2Q 2013 Financial Results for MAS, AirAsia and AirAsia X

[Josh T 0]

Have the Q2 results for MH been released yet?

[Mohd Suhaimi Fariz 2]

Have the Q2 results for MH been released yet?

 

Released today: http://www.bursamalaysia.com/market/listed-companies/company-announcements/1380957

 

Operating profit Q2 2013 - RM 7.9 million compared to loss of RM 101 million in Q2 2012.

Net loss Q2: RM 175 million compared to loss of RM 348 million in Q2 2012.

Edited August 20, 2013 by Mohd Suhaimi Fariz

[flee 5]

MH is slowly making progress. Hopefully, Q3 will be better as the worst Qs of their season are over and the 2H should see even stronger performance. However, with the weakening RM, it will be very hard not to suffer from forex losses.

[flee 5]

KUALA LUMPUR (Aug 20): Malaysia Airlines System Bhd (MAS) said its net

loss for the second quarter to end-June 2013 narrowed by about 50% to

RM175.9 million, from a net loss of RM349.2 million in the second quarter of

2012.

But the national carrier said it posted an operating profit of RM8 million for the

quarter, compared to an operating loss of RM102 million in the

corresponding quarter one year ago.

There was also improvement in revenue for the quarter, rising to RM3.8

billion from RM3.3 billion a year ago.

In a press statement, MAS said the improved result was attributed to the

strong growth in revenue and the focus on productivity and cost control.

“The group reported stronger year-on-year operational performance with 14%

increase in revenue and 19% increase in capacity. Overall traffic increased

29% and seat loads climbed to a 10-year record high of 80%.”

For the first six months of 2013, Malaysia Airlines recorded a 61% reduction

in operating loss of RM157 million compared to a loss of RM409 million in

the previous year corresponding period, added the statement.

Net loss for 1H 2013 ended 30 June 2013 was RM454.8 million compared to

a loss of RM521.0 million one year ago.

Commenting on the financial results, MAS group CEO Ahmad Jauhari Yahya

said: “We are pleased that we have been able to bring in an operating profit

in Q2 this year... The strong push to fill our aircraft, optimize our asset

utilization and preserve shareholder value is gaining good momentum.”

“We are making good progress to pare down our losses with the many

initiatives to drive revenue, manage costs and improve productivity."

“We remain on track with our business plan to turnaround our group and

build sustainable profit by end 2014”, added Ahmad Jauhari.

MAS’ business plan, unveiled at the end of 2011, targets profitability in three

years.

Going forward, Ahmad Jauhari sees a better second half of 2013.

“Traditionally the second half of the year is better compared to the first half.

We believe the rest of 2013 will be encouraging,” he said.

Source: The Edge

[flee 5]

Airasia X reports RM 32.3m loss due to weak RM vs US$

 

See: http://www.bursamalaysia.com/market/listed-companies/company-announcements/1381141

[flee 5]

KUALA LUMPUR, Aug 20 (Bernama) -- AirAsia X Bhd reported a lower pre-tax loss of RM58.41 million for its second quarter (Q2) ended June 30, 2013, compared with a pre-tax loss of RM92.87 million in the same period last year.

Revenue increased to RM491.13 million for the period reviewed from RM405.20 million previously.

In a filing to Bursa Malaysia, AirAsia X said revenue from passenger seat sales on scheduled flights rose by RM40.6 million, or about 15.8 per cent, to RM298.2 million for the quarter reviewed against RM257.6 million in the same period a year ago.

The increase was due primarily to a 20.4 per cent rise in total seat capacity for Q2 2013 from the same quarter last year as a result of the increase in the number of aircraft to eleven as at June 30, 2013, from nine as at June 30, 2012.

Revenue from fuel surcharges rose to RM56.6 million in Q2 2013 from RM31.13 million in Q2 2012 due to the increase in number of passengers flown from 581,840 in Q2 2012 to 697,112 in Q2 2013.

