ASIA Aviation, owner of Thailand’s biggest low-cost airline, expects record earnings from core operations this year as a surge in overseas visitors boosts seat demand and airfares.
Thai AirAsia, the company’s 100-owned budget airline unit, also intends to add more flights to China and India to capitalise on a boom in travel from its two biggest markets, Asia Aviation chief executive officer Santisuk Klongchaiya said in a Jul 4 interview in Bangkok.
“China and India will be the major driver for our earnings growth,” Santisuk said, noting that more Thais are visiting those countries. “Strong demand should continue to be a tailwind for our earnings for remainder of this year.”
Thailand welcomed 17.5 million foreign tourists in the first half, a 35 per cent jump from a year earlier, with Chinese visitors making up almost a fifth of the total. Prime Minister Srettha Thavisin has made tourism a key part of his strategy to revive growth in South-east Asia’s second-biggest economy, and the government is considering an end to a 52-year-old ban on afternoon alcohol sales and the legalisation of casinos. It will also expand airport capacity.
Asia Aviation, which is 40.7-owned by Malaysia’s AirAsia Aviation, posted a net loss of 409 million baht (S$15.2 million) in the March quarter, as the Thai currency’s weakness led to foreign exchange losses of 2.1 billion baht on aircraft leasing. But the company posted a core profit of 1.6 billion baht in the period, compared to a 203 million baht loss a year earlier.
Asia Aviation’s core profit peaked at 3.4 billion baht in 2016, according to the company’s investors relation department. The stock has risen just over 3 per cent this year.
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Peers including Thai Airways International and Bangkok Airways are rushing to add seats to cater for a rise in international visitors, and while Thai AirAsia plans to expand its fleet to 60 planes with four new aircraft, Santisuk said it’s not easy to build capacity.
“We have difficulties in expanding our flight capacity as pent-up travel demand worldwide has put a strain on aircraft production and services,” he said. Still, strong demand and limited seat capacity will continue to keep airfares in the region at the currently high levels they are versus before the pandemic.
The airline’s fleet expansion and sustained revival of demand from China will be key to its growth in 2024, Bloomberg Intelligence said in a Jun 26 note. BLOOMBERG
