Thursday 28 Mar 2024
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KUALA LUMPUR (Nov 12): Shares of AirAsia X Bhd (AAX) rose 9.09% after the carrier inked a profit sharing agreement (PSA) with AirAsia Group Bhd (AAGB) on the Kuala Lumpur to Singapore (KUL-SIN) route.

At 10.19am, AAX rose 1.5 sen to 18 sen for a market capitalisation of RM684.45 million, making it one of the top active stocks across Bursa Malaysia this morning.

AAGB yesterday said its wholly-owned unit AirAsia Bhd (AAB) would be transferring two of its existing slots on the KUL-SIN route, involving 14 flights, to AAX.

It said AAX would share 50% of the net operating profit of the route with AAB on a monthly basis under an agreement between them.

Meanwhile, MIDF Research maintained its "neutral" rating on AAX with an unchanged target price of 17 sen.

Financially, an annual net operating profit (excluding tax) of RM2.42 million from the PSA was projected.

The research house in a statement today said it pro-rated this profit for the remaining of FY19, of which the net profit attributable to AAX is roughly RM300,000 but unable to offset the RM8.1 million loss it forecasted for FY19.

"Meanwhile, we estimate approximately RM1.53 million worth of net profit to accrue in FY20, which is minimal from the full year forecast of RM45.6 million," it said.

MIDF Research said the lower passenger service charge of RM50 for international departures beyond ASEAN will deliver additional boost to the current travelling trend. Notwithstanding this, the research house believed the ongoing capacity deployment would remain a headwind for the rest of FY19.

"This in addition to the adoption of MFRS 16 will be a hurdle as the majority of AAX's fleet are leased, with gains from lower amount of interest to be realized beyond the fifth year of the lease term.

"On a bright note, we expect AAX's 'Teleport.social', a platform enabling sellers on social media to integrate with Teleport's logistics infrastructure, to realise full year benefit in FY20 and maximize AAX's belly space," the research house added.

It said the direct impact for AAX would be increased utilisation of its wide body aircraft by 0.2 hours from its current 14.4 hours. Small pockets of unutilised aircraft time will be used along with capacity being doubled to 377 seats with the Airbus A330 compared to 180 seats using the Airbus A320.

"Furthermore, load factor of KUL-SIN route which we opine is higher than 80% will be further boosted through the increase in fly-thru passengers into Singapore from core markets, i.e. China, India, Japan and Korea," it said.

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