CIMB raises AirAsia X core net profit for FY17

KUALA LUMPUR: AirAsia X’s first quarter fiscal 2017 (Q1’17) group core net profit of RM24mil was more than CIMB Equities Research’s previous full-year forecast of RM13mil as it had underestimated AAX’s charter-flight revenues as it was concerned about multiple headwinds.

The research house said yesterday it revised up its FY17F core net profit forecast to RM42.7mil.

Consensus estimates see higher FY17F profits versus that of FY16 so the Q1 would have disappointed, it added.

Still, its new FY17F core net profit is 77% lower against FY16, in the same way that the Q1’17 result was 71% lower on-year, due to multiple pressure points.

“Hence, we maintain ‘reduce’ but raise target price slightly (to 25 sen from 24 sen), still at one time CY17 price-to-book value,” it said.

Elaborating on the results, CIMB Research said that its Malaysian operations or Malaysian AAX (MAAX) reported an estimated airline-only core net profit of RM28.5mil in Q1’17 (excluding estimated leasing profits earned from its associate airlines), down 63% from Q1’16’s RM77mil, despite a 29% rise in available seat kilometres (ASK) capacity.

The drop was on the back of a 16% rise in the price of jet fuel from US$57 a barrel in Q1’16 to US$66 in Q1’17, a 9% rise in unit staff costs due to salary hikes for pilots and crew as a defensive retention move and a 6% appreciation of the US dollar, which impacted around 60% of MAAX’s costs.

The strong 29% ASK growth at MAAX also necessitated underlying yield cuts of 4% on-year.

Fortunately, revenue passenger km (RPKs) demand responded well, growing faster than ASK growth and helping passenger load factors (PLF) improve 2.3% pts to 84%.