Growing number of passengers boost AirAsia’s load factor in 2Q16
KUCHING: AirAsia Bhd ( AirAsia) saw encouraging figures across the board for its operations in Southeast Asia, pegging analysts to anticipate strengthening passenger fares ahead on the back of a travel demand recovery.
MIDF Amanah Investment Bank Bhd ( MIDF Research) noted that Malaysia AirAsia’s load factor in the second quarter of financial year 2016 (2QFY16) was its highest in more than 10 years.
Malaysia AirAsia’s 2QFY16 operating statistics continued its good run with revenue passenger kilometre ( RPK) growth of 19 per cent year on year (y- o-y) and 0.7 per cent quarter- on- quarter (q-o-q) out pacing average seat kilometre (ASK) growth of 10 per cent y- o-y and minus 0.7 per cent q-o-q.
“This resulted in a higher load factor of 87 per cent which was not only the highest in over 10 years but also marks the fourth quarterly improvement over the past five quarters,” it explained.
“The stellar performance can be attributed to Malaysia Airlines’ 30 per cent capacity cuts and AirAsia’s strategy of flying overseas directly from secondary cities paying off handsomely, such as from Kota Kinabalu to China, Langkawi to China and Johor Bahru to China.”
“Meanwhile, neighbouring ally Thai AirAsia’s load factor tapered quarter- on- quarter to 83 per cent from 1QFY16’s 88 per cent due to 1QFY16 being the peak tourism period.
“Capacity was grown aggressively with a 17 per cent y- o-y increase in ASK as six new aircraft added over the similar period last year with four added since the start of 2016,” MIDF Research noted.
“This was well absorbed with a higher RPK growth of 19 per cent y- o-y resulting in a higher load factor of 83 per cent.”
Other subsidiaries, Indonesia AirAsia and Philippines AirAsia, showedg steady improvement registering load factors of 83 per cent and 91 per cent respectively.
MIDF Research said both associates continued their fleet right- sizing exercise with respective fleet size reductions of minus seven for Indonesia AirAsia and minus one for Philippines AirAsia as part of their efforts to become profitable.
Pending more details on yield data and results for 2QFY16, analysts at Public Investment Bank Bhd (Public Invest Research) expect passenger fares in the second quarter to remain strong due to travel demand recovery.
“Overall, 2QFY16 operational numbers was stronger than a year before, but flat on a quarterly basis,” it said in a separate report. “We maintain our neutral call with target price of RM2.36 per share. We believe the positives have already been priced-in amid the continued run-up in share prices.
“Our target price is based on enlarged share capital, including the proposed share placement to Tune Live Sdn Bhd which is expected to complete by this quarter.”
The stellar performance can be attributed to Malaysia Airlines’ 30 per cent capacity cuts and AirAsia’s strategy of flying overseas directly from secondary cities paying off handsomely, such as from Kota Kinabalu to China, Langkawi to China and Johor Bahru to China. MIDF Research