AAX net gearing ratio to remain manageable after MAHB summons
KUCHING: AirAsia X Bhd’s (AAX) net gearing ratio is expected to remain manageable even if it has to pay the summons issued by Malaysia Airports Holdings Sdn Bhd ( MAHB) for the uncollected international passenger service charges ( PSC), analysts say.
Of note, on Tuesday, AirAsia Bhd (AirAsia), AAX’s whollyowned subsidiary, with a Writ of Summons in the sum of RM9.396 million pertaining to PSC that AirAsia had not collected and refused to collect from traveling passengers.
In a filing on Bursa Malaysia, it explained that it has collected RM50 per non-Asean international passenger and have paid Malaysia Airports Sepang Sdn Bhd ( MASSB) but it also claimed that MASSB wants another RM23 per passenger effective July 2018 which it said it had not and would not collect.
According to the research arm of MIDF Amanah Investment Bank Bhd ( MIDF Research), the Writ of Summons amounted to RM26.7 million for uncollected international PSC since July 1, and this relates to the RM23 difference charge per passenger for international passengers since AAX has only been collecting RM50 per passenger instead of RM73.
The research team pointed out that MAHB stated that same rates should apply to both klia2 and KLIA Main Terminal while, AAX reiterated its stance that klia2 is a low- cost airport and the charges levied should commensurate with the level of services provided. It also noted that AAX intends to pursue cross claims against MAHB in relation to the infrastructure of airports which include major apron defect, random closure of runways, damages to aircrafts and rupture of fuel pipelines which it believed exceeds the claims MAHB is seeking.
“In the event that AAX would have to reimburse the RM26.7 million worth of uncollected PSC to MAHB, the impact would not be material to AAX’s day-to- day operations as the company has generated a net operating cash flow of RM47.3 million on average for the past three quarters.
“Moreover, AAX has a net gearing which is still manageable, remaining below 0.7-folds after considering such payments to MAHB,” MIDF Research opined.
Overall, the research team maintained its ‘neutral’ stance on the stock. It said: “Future adherence to the full PSC could push average fares upwards to sustain margins but we believe this will be partly mitigated by AAX’s prudence in shifting some of the future capacity into other core markets namely, Japan, South Korea and India to factor in the slower growth from the China segment.”
However, it also noted that a rerating catalyst for AAX would be the possible equal downward revision of PSCs for klia2 and KLIA Main Terminal without any plans to reverse out any previous charges according to MAVCOM.