Friday 29 Mar 2024
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KUALA LUMPUR (April 7): Shares of AirAsia Bhd and AirAsia X Bhd (AAX) fell in active trade this morning following the decision by the Department of Civil Aviation to raise fees charged to airlines by substantial amounts.

At 9.38am, AirAsia fell 1.05% or 2 sen to RM1.88 with 4.71 million shares done while AAX fell 1.64% or half a sen to 30 sen with 16.2 million shares done.

In a note April 6, CIMB IB Research said AirAsia’s group earnings will be affected by 10-12% if it absorbs the additional cost, or if the industry does not succeed in scaling back the proposed new rates.

“Our target price is still based on 8x CY17 P/E; our forecasts are intact as most of the cost increase will be eventually passed on to passengers.

“We remain confident in our Add call, as the founders plan to increase their stake to 32.4%, and FY16 will be a good year will low oil prices and a stronger ringgit,” it said.

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