Budget carrier AirAsia said today its net profits plummeted 95 percent in the second quarter compared with a year ago, blaming high fuel costs and foreign exchange losses.

tony fernandes The region's biggest low-cost carrier posted net profits of RM9.4 million for the three months to June, compared with RM185.1 million a year earlier.

"This is a commendable performance given that unit fuel price increased by 65 percent to 142.5 dollars per barrel," said chief executive Tony Fernandes, adding that the weakening ringgit led to a loss of RM77 million.

He said revenues increased 41 percent in the quarter to RM608 million, with a 20 percent increase in passenger load and a 16 percent rise in fares.

New baggage fee has helped bottom-line

AirAsia said it was benefitting from the global economic slowdown, as more travellers - including corporate cusotmers - switched from full-service carriers to budget airlines.

It said a new fee for checked-in baggage introduced in the quarter has helped to compensate for some of the higher fuel cost "without undermining passenger demand."

Load factor - the proportion of seats filled - decreased to 76.4 percent from 80.7 percent a year earlier as capacity jumped 33 percent with the introduction of two Airbus A320s to the fleet.

The carrier had 43 aircraft by the end of the reporting period, up from 34 a year earlier.

AirAsia said its Thai operations "endured a challenging period due to escalating domestic political uncertainty."

Fernandes was characteristically bullish about the carrier's future.

"At a time when most airlines are cutting back on capacity and carrying fewer passengers, AirAsia continues to grow the business and expand the route network successfully," he said.