Airline Weekly | International : Analytical : Essential

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AirAsia

Annual revenues:	$574m
Annual operating profit:	$105m
Annual net profit:	$173m
Operating profit margin:	18%

(Figures are from the period of JAN07-DEC07 in U.S. dollars.)

Strengths and opportunities:
- Remarkably low costs and excellent record of profitability
- Probably received great deal on A320s based on large order
- Well-known brand
- Proven ability to capture ancillary revenues from many sources
- Well positioned to stimulate demand to China, India and elsewhere in the region
- Now supported by Malaysian government, which provides it route rights and low-cost airport terminals
- Low airport and labor costs
- Charismatic founder and CEO
- Brand will spread with AirAsia X longhaul venture

Weaknesses and threats:
- Lots of low-cost competition in the region
- Enormous amounts of new planes on order
- Involved in many different ventures which could distract management
- Asian market access still restricted in some areas
- Average incomes in the ASEAN region still low
- May get dragged down by politics in unstable countries
- Longhaul flying poses new risks; may complicate operations

Financial data is sourced from company reports. The strengths and weaknesses are based on an analysis by Airline Weekly's editors. Information provided on airlineweekly.com is for general informational purposes only and should not be construed as investment advice.

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