AirAsia X earnings expected to improve

PETALING JAYA: AirAsia X Bhd’s (AAX) second quarter 2023 (2Q23) earnings is likely to be weaker quarter-on-quarter (q-o-q) but its forward booking trends are encouraging.

Its 49%-owned Thai AirAsia X (TAAX) is expected to start contributing soon, which will be positive for the PN17 classified airline.

Maybank Investment Bank (Maybank IB) Research expects its 2Q23 core net profit to hit about RM30mil as compared to 1Q23 earnings of RM42.5mil.

More importantly, AAX stated demand and fares are rising in 3Q23 on seasonally higher demand. Traditionally the airline carries fewer passengers in 2Q23 due to seasonally lower demand.

The research house has forecast AAX’s financial year 2023 (FY23) core net profit to hit record high of RM160.1mil driven by high airfares and more aircraft.

For FY24, it has forecast the carrier’s core net profit will hit another record high on more aircraft capacity but moderated by lower airfares.

The airline is sensitive to fuel price movements and a US$1 (RM4.55) per barrel change in fuel price will impact earnings by RM7mil to RM13mil.

Maybank IB Research said efforts to uplift its PN17 classification are ongoing and more importantly, have not received any negative feedback.

It said that AAX qualifies to have its PN17 classification lifted as its shareholders’ equity is already more than RM40mil and it has generated three consecutive quarters of profits. AAX hopes to receive a reply by month end on the matter.

The research house added that TAAX has executed its debt restructuring and is awaiting court sanctions. Post-court sanctions (likely in 4Q23), AAX will account for its share of TAAX’s profits.

If AAX recognised 49% of TAAX’s 1Q23 core net profit, its 1Q23 core net profit would have surged by 74%.

On its planned acquisition of Capital A Bhd’s four short-haul airlines, AAX stated that has not been finalised though it is in a strong negotiating position.

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