On prospects, AirAsia X said the company's positioning within the Asia-Pacific region, which is forecast to be robust and potentially surpassing North America as the world's largest aviation market, allowed the airline to benefit from this growth and continued to be a large and attractive feeder market for its long-haul routes.

Barring any unforeseen circumstances, the company expects its prospects to remain positive.

[zamim 0]

KUALA LUMPUR (Aug 20): Malaysia Airlines System Bhd (MAS) said its net

loss for the second quarter to end-June 2013 narrowed by about 50% to

RM175.9 million, from a net loss of RM349.2 million in the second quarter of

2012.

 

But the national carrier said it posted an operating profit of RM8 million for the

quarter, compared to an operating loss of RM102 million in the

corresponding quarter one year ago.

 

There was also improvement in revenue for the quarter, rising to RM3.8

billion from RM3.3 billion a year ago.

 

In a press statement, MAS said the improved result was attributed to the

strong growth in revenue and the focus on productivity and cost control.

 

“The group reported stronger year-on-year operational performance with 14%

increase in revenue and 19% increase in capacity. Overall traffic increased

29% and seat loads climbed to a 10-year record high of 80%.”

 

For the first six months of 2013, Malaysia Airlines recorded a 61% reduction

in operating loss of RM157 million compared to a loss of RM409 million in

the previous year corresponding period, added the statement.

 

Net loss for 1H 2013 ended 30 June 2013 was RM454.8 million compared to

a loss of RM521.0 million one year ago.

 

Commenting on the financial results, MAS group CEO Ahmad Jauhari Yahya

said: “We are pleased that we have been able to bring in an operating profit

in Q2 this year... The strong push to fill our aircraft, optimize our asset

utilization and preserve shareholder value is gaining good momentum.”

 

“We are making good progress to pare down our losses with the many

initiatives to drive revenue, manage costs and improve productivity."

 

“We remain on track with our business plan to turnaround our group and

build sustainable profit by end 2014”, added Ahmad Jauhari.

 

MAS’ business plan, unveiled at the end of 2011, targets profitability in three

years.

 

Going forward, Ahmad Jauhari sees a better second half of 2013.

“Traditionally the second half of the year is better compared to the first half.

We believe the rest of 2013 will be encouraging,” he said.

 

Source: The Edge

 

Normally in the report the CEO will also mention about yield but not this time. The load factor was stressed. Based on previous reports if load factor is high , yield would drop. Why did they omit it?

[Josh T 0]

Good to see that MH is heading in the right direction. I think the gradual improvement means that problems are being dealt with at a deeper level rather than being mostly superficial like in the past. It's about sustainability in the long-term. AJ needs to stay as CEO.

[Mushrif A 3]

Normally in the report the CEO will also mention about yield but not this time. The load factor was stressed. Based on previous reports if load factor is high , yield would drop. Why did they omit it?

 

Because yield probably did drop. Unless a regulatory requirement, no need to stress upon any negativity. There is a marketing spin in any public statement.

[flee 5]

From The Star:

 

KUALA LUMPUR: Malaysian Airline System Bhd's (MAS) net losses narrowed to RM175.98mil in the second quarter ended June 30, 2013 from a net loss of RM349.25mil a year ago.

The national carrier attributed the improved result to the strong growth in revenue and the focus on productivity and cost control. It registered an operating profit of RM8mil compared to an operating loss of RM102mil a year ago.

MAS said its revenue rose 14.2% to RM3.772bil from RM3.301bil. Loss per share was 1.30 sen compared with4.92 sen.

"Overall traffic increased 29% and seat loads climbed to a 10-year record high of 80%. June 2013 saw the highest ever seat load factor ever in a month, at 84%, an improvement of 7% from one year ago," MAS said.

For the first half, the national carrier's net losses also narrowed to RM454.81mil from RM521.04mil in the previous corresponding period. Revenue rose 14% to RM7.318bil from RM6.415bil.

