KUALA LUMPUR: AirAsia Bhd's first quarter (1Q) net profit rose in annual and quarterly terms, as the budget airline booked higher revenue as well as foreign exchange (forex) gains.

In a statement to the bourse on Monday, May 31, the low-cost carrier (LCC) said net profit in its first quarter ended March 31, 2010 (1Q10) rose 10.3% to RM224.11 million or 9.1 sen a share from RM203.15 million or 8.6 sen a share a year earlier.

Revenue climbed 10.2 % to RM878.04 million from RM797.13 million as passenger volume grew 17% although the average fare was 13% lower at RM173.

"The aviation industry has been enjoying a steady recovery since the end of last year. Passenger traffic has been growing steadily and ticket prices are moving up due to stronger demand and a tighter supply-demand scenario," AirAsia said. No interim dividend was declared.

At pre-tax level, profit more than doubled to RM256.19 million from RM124.12 million a year earlier as the airline reduced operating and finance expenses and registered forex gains.

AirAsia, with operating units in Thailand and Indonesia, raked in forex gains of RM166 million in 1Q10 as the ringgit strengthened against the US dollar, compared to a forex loss of RM90.37 million a year earlier.

Excluding forex gains, AirAsia's core operating profit fell 33% to RM111.4 million from RM165.96 million.

In quarterly terms, the airline's net profit almost tripled from RM76.66 million in the preceding fourth quarter while revenue fell 1.8% from RM894.06 million.

Based on existing forward booking trends, AirAsia's passenger demand in 2Q remained positive, the airline said.

"Load factors achieved in the month of April were ahead of the prior year in Malaysia, Thailand and Indonesia and forward bookings for future months remain ahead of the same time last year," it said.

In Thailand, 2Q is deemed a weaker period for the airline due to less tourist arrivals and demand for leisure travel. The carrier said its Thailand unit planned to reduce capacity by 12% during the period to match supply and demand for air travel.

Meanwhile, the outlook for AirAsia's unit in Indonesia is deemed positive for 2Q in line with passenger volume growth. A firmer rupiah against the US dollar is also expected to reduce the airline's operating costs which are mainly denominated in the US dollar.

AirAsia said it would take delivery of six A320 aircraft in 2Q. Two units will used for its Malaysian operations while three units are allocated to its Thailand unit. Its Indonesian unit will take the remaining aircraft.

In a separate statement, AirAsia CEO Datuk Seri Tony Fernandes said the LCC was constantly re-evaluating and restructuring its internal operations.

"We are fine-tuning the route network to extract higher yields. We are determined to stay ahead of the competition through constant innovation and wider use of technology," he said.

On fuel, Fernandes said AirAsia had partially hedged its fuel requirements up to December 2010 to mitigate volatile oil prices.

In a separate announcement to the exchange, AirAsia said financial due diligence on VietJet Aviation Joint Stock Company in Vietnam has been completed and an application was being made to the Civil Aviation Authority of Vietnam for an air operating certificate.

Meanwhile, a filing to Bursa Malaysia showed US-based fund Wellington Management Co, had disposed of 5.3 million AirAsia shares from May 24 to 27. The recent disposals saw its shareholding reduced to 149.47 million shares or 5.42%.