PETALING JAYA: The second half of financial year 2023 (2H23) is expected to be a lot stronger for AirAsia X Bhd
(AAX) on seasonally higher demand and fares, coupled with sequentially lower expenses.
For the third quarter of financial year 2023 (3Q23) and 4Q23, AAX said passenger demand and fares are trending higher and maintenance and operations expenses will moderate to about RM90mil per quarter.
Maybank Investment Bank Research said with more passengers in FY23, higher average user charges and higher aircraft leasing expenses, it has cut FY23, FY24 and FY25 earnings per share by 16%, 29% and 26%, respectively.
However, AAX expects to record a one-off share of profits from 49%-owned Thai AirAsia X (TAAX) of about RM300mil in 4Q23 once the latter’s debt restructuring is completed.
If AAX had equity accounted for TAAX’s 2Q23 core net profit, it would have added a punchy RM16.5mil. It assumes no contributions from TAAX for now.
AAX swung from 1Q23 core net profit of RM42.5mil to 2Q23 core net loss of RM33.8mil, as it had to lower fares by 32% quarter-on-quarter (q-o-q) to attract passengers during the seasonally slower 2Q23.
Maintenance and overhaul expenses surged 82% q-o-q to RM115.8mil as more aircraft returned to service.
Though it concedes that 2Q23 was disappointing, there is still upside from AAX, having its PN17 classification lifted and the contributions from TAAX, Maybank IB said.
The research house has cut its target price to RM3.01 a share from RM3.58 but maintained its “buy” call on AAX.
For the first six months of 2023, the number of passengers carried amounted to 1.1 million.
As AAX returns more aircraft to service (August 2023: 13, December 2023: 17), more passengers will be carried.
With that, the research house has raised its FY23 passenger forecast from 2.3 million to 2.6 million. It maintained its FY24 and FY25 passenger forecasts for now.
To cater to increased demand, AAX had to use aircraft which were leased on the “power by the hour” model, which led to higher-than-expected aircraft leasing expenses.
Going forward, AAX expects aircraft leasing expenses to moderate to RM12mil per quarter as it replaces aircraft leased on the “power by the hour”’ model with those that are leased at fixed annual rates.
