PETALING JAYA: MALAYSIA AIRPORTS HOLDINGS BHD’s (MAHB) operations may weaken further before improving, as the global aviation sector continues to face headwinds from rising Covid-19 cases.
Maybank Investment Bank Research (Maybank IB) in a report yesterday said MAHB’s Malaysian passenger traffic may fall year-on-year (y-o-y) this month by a wider percentage, as airlines cut capacity after experiencing lower load factors in February.
“Case in point, the first week of March saw Airports of Thailand passenger traffic plunging by a wider 43% y-o-y. For now, we maintain our earnings estimates, which are premised on 2020 Malaysian passenger traffic easing 5% y-o-y and Turkish passenger traffic growing 1% y-o-y.”
MIDF Research, meanwhile, said it expects to see lower passenger traffic for MAHB’s international segment this month.
“We are expecting the decline in passenger traffic to extend into March and April 2020 after taking into effect the wider travel ban by the Malaysian government on all Italians, Iranians, South Koreans and other foreigners arriving from these countries effective March 13,2020. Furthermore, more than a 100,000 Covid-19 cases have been confirmed at the time of writing.”
The research house said the North-East Asian market experienced the largest reduction in scheduled airline capacity movements of 44.8% from Jan 20 to March 9, followed by South-East Asia at 17.7%.
“Pencilling in a 20% y-o-y reduction for MAHB’s total passenger traffic in Malaysia for March, first-quarter 2020 passenger traffic will see an approximately 13% y-o-y decline before staging a recovery at the start of the second half of 2020 (2H20), as the Covid-19 fears are expected to subside.
“Our basis for the upside in 2H20 comes after around three million seats were added to the scheduled airline capacity in China last week, offering early signs of revival as the infection rate of Covid-19 slows down in China.” MIDF Research said it expects other regional airlines to follow suit in 2H20.
CGS-CIMB said the Malaysian aviation industry is “suffering a massive stroke from which it may struggle to recover”.
“Passenger traffic may decline by a greater percentage from March to May, as airlines take action to sharply curtail their capacity from March onwards. With Covid-19 cases spreading rapidly in Malaysia, South Korea, Iran and Europe, health fears may keep more passengers grounded.
The research house added that it does not expect a sharp “V-shaped” post-SARS recovery for the industry this year.