KUALA LUMPUR (April 28): MIDF Research has maintained its "trading sell" rating on AirAsia Group Bhd at 79 sen with an unchanged target price of 54 sen after the carrier's consolidated operations (Malaysia, Indonesia and Philippines) recorded a drop in preliminary available seat-kilometre (ASK) by 19% to 14.38 million. 

In a note today, the research house said the inevitable decline in ASK in 1QFY20 was partially attributable to a reduction in the number of flights which started in February and was extended to March 2020, especially for AirAsia Malaysia (MAA) and AirAsia Thailand (TAA) amid the Covid-19 pandemic. 

The group's consolidated air operator certificates' load factor dropped slightly below 80%. Nevertheless, the passengers load factor stood near the healthy level of 80%, at 78%, during the quarter under review. 

"Load factor was deemed manageable due to the proactive capacity management, particularly in the months of February and March 2020," it said. 

MIDF said among AirAsia's three operations, Malaysia was the largest contributor to drop in passenger carried. In absolute and percentage terms, Malaysia recorded a decrease of 2.3 million passengers in 1QFY20, representing a 27% y-o-y decline.

On April 17, AirAsia announced it will resume scheduled domestic flights commencing with Malaysia on Wednesday (April 29), followed by Thailand on Friday (May 1), India (May 4), Indonesia (May 7) and the Philippines (May 16), subject to approval from authorities.  

However, extension of travel bans in some of these countries continues due to the Covid-19 pandemic, only enabling passengers that can be carried under exceptional cases. 

"Domestically, the upcoming travelling season during Hari Raya Aidilfitri could be thwarted as there is a possibility of the movement control order being extended beyond May 12, 2020. All in, we view that 2QFY20 will continue to be a tough quarter," MIDF said.

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