Thursday 28 Mar 2024
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KUALA LUMPUR (April 28): Passenger traffic at the 39 airports which Malaysia Airports Holdings Bhd (MAHB) operates in the country, is expected to increase by 1%-3% this year, said Moody's Investors Service.

The international rating agency said the growth will be fueled by a recovery in sentiment from the airline disasters that occurred in 2014, and the completion of route rationalisation by Malaysia Airlines Bhd in 2016.

Moody's vice-president and senior analyst Ray Tay said code-sharing arrangements and the entry of new airline operators in its Malaysian segment will also lend some support to the rating agency's expectation that MAHB will record increased traffic growth for 2016.

Last year, passenger traffic in the country rose by a marginal 0.6%, compared with 2014.

MAHB recorded a 3.4% growth in passenger traffic to 21.1 million in the first quarter of this year (1Q16), while traffic at its Sabiha Gokcen International Airport (SGIA) in Istanbul continued to show double digit growth of 19.6% to 6.7 million passenger movements.

Overall, Moody's is of the view that MAHB's financial profile will be moderate in 2016.

"Over the next two years, while MAHB will likely register growth in passenger traffic, SGIA's operations will pose a drag on MAHB's credit profile, due to the utilisation fees payable to the government," Tay said in a statement today.

Moody's recognises the present value of SGIA's utilisation fee liability and concession fee payables as debt obligations on the part of MAHB. The annual SGIA utilisation fee payments increase MAHB's finance costs by RM422 million, stepping up to RM590 million over SGIA's concession life ending 2030.

The utilisation fee payments are classified as part of finance costs, and are not included in MAHB's reported earnings before interest, taxes, depreciation and amortisation (ebitda).

Moody's views any excessive large investments into non-airport related operations and expansions overseas, as credit negative moves that will pressure MAHB's A3 rating.

As for MAHB's stable rating outlook, the outlook reflects Moody's anticipation of passenger growth and the consequent improvement in MAHB's credit metrics.

Meanwhile, Tay said MAHB's operating results for the first-quarter ended March 31, 2016 (1QFY16) are within Moody's expectations.

MAHB's revenue rose 16.4% year-on-year to RM1.02 billion in 1QFY16, while EBITDA  (earnings before interest, taxation, depreciation and amortisation) increased 12.2% to RM453 million. The increase was driven by higher passenger traffic, which led to an increase in passenger charges, retail and associated revenue.

MAHB shares closed 10 sen or 1.54% higher at RM6.60 today, giving it a market capitalisation of RM10.95 billion.

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