KUCHING: Low cost, long-haul carrier AirAsia X Bhd (AirAsia X) is poised to see a robust second half (2H) of the year, as the third and fourth quarter (3Q and 4Q) are expected be the strongest earnings quarter and the airline have been viewed as right on track with its expansion plans.
Analyst Jerry Lee of RHB Research Institute Sdn Bhd (RHB Research) in a note, said AirAsia X’s 3Q13 operating statistics grew significantly in tandem with the carrier’s aggressive fleet expansion plans.
The airline’s revenue passenger kilometres (RPK) surged by 30.3 per cent year-on-year (y-o-y) and 20.8 per cent quarter-on-quarter (q-o-q), while available seat kilometres (ASK) improved by 31.9 per cent y-o-y and 20.2 per cent q-o-q.
“These were mainly attributed to an expansion of its fleet size from 12 to 14 aircrafts q-o-q, and its high load factor of 80 per cent despite a surge in ASK,” Lee noted.
Overall, AirAsia X’s expansion plans have been envisaged as well on track. Thai AirAsia X (TAAX) obtained the approval from the Department of Civil Aviation of Thailand for the air operator’s license (AOL) on October 8, 2013 while in Australia, AirAsia X has increased its flight frequencies to various destinations in the region. Additionally, it has also opened it opened new routes to fully utilise its aircraft.
“Although we reckon that its airfares may face downward pressure due to promotional airfares for new routes, we believe the impact should be mitigated by its high load factor,” Lee commented.
The analyst cautioned, “Major risks to our assumptions are promotional airfares are more aggressive than anticipated, operating expenses are higher than our expectations, and AirAsia X may not be able to maintain its high load factor.”
Nevertheless, RHB Research remained confident that AirAsia X will able