Business

Friday November 20, 2009

All eyes on AirAsia and MAS results as others turn in losses

By B.K. SIDHU


PETALING JAYA: Several regional airlines have incurred huge losses in the third quarter of this year although demand for passenger air travel is trickling in, and it will be interesting to see what financial numbers the local carriers will report this week and next.

For AirAsia Bhd, analysts are upbeat that its financial results for the third quarter (Q3) ended September 30, 2009 will be good but they cannot say the same for Malaysia Airlines (MAS), even though the latter is expected to show better financial numbers for its fourth quarter.

“AirAsia’s financial numbers for Q3 should be pretty strong,’’ said an analyst. The airlines’s passenger growth in Q3 was said to be stable, with load factor at about 75.4%.

AirAsia group chief executive officer Datuk Seri Tony Fernandes, in an SMS reply, said Q3 was always the weakest quarter “but we are happy with the results’’. The airline will release its results today.

For the first half-year ended June 30, AirAsia’s net profit was RM342mil on revenue of RM1.37bil. For Q2, it was RM139mil and RM657mil respectively. Analysts project RM513mil net profit and RM2.7bil sales for the full year.

As for MAS, an analyst is of the view that the airline may not be able to break even.

“But if it just managed to break even in Q3, it would be good for the airline,’’ he said, citing international traffic decline as a reason.

MAS reported a net profit of RM876mil, aided by RM1.34bil derivative gains on fuel hedging, for its second quarter ended June 30, 2009. Operationally, it reported a loss of RM420mil while revenue was at RM2.56bil.

MAS, in its profit projections to Bursa Malaysia, said in a worst-case scenario, it may report a loss of RM499mil to a net income of RM50mil. In the best-case scenario, the profit could be between RM501mil and RM1bil.

“It is a tough environment (in which airlines are operating),’’ said MAS managing director and CEO Tengku Datuk Azmil Zahruddin.

“Yields are under pressure and airlines are pressured to keep fares low,’’ he told StarBiz recently.

On his expectation for the Q3 results, he said: “It should be better than the second quarter.’’ MAS is slated to release its results in the middle of next week.

Last week, Asia’s largest airline, Singapore Airlines, announced its first quarterly loss since the Severe Acute Respiratory Syndrome outbreak in 2003 with a US$221.7mil operating loss and US$213.3mil net loss for the three months ended June 30, 2009.

This was due to the devastating combination of the global economic downturn, the outbreak of Influenza A(H1N1) and large fuel hedging losses.

Thai Airways International slipped to a net loss of US$121.5mil in Q3 2009, due predominantly to foreign exchange losses and falling passenger yields.

The International Air Transport Association reported a miniscule 0.3% rise in international traffic for September even though the month is normally a busy period for business travel. Premium traffic fell 13.9% in September compared with a year earlier.

Rising fuel prices and a weakened dollar will also remain a concern, going forward, for airlines.

 
AIRASIA :  [Stock Watch]  [News]
MAS : [Stock Watch] [News]


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