MAS recorded a 61% reduction in operating loss of RM157mil from a loss of RM409mil.

Its group CEO Ahmad Jauhari Yahya said with the encouraging performance at the revenue generation level, "we can now focus on implementing more structural improvements, including enhancing our administration and support services".

He said the MAS would continue to improve operational effectiveness such as its "On Time Performance", turn times on aircraft, better engineering service turnaround, reducing service disruptions, precise material and inventory management, which would further contribute to the bottom-line in the future.

[flee 5]

Unions back MAS CEO Jauhari

 

PETALING JAYA: Malaysia Airlines (MAS) group chief executive officer Ahmad Jauhari Yahya has finally secured the buy-in of its powerful unions in his efforts to turn around the carrier, which reported a loss of RM175.98mil for its second quarter to end-June 2013, sources said.

The new-found support from the unions is believed to be part of the key message that Ahmad Jauhari will deliver to the media at a noon briefing today.

Sources said Ahmad Jauhari had spent most of Monday with the heads of the eight MAS unions and associations and was successful in getting their support. These bodies would show their support for the CEO at today’s briefing, the sources said.

The hastily called briefing comes amid reports of a possible sale of the national carrier to private parties, although the Government has denied there was any such plan being hatched.

Winning over the unions is seen as a big win for Ahmad Jauhari, as they had proved to be a stumbling block in some of the previous attempts at turning MAS around.

It is understood, however, the unions have laid down certain conditions for getting their support, including the aggressive hiring of new personnel into top positions at MAS. The unions have argued that such hirings were unjustifiably bloating the operating costs of MAS.

A source said of Ahmad Jauhari’s latest move with the unions: “This is the first time he has come out to seriously engage with the unions. While this could be seen as a desperate attempt of a CEO trying to save his airline, it is also good to know that he understands that staff support in turning around the airline is important.

“The employees also want to see their airline become profitable.”

The sources added that Ahmad Jauhari told the unions that MAS would be profitbale by the first quarter of 2014.

Some analysts have said that such a scenario is likely, considering that MAS’ unfavourable aircraft leases would expire by then, and the new planes it was getting should help bring down overall operating costs.

MAS told Bursa Malaysia yesterday that its losses had narrowed to RM175.98mil for the second quarter of 2013 from the net loss of RM349.25mil a year earlier.

Revenue was up at RM3.7bil from RM3.1bil, while loss per share stood at 1.32 sen versus a loss of 4.92 sen a year earlier.

For the first six months of 2013, MAS reported a net loss of RM454mil compared with a loss of RM521mil for the equivalent period in 2012. Revenue was up to RM7.3bil from RM6.4bil, while loss per share stood at 4.41 sen versus 7.34 sen previously.

MAS reported an operating profit of RM8mil for the second quarter, which is a positive development compared with a loss of RM101mil a year earlier.

MAS said its overall traffic increased 29% and seat loads climbed to a 10-year record high of 80%. June 2013 saw the highest ever seat load factor in a month, at 84%, an improvement of 7% from a year ago.

“With the encouraging performance at the revenue generation level, we can now focus on implementing more structural improvements, including enhancing our administration and support services.

“We will continue to improve operational effectiveness in other areas such as continued improvement in our on-time performance, turn times on our aircraft, better engineering service turnaround, reducing service disruptions, precise material and inventory management, and much more, which will further contribute to the bottom line in the future,” Ahmad Jauhari said in a statement yesterday.

Source: http://www.thestar.com.my/Business/Business-News/2013/08/21/Unions-back-MAS-CEO-Jauhari.aspx

AirAsia X net loss shrinks in Q2

 

PETALING JAYA (Aug 21, 2013): AirAsia X Bhd, which was listed on the Main Market of Bursa Malaysia on July 10, 2013, narrowed its net loss in its second quarter ended June 30, 2013 (Q2) to RM32.3 million from RM77.64 million a year ago, on higher revenue.

