Budget carrier AirAsia said today its net profits were slashed by nearly half in the three months to March, blaming intense competition, high promotion costs and a hefty one-off maintenance cost.

Southeast Asia's leading low-cost carrier said profits were RM22.80 million in the quarter, compared to RM40.69 million a year ago.

It said revenues were up 23 percent to RM201.68 million, driven by a 42 percent growth in passengers, but that this was offset by a 14 percent drop in average fares.

Outlook positive

As well, profits were hit by a one-off maintenance charge of RM6.3 million on the final batch of Boeing 737s brought into the fleet. It has ordered 100 new Airbus A320s to quadruple the size of its fleet and shave down costs.

"Our outlook for the fourth quarter is positive relative to the third quarter," said the airline's chief executive Tony Fernandes.

"We budget for higher oil prices, but anticipate that these higher costs will be partially offset by a more benign yield environment" now that Malaysia Airlines has dropped a discount promotion, he said.

"The new A320s, the cost and operational benefits from the low-cost terminal and a strengthening ringgit should continue to drive operating costs lower, although fuel volatility will remain a variable," he said.