New planes to boost AirAsia’s y-o-y figures
KUCHING: New aircraft helped to boost average seat per kilometre (ASK) for low cost carrier AirAsia Bhd (AirAsia) in financial year 2017 (FY17) which grew nine per cent year on year (y-o-y).
According to MIDF Amanah Investment Bank Bhd (MIDF Research) said in the fourth quarter of FY17, AirAsia’s consolidated airport operator certificates (AOCs) – including Malaysia, Indonesia and the Phillipines – saw its ASK increased 14.0 per cent year on year (y-o-y) and 4.6 per cent quarter on quarter (q-o-q). This extended an increase in ASK of 14 per cent yo-y registered in 3QFY17, leading to a +9.0 per cent y-o-y increase in ASK in FY17.
“This is slightly below our expectations of 10 per cent y-o-y,” MIDF Research said in a report, adding that in the first two quarters of FY17, AirAsia’s ASK has been growing by single digit.
“Its fleet size saw an addition of six new aircraft from 3QFY17 to 116 aircraft. There were seven new routes introduced: four in Malaysia and three in Indonesia.
“Meanwhile, 17 routes saw an increase in frequencies: 12 in Malaysia, four in Indonesia and one in Philippines. We expect ASK to pick up further in FY18 as AirAsia plans to add circa 30 aircraft to its consolidated AOCs in 2018.”
The research firm saw that AirAsia’s load factor remained comfortable at 88 per cent.
Despite ASK expansion, the airline managed to maintain its 4QFY17 load factor at a healthy level with improvement of one percentace point y-o-y.
During the same quarter, AirAsia AOC’s revenue per kilometre (RPK) increased 15 per cent y-o-y while recorded 4.3 per cent q-oq increase in light of seasonally stronger quarter. On an annual basis, load factor improved by similar pattern, inching up by one percentage point y-o-y to 88 per cent. Thai AirAsia showed improvements as well, as load factors ticked up six percentage points in 4QFY17. Its ASK increased 15 per cent y-o-y as it took two new aircraft, enlarging its fleet size to 56 aircraft.
During the quarter, TAA added one new route while five existing routes saw frequency additions.
“We continue to like Air Asia because of the company continuous efforts to reinvent itself by introducing new digital offerings to ensure that it stays relevant in the highly competitive industry.
“We remain positive on AirAsia’s earnings prospect predicated on stable demand growth with conservative ASK expansion of 10 per cent, and new areas of growth in Air Asia India and Air Asia Japan. Hence, we are maintaining our buy recommendation.”
“However, we are reviewing our target price of RM4.02 as we believe that there may be a possible revision in our earnings following from the expected FY17 earnings release next month.”