Strong Q3 earnings expected from AirAsia X

  • Analyst Reports
  • Friday, 03 Nov 2017

KUALA LUMPUR: RHB Investment Research has maintained its Buy call on AirAsia X Bhd with a targe price of 46 sen a share. 

The research firm expects AirAsia X Bhd to report strong Q3FY17 earnings come end-November 2017, owing to the 23% on-year increase in passengers carried and a 1ppt improvement in load factor for its Malaysian operations.

"On a 9M YTD basis, AAX’s load factor improved 3ppts to 81% despite a 24% y-o-y increase in capacity via higher aircraft utilisation and flight frequencies. This is in line with its load active, yield passive strategy."

RHB Investment Research said AAX’s forward bookings remain strong, having secured 83% to 88% load factor for Oct-Dec 2017.

Average base fare has seen an uptick in Oct and Nov 2017 to +10% y-o-y and +2% y-o-y respectively. 

Chinese passenger traffic picked up in 2H2017 and AAX management is guiding for operations at its associates in Thailand and Indonesia to improve going forward, driven by capacity addition, lifting of regulatory overhand and strong cost management.

RHB Investment Research is positive on AAX's plas to realign routes from Australia to other more profitable key markets in North Asia and India.

"The company’s plans to add capacity and replicate routes from its associates in Thailand and Indonesia to markets in North Asia where its Malaysia operations currently operate in, should also allow the company to optimise its route network and provide greater economies of scale for the group and help sustain its low cost structure," it said.

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