MAHB sees slowdown in February, further drag expected ahead
KUALA LUMPUR: Malaysia Airports Holdings Bhd (MAHB) will be affected by Covid-19 in terms of passenger traffic growth and potential tariff rebates or discounts on its retail rentals.
The research arm of Kenanga Investment Bank Bhd (Kenanga Research) recapped that MAHB’s year on year (y-o-y) February 2020 passenger movements for the international segment fell 30 per cent while the domestic segment recorded a decline of 17 per cent.
It noted that this brings year to date (YTD) February 2020 passenger movements for international (down 12 per cent) and domestic (down four per cent) passenger, respectively.
“We expect MAHB to be hit by the Covid-19 in terms of passenger traffic growth and potential tariff rebates or discounts on its retail rentals,” Kenanga Research.
Kenanga Research expected lower passenger growth ahead following the Covid-19 pandemic which is taking its toll on airlines operators due to the travel restrictions and collapse in air travel.
“Case in point, AirAsia Group
Bhd (AirAsia) will temporarily suspend all international and domestic flights in Malaysia from March 29 to April 25, while AirAsia Philippines will be suspended from March 20 to April 14.
“Additionally, AirAsia Indonesia will see a sharp reduction in frequency in its international flights. Similarly, AirAsia Thailand will halt its international flights from March 22 to April 25.”
The research arm added that both airlines will operate on domestic flights at reduced frequency.
For Malaysia Airlines, Kenanga Research noted that the operator is expected to significantly reduce its overall network during the Movement Control Order (MCO).
The research arm also noted that this could be further exacerbated by the recently extended MCO and Malaysia Airlines has suspended flights including those to India and the Philippines on top of previously suspended services to Saudi Arabia, South Korea, as well as Beijing Daxing.
Meanwhile, Kenanga Research pointed out that MAHB is still talking to the Government in terms of mechanism on the recently announced rebates on rental for premises at the airport as well as landing and parking charges.
“We highlight that management is not ruling out Regulatory Asset Base (RAB) framework and discussion with the relevant authorities is still on-going.
“For illustration purposes, assuming a 20 per cent rebate on both rental and landing and parking charges over a sixmonth period, a back-of the envelope calculation suggest a negative impact of 20 per cent of our financial year 2020 estimate (FY20E) net profit.”