AirAsia’s operating numbers above forecasts
KUALA LUMPUR: AirAsia Bhd’s (AirAsia) operating numbers are above the research arm of MIDF Amanah Investment Bank Bhd’s (MIDF Research) forecasts and they are projecting that financial year 2015 (FY15) results could surprise on the upside.
According to MIDF Research, for FY15, available seat kilometres ( ASK), revenue passenger kilometres (RPK) and load factors came in above its forecasts.
The research arm noted that quarter-on-quarter, Malaysia AirAsia’s (MAA) fleet size was reduced by one aircraft to 80 aircrafts in the fourth quarter of 2015 (4Q15).
“For FY15, MAA’s fleet was reduced by two aircrafts to 80 aircrafts, with two aircrafts novated to Asia Aviation Capital and leased to a third party,” the research arm said.
It added that in 4Q15, demand growth of an increase of 12 per cent exceeded capacity growth of an increase of five per cent thus resulting in higher load factor of 85 per cent.
The research arm believed that some of this demand could have resulted from Malaysia Airlines’ (MAS) capacity cuts.
On another note, MIDF Research highlighted that Thailand continued to improve in FY15 with capacity expansion of +17 per cent (five new aircrafts added) being absorbed by a higher 20 per cent pax growth with five new routes introduced.
It further noted that load factor stood at 81 per cent.
“Ontheflipside,bothIndonesia AirAsia (IAA) and Philippines AirAsia (PAA) saw reduced fleet and capacity numbers.
“IAA’s pax numbers continued
For FY15, MAA’s fleet was reduced by two aircrafts to 80 aircrafts, with two aircrafts novated to Asia Aviation Capital and leased to a third party.
to decline due to intense competition but PAA’s saw a slight increase in passenger numbers due to betterbranding,” the research arm said.
Movingforward,MIDFResearch projected that FY15 results could surprise on the upside due to higher average fares and yields as a result of better pricing by competitors and good operating numbers.
In addition, we could see better operating figures due to lower operating expenses arising from savings from lower jet fuel prices which averaged at US$56 per barrel (bbl) in 4Q15 (-54 per cent year on year (y-o-y)), offsetting the increase in expenses resulting from higher US dollar/ringgit which averaged at 4.28 in 4Q15 (up 27 per cent).
All in, MIDF Research maintained ‘buy’ on AirAsia with a target price of RM1.82 per share ahead of results release at month end.
The research arm’s target price was based on price earnings ratio (PER) of 8.5-fold FY16 earnings per share.
MIDF Research