Its operating loss for Q2 also shrank, falling to RM11.6 million from RM38 million a year ago.

Revenue for Q2 grew 21% to RM491.14 million from RM405.2 million as its revenue per available seat kilometre (RASK) improved by 9.9% to 11.60 sen from 10.55 sen a year ago as a result of the route network consolidation exercise undertaken where AirAsia X had stopped a number of unprofitable routes.

The low cost, long-haul airline had discontinued its flights to Europe and India during the first half of last year. The number of routes dropped from 17 to 14, and AirAsia X focused its networks on core markets in North Asia and Australia, including increasing average weekly frequencies per route by 14%.

It also saw revenue increases in its fuel surcharge, ancillary revenue such as AirAsia Insure, and freight and cargo segments for Q2.

However, Q2 revenue growth was partially offset by higher operating expenses relating to aircraft fuel cost which increased 5.1% to RM231.1 million from RM220 million a year ago, staff costs which rose 32.9% to RM57.3 million from RM43.1 million and other operating expenses which jumped 50.3% to RM44.6 million from RM29.7 million due primarily to an increase in marketing and promotional expenditure.

As at June 30, 2013, AirAsia X's cash position stood at RM39.88 million, while total borrowings amounted to RM1.81 billion.

In a statement yesterday, AirAsia X said its fleet size increased to 11 for Q2 from nine a year ago, with two new A330-300 deliveries.

Passengers carried in Q2 increased by 19.8% year-on-year to 697.11 million from 581.84 million, while average passenger fare increased by 2.5% to RM508.84 from RM496.48 due to the increasing maturity of its route network. Load factor was at 81.8% from 81.9%.

But the airline still managed to turn in a net profit of RM17.89 million in the six months ended June 30, 2013 (H1), compared with a net loss of RM29.1 million a year ago.

Its operating result also improved to a profit of RM46 million for H1 from an operating loss of RM4.6 million a year ago.

Revenue for H1 rose 9% to RM1.03 billion from RM941.91 million, primarily driven by an increase in passenger volume and seat capacity, as well as higher contribution from its ancillary revenue. RASK also improved by 12.4% to 12.65 sen from 11.26 sen.

In the first half of this year, the airline recognised a net tax allowance of RM41.5 million compared with RM6.9 million a year ago, due primarily to income tax exemptions recognised for certain qualifying expenditures as provided by the Finance Ministry.

AirAsia X said it is due to receive another two planes before the end of the year, bringing its total fleet size to 18 at year-end comprising 16 A330-300s and two A340-300s.

AirAsia X CEO Azran Osman-Rani said it hopes to add more flight frequencies and new destinations in its key markets of Taiwan, China, Japan, South Korea, Australia and Nepal.

Source: http://www.thesundaily.my/news/802276

[Cheng Long 0]

Happy to see MAS moving in the right direction.. From customer's point of view, hope for more products & services improvements, and more destination & frequency..

[Mohd Suhaimi Fariz 2]

It is understood, however, the unions have laid down certain conditions for getting their support, including the aggressive hiring of new personnel into top positions at MAS. The unions have argued that such hirings were unjustifiably bloating the operating costs of MAS.

 

What does this mean - are they pushing out the expats & replacing them with the OLD FOGIES & deadwoods?

 

I sure hope not!

[flee 5]

MAS’ bottomline will be severely affected in the coming quarter, says Alliance Research

KUALA LUMPUR (Aug 21): MALAYSIAN AIRLINE SYSTEM BHD’s (MAS) will be severely affected in the coming quarter, according to Alliance Research.

In a note Wednesday, Alliance Research analyst Tan Kee Hoong said MAS 1HFY13 core net loss of RM549.2 million continues to disappoint both Alliance Research’s and consensus expectation.

Tan said despite substantial improvement in load factor, MAS financial performance was dragged down by lower yield arising from the management’s “load active yield passive” strategy.

“We expect yield to remain under pressure as management remains adamant in following through with this strategy, with the aim of achieving a 85% load factor.

