year. The service charges can reduce the operating profit by 6% for every year from 2002 until now.

It is big amount if you ask me and I hope AirAsia successes in the request.

AirAsia Q1 profit rise 86%

AirAsia Q1 profit rise 85.6% to RM162 million.
AirAsia Q1 revenue rise 31.7%.

News (May 28, 2008): AirAsia order worth $50 million on Honeywell

Honeywell said that AirAsia had placed an order for auxiliary power systems on 125 new Airbus A320 aircraft which worth more than $50 million.

May 29 to report quarterly Q1 2008 earning

AirAsia will report its Q1, 2008 quarterly earning by end of this month, believed is on May 29.
We will have more clear idea on how rising of fuel price and tight competition of MAS affecting AirAsia.

AirAsia annual meeting 2008

AirAsia Berhad will have the Fifteenth Annual General Meeting. It will be held at AirAsia Academy, Lot PT25B, Jalan KLIA S5, Southern Support Zone, Kuala Lumpur International Airport, 64000 Sepang, Selangor Darul Ehsan on Tuesday, 3 June 2008 at 10.00 a.m.

AirAsia Shares Fall to Record Low on Profit Concerns

May 27 (Bloomberg) -- AirAsia Bhd, Southeast Asia's biggest budget carrier, fell to a record low in Kuala Lumpur on concern higher oil prices will hurt passenger traffic and erode future earnings.

Sepang, Malaysia-based AirAsia dropped 6 sen, or 5.6 percent, to 1.02 ringgit as of 11:59 a.m. local time, the lowest since it started trading on Nov. 19, 2004. It's the second-worst performer on the 100-member Kuala Lumpur Composite Index today.

The price of jet fuel, the carrier's biggest expense, jumped to a record $173.10 a barrel yesterday, boosting year-to- date gains to 57 percent. Singapore Airlines Ltd., Cathay Pacific Airways Ltd. and other Asian carriers have increased surcharges on tickets this year to cover the higher fuel costs.

``If surcharges were to be raised much further, you might actually see some demand slowdown,'' said Scott Lim, who helps manage $431 million as chief investment officer at CMS Dresdner Asset management Sdn. in Kuala Lumpur. The airline's passengers are mostly ``price sensitive'' holidaymakers, who may opt to defer travel if fares increase, said Lim, who doesn't own the airline's shares.

The discount carrier said last month it will start charging a fee of 5 ringgit per piece for checked-in baggage.

AirAsia, due to report earnings on May 29, is also facing increasing competition from bigger rival Malaysia Airline System Bhd., the nation's biggest airline, which has cut fares and given away free tickets to win travelers.

``Very Difficult''

Malaysian Air on May 20 said its first-quarter net income fell 9.5 percent. The company also said it will be ``very, very difficult'' to reach the top end of its profit forecast due to higher jet fuel costs.

``So long as oil prices have upward momentum, that's going to impact the outlook on earnings for airlines worldwide,'' Vincent Khoo, an analyst at Aseambankers Malaysia Bhd. in Kuala Lumpur, said by phone today.

Airlines may lose as much as $40 billion this year as higher fuel prices and too many unoccupied seats wipe out earnings, independent aviation analyst Chris Tarry aid May 20.

A possible slowdown in the region because of high inflation may also lead to cutbacks in discretionary spending including travel, said Khoo, who has a ``fully valued'' rating on AirAsia.

AirAsia, run by Chief Executive Officer Tony Fernandes, is among the 18 budget carriers that started flying in South and Southeast Asia in the past five years as economic growth in the region fueled demand for air travel.