Air travel recovery reaches full speed

Kenanga Research has raised MAHB’s system-wide passenger throughput by 5% and 7% to 122 million and 131 million in FY23 and FY24, respectively.

PETALING JAYA: Air travel will continue its recovery this year and is likely to return to the pre-pandemic levels in 2024, as both business and leisure travel spike.

However, the players have their own unique issues to resolve amid the rise in travel activity.

For Capital A Bhd, it is a beneficiary of the recovery in air travel as the Covid-19 pandemic comes to an end, but the clock is also ticking on the need for a viable and holistic regularisation plan to lift the company out of its Practice Note 17 or PN17 status.

Kenanga Research believes the tariff hike pegged to the consumer price index recently proposed by the Malaysian Aviation Commission may not be sufficient to generate enough cash flows for capital expenditure or capex purposes, particularly for airport expansion and maintenance.

The research house has maintained its “neutral’’ view on the sector.

Tourism Malaysia, meanwhile, expects tourist arrivals in Malaysia to jump 60% to 16 million this year from an estimated 10 million last year.

According to Kenanga Research, a key driver is Chinese tourists who historically contributed to an estimated 12% of total tourist arrivals in Malaysia. In 2024, the research house projects tourist arrivals to jump further by 24% to 20 million compared with the pre-pandemic level of 26 million.

This will translate to a continued rise in passenger throughput at Malaysia Airports Holdings Bhd’s (MAHB) airports and passengers carried at Capital A.

Capital A’s system-wide revenue passenger km is expected to grow 52% to 35 billion in the financial year 2023 (FY23), after recovering by 20 billion to 24 billion in FY22.

In November 2022, the group operated 125 aircraft and is currently targeting to get 140 operational aircraft to reach full fleet utilisation by the second quarter of the year.

Its digital segment is expected to remain loss-making.

Its airasia Super App is expected to grow, underpinned by the continued resurgence of travel demand from the border reopening and tactical campaigns, alongside expected growth from airasia Food, Ride and Xpress.

Additionally, Teleport is expected to continue expanding throughout the year, as it adds new international lanes and delivery hubs, while BigPay has also launched its digital lending platform, extending its services to include new loan products, it said.

Kenanga Research has raised MAHB’s system-wide passenger throughput by 5% and 7% to 122 million and 131 million in FY23 and FY24, respectively. However, it is a long way from matching the pre-pandemic level of 141 million recorded in 2019.

It also raised its FY23-FY24 net profit forecasts for MAHB by 2%-3%, respectively, while lifting its target price slightly from RM6.80 to RM7 a share.