“With yield under pressure and an appreciating US dollar (USD), we expect MAS business turnaround to take longer than expected and to continue to suffer losses. As such, we maintain our Sell rating for MAS with a revised target price of 23 sen,” said Tan.

Tan said the carrier has a natural net short exposure on USD as a significantly high proportion of operating expenditure was USD denominated, whilst only 5% of its revenue is USD-denominated.

In addition, it has RM3.9 billion USD-denominated borrowings, said Tan. “Despite the significant exposure, management indicate that they will leave the USD exposure unhedged even as USD continues to ppreciate

(+7.1% YTD).

“As such, we believe MAS bottomline will be severely affected in the coming quarter,” said Tan.

At 11.05am, MAS was the most actively traded counter with 66.9 million shares done. The stock gained half a sen to 34.5 sen.

Source: The Edge

[flee 5]

Forex risks seen for AirAsia X

 

KUALA LUMPUR (August 21): AirAsia X Bhd may have to contend with costlier fuel in the third quarter ending September 30, 2013 (3QFY13) as the US dollar (USD)strengthens against the ringgit, analysts said.

As jet fuel is priced in USD, analysts said the long-haul budget airline may have to pay more for fuel in ringgit terms.

In a note today, Alliance Research Sdn Bhd analyst Tan Kee Hoong said while AirAsia X's fuel cost declined 5.3% in 2QFY13 from a year earlier, the research firm "believes this trend will reverse in the coming quarter as fuel cost in ringgit terms should rise in tandem with the strengthening USD.

"We are cautious on AirAsia X’s exposure to the USD (+7.1% YTD). As we have highlighted previously, a 1% appreciation of USD vis-à-vis ringgit will reduce AirAsia X's earnings by approximately 8% to 13.7% for FY13-FY15".

Tan also cautioned investors on the impact of a weakening Australian dollar (AUD) versus the ringgit on AirAsia X.

"In addition, AUD is also depreciating against the ringgit. Passenger yield in ringgit terms will be affected if AUD continues to weaken going forward. This will adversely impact AirAsia X, as the Australia market is its most profitable segment," Tan said.

Against the USD over the last six months, the ringgit has weakened to RM3.294 today from the RM2.957 seen on May 7, Bloomberg data show.

Compared to the AUD, the ringgit has strengthened to RM2.9756 from RM3.2578 seen on March 22.

Despite being optimistic of AirAsia X's long-term potential, Alliance recommended that investors stay on the sideline. This is in view of the

strengthening USD and the delay in the opening of KLIA2, both of which, may hamper AirAsia X's near-term growth prospects.

Instead, Tan prefers AIRASIA BHD [] for exposure to the aviation sector. This is given its cheaper valuation vis-à-vis AirAsia X, lower implementation risks and lower sensitivity to USD.

Alliance is maintaining its "neutral" call for AirAsia X with an unchanged target price (TP) of RM1.33.

Meanwhile, RHB Research has maintained its "buy" call for AirAsia X shares with a TP of RM1.65.

In a note issued following the announcement of AirAsia X's latest financials, RHB analysts Jerry Lee and Ahmad Maghfur Usman said the airline has strong growth potential arising from its aggressive business expansion backed by AirAsia.

“AirAsia X’s 1HFY13 numbers were well within our estimates, albeit below consensus,” the analysts said.

The airline reported a 2QFY13 core net loss of RM28.4 million which is a typical quarterly weakness for all airlines while cumulative 1HFY13 net profit stood at RM15.8 million, the analysts said.

