AirAsia Group to post subdued earnings?

PETALING JAYA: AirAsia Group Bhd is expected to register subdued earnings for the quarter ended September 2018 mainly due to a weaker passenger load factor during the period.

Maybank Investment Bank Bhd (Maybank IB) yesterday said AirAsia’s group passenger load factor had declined by 5.1 percentage points year-on-year to 81.6 per cent in the third quarter of 2018 on the back of 10.3 per cent year-on-year capacity growth.

The firm added that 2016 and 2017 were exceptionally strong years for AirAsia as it enjoyed above-normal load factors, yields and profit margins.

Maybank IB forecast AirAsia’s third quarter 2018 core net profit to fall 53 per cent to RM176 million.

This would take nine-months 2018 core net profit to RM754 million or 73 per cent of our full-year forecast. We would deem this as within our expectation, the research firm said.

Maybank IB, however, has upgraded the stock to “buy” mainly to its ‘over-corrected’ share price.

“AirAsia’s share price has retracted by 20 per cent in the past month and the stock is now trading at deep discount relative to global peers and also against its own history.”

Meanwhile, the investment bank said AirAsia’s long-haul arm, AirAsia X Bhd (AAX), was expected to register a record loss in the third quarter on the back of a fuel price hike and weaker consumer sentiment.

“We estimate a core loss of RM78 million for AAX’s upcoming third quarter earnings. This will be its weakest quarter and well below market expectations,” it said.

It added that AAX conducted big changes during the three-month period.

“AAX conducted many flight terminations, namely to Tehran and Maldives.

“This has caused its average stage length to reduce to 3,207km in the third quarter of 2018 and consequently cause a material increase to both yields and unit cost.

Source: NST