Monday, November 5, 2018

One can see that Maybank analyst is targeting Airasia

There is definitely going to be impact onto aviation business with the introduction of levy for travellers by government, RM20 for ASEAN and RM40 for non-ASEAN. Local travelling, there will still be no levy.

However, in reading the release here by Maybank, I think the opinion is wrong. How can Airasia and Airasia-X be impacted while MAHB is not impacted?

MAHB's revenue is dependent on passenger traffic. If ever, MAHB is more affected than Airasia's revenue is only about 30% from Malaysia, whereas MAHB's bulk of revenue is on passenger traffic.

His analysis is wrong.

Part of the article from STAR is below:

Maybank Research said the departure levy will negatively impact AirAsia and AirAsia X’s passenger load as their passengers are perceived to be price sensitive. 

Historical accounts are mixed regarding the impact of tax hikes on air travel; in Europe, it caused a multi-year traffic decline while in Hong Kong and Singapore, it merely reduced the traffic growth momentum ever so slightly. 

“The jury is not yet out whether the departure levy will kill passenger demand,” it said.

Maybank Research said the tax burden for international air travel will rise by 49% (within Asean) and 51% (outside Asean). 

MAHB is largely unaffected but it is negative for airlines. 


reyes430 said...

well if travelers are sensitive to price hike, they will still stick to airasia. the departure levy is charged upon everyone regardless of which airline one is taking.

Unknown said...

Hi Felicity, after selling all the planes an lease back, how much the EPS will be going down assuming oil price in 2019 and 2018 are the same with no revenue growth? Have you ever done such analysis? Mind to share?

felicity said...

Yes Nixiao100,
The impact is about RM130 - RM150 million. I think Airasia negotiated them well and do not commit to long term lease as well for a portion of the planes. What is unknown is what is the selling price for the new planes which is part of the deal.

Anyway, I think the aggressive expansion plan by Airasia has put Airasia to do this deal. With the sale, the balance sheet for the group is pretty good and allow the business to expand.

Looks like now TF is focusing on Japan as now China has taken a backseat. India I believe is also in the expansion plan despite what is mentioned by Maybank analyst.

Airasia is now looking at Airasia 3.0 which is regional expansion, and let's see how it goes. The current price of RM2.70 is not doing justice to its potential as well as current earnings.

If one still focus on PE, NA, the analysts are mainly looking at trees - not woods.


Unknown said...

Dear Felicity, may I know at what price Airasia is going to lease back the plane for each A320neo per month?

felicity said...

There are 182 planes, it is not the same price for one plane to another, depending on age etc usually. They do not reveal the price.

Unknown said...

Hi Felicity,

Back in 2017 when Airasia own approximately 200 A320 aircrafts. List price of an A320 is around 100 mil USD. Then the asset value should be around 20 billion USD or close to 70 billion ringgit. Assuming depreciation of 50% it will still be around 35 billion ringgit. How come the property plan and equipment at that time are valued at a mere 12 billion ringgit only?