AirAsia Philippines, thelocal unit of Southeast Asia's largest budget carrier AirAsia Berhad, said the operating environment in the country remains challenging but it expects its performance to improve in the remainder of the year.

"The outlook for the second half of 2014 should be seen in the context of the current prices of oil and aviation fuel. The operating environment in the Philippines remains challenging, but an improved performance is expected in the remainder of the year," the airline said.

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