Source: The Edge

[flee 5]

MAS goes for high load, low yield to fly back into the black

 

http://www.themalaysianinsider.com/business/article/mas-goes-for-high-load-low-yield-to-fly-back-into-the-black

[CH Teo 0]

Last but no least, some report on Air Asia performance is here:

 

http://www.thestar.com.my/Business/Business-News/2013/08/21/AirAsia-Q2-operating-profit-up.aspx

[flee 5]

Bursa Filing for Airasia Berhad:

http://announcements.bursamalaysia.com/EDMS/edmsweb.nsf/all/F023F740E624408448257BCE0038BED7/$File/AirAsia%20Bursa%20Announcement%20-%20Q2%202013.pdf

[nrazmoor 0]

Malaysia Airlines reports operating profit in 2Q2013, expects better second half

Malaysia Airlines revenue up 12% - financial highlights (according to Malaysian Financial Reporting Standards):

• Three months ended 30-Jun-2013:
• • Operating revenue: MYR3594 million (USD1171 million), +11.7% year-on-year;
  • Operating costs: MYR3765 million (USD1226 million), +10.6%;
  • Operating profit: MYR7.9 million (USD2.6 million), compared to a loss of MYR101.9 million in p-c-p;
  • Net profit (loss): (MYR175.2 million) (USD57.1 million), compared to a loss of MYR348.7 million (USD113.6 million) in p-c-p;
  • Passenger numbers: 4.2 million, +29%;
  • Passenger load factor: 80.4%, +6.6 ppts;
  • Passenger yield: -14%;

http://centreforaviation.com/news/malaysia-airlines-reports-operating-profit-in-2q2013-expects-better-second-half-256752

[Josh T 0]

Now that passenger numbers are on the way up, they need to focus on improving yields. SQ and CX are very good at maximising yields.

[JuliusWong 0]

MAS load factor went up, but yield went down.....Filled aircraft but not enough/ just enough to cover cost. Kinda risky don't you guys think? Overall MAS has pulled a stellar return to stability. Well, the Red camp profits are under pressure now.

[flee 5]

From The Star:

 

PETALING JAYA: Malaysia Airlines (MAS) is on track to become profitable by end-2014, as its turnaround plan gains traction and receives the backing of its unions, according to group chief executive officer (CEO) Ahmad Jauhari Yahya.

“It is gaining momentum and going in the right direction. We are generating positive cashflow now. We want to build sustainable profits, hopefully, by the end of 2014. There is still a lot to do,” he said at an update briefing on its business plan introduced in late-2011.

He said it now had a cash balance of RM5.5bil, following a series of corporate exercises and net gearing ratio being reduced to 1.3 times.

Ahmad Jauhari also disclosed that the carrier’s unions were “fully behind its turnaround plan”, confirming a StarBiz report on Wednesday. StarBiz had reported that Ahmad Jauhari had finally secured the buy-in of its powerful unions in his efforts to turn around the carrier.

MAS has eight workers’ and executive unions. At present, it has a workforce of 20,000. Seven union leaders, including from Sabah and Sarawak, were present at the briefing yesterday, with the exception of the Malaysia Airlines Employees Union (Maseu).

“We’re in discussion with them (Maseu). We believe in solving problems internally. Like in any company, there are differences and we’re in communication with them,” Ahmad Jauhari revealed.

In the second quarter ended June 30, 2013, MAS registered an operating profit of RM8mil from an operating loss of RM102mil a year ago.

“Overall, we are pleased with the second quarter because the first half of the year is usually challenging, and traditionally, we perform better in the second half of the year,” he said.

Recall that at end-2011, Ahmad Jauhari had said MAS was bleeding cash to the tune of some RM5mil per day and that its then-reserves would last no longer than four months. “We have to immediately put in place a plan to reset this airline,” he had said.

The business plan, which is now at its half-way point, has shown some positive results. Nevertheless, there is criticism that its yields are decreasing.

“What is more important is achieving sustainable margins. As long as we manage to build revenue more than costs, making money is what it’s all about,” noted Ahmad Jauhari.

He said MAS’ yields cannot be compared with its regional peers like Singapore Airlines, as the latter had more front-end loads.

Ahmad Jauhari said MAS’ overall traffic had increased 30%, with seat loads climbing to a record high of 80%. June 2013 saw the highest seat load factor in a month in 10 years at 84.3%, he said.

On its fleet-renewal programme, Ahmad Jauhari said MAS would announce its plan by year-end. The airline currently had 146 aircraft, of which 82 fly for MAS, 15 for MASWings and 20 for Firefly. He said the group would replace its B777s, which were the oldest in its fleet.

Asked on his expiring contract, Ahmad Jauhari – who was appointed CEO on Sept 19, 2011 - said it was private and confidential.

“I would be around to see the airline being profitable,” he said when asked if he would still be helming MAS into profitability in 2014.

Meanwhile, CIMB Research has resumed its coverage on MAS after two years, with an “underperform” rating and a target price of 17 sen. The research house disclosed that during a conference call, MAS had reiterated that its goal was no longer yield maximising, as was the case under the previous CEOs, but revenue maximisation.

“This means that MAS should pursue growth even if each incremental unit of capacity attracts a lower and lower yield, as long as incremental dollar revenues exceed the associated variable costs.

“The goal is to earn as much operating profits as possible in order to help pay for fixed costs,” CIMB Research said.

It noted that flying hours per plane had risen from 10 hours per day to 11.7 hours this year in a move to sweat its assets harder.

“After aggressively scaling back on its long-haul capacity last year, MAS’ strategic objective in 2013 has been to increase the utilisation of its fleet and grow short-to-medium-haul capacity, even when it comes at the expense of yields.”

CIMB Research expects MAS to continue registering losses for at least the next three years, with losses potentially widening even further in 2014 on the back of a weaker ringgit.

[KK Lee 5]

Now that passenger numbers are on the way up, they need to focus on improving yields. SQ and CX are very good at maximising yields.

 

MH aircraft type/capacity couldn't match demand most of the time, how to maximize yield?

[flee 5]

Air Asia falls 7% after 2Q results; FX risks seen

 

KUALA LUMPUR (Aug 22): Shares of AirAsia Bhd fell in morning trades after the high profile company released its second quarter results.

Some analysts have alerted currency risk in view of the weakening ringgit vis a vis the US dollar.

Yesterday, the low-cost airline reported core earnings of RM109 million for its second quarter ended June 2013, which brought first half core net profit to RM264 million – largely within the estimates of analysts.

At noon, the stock fell 21 sen or 7% to RM2.77 on trades of 15.6 million shares. It was the 10th most active counter against a depressed market.

AmResearch, in a note today, said the strength in dollar is “a developing risk” for Air Asia as the bulk of its cost (from buying fuel) is denominated in US dollar.

“We estimate that every 1% change in our US dollar assumption will impact FY13-14F earnings by 2%-2.5%... Increasing earnings risk from a weak currency (ringgit), a deteriorating yield environment and rising cost, entice us to maintain our HOLD call.”

“We reaffirm our HOLD rating on Air Asia at unchanged fair value of RM2.80/share following the release of its 2Q13 results last night.”

The research house noted that despite a 5% YoY drop in spot jet fuel price, AA’s core earnings (excluding forex losses, mark-to-market gains and deferred tax) contracted by 22% YoY and is down 13% YTD. Operating parameters seem to have deteriorated with yields falling 12% YTD and loads falling 1.4% YTD.

But Kenanga Research, which like other research houses expect Air Asia to see stronger earnings in 2H13 due to more public holidays traveling and positive contributions from its associates, has maintained “outperform” rating on the airline.

“We maintain our target price of RM3.51 based on an unchanged 11x FY14 PER,” said the research house.

Source: The Edge

[flee 5]

MAS Analysts Presentation:

 

http://ir.chartnexus.com/mas/doc/presentation/Malaysia%20Airlines%20Q2%202013%20(Analysts).pdf

 

Media Release:

 

http://ir.chartnexus.com/mas/doc/media/Malaysia%20Airlines%20registers%20Operating%20Profit%20for%20Q2%202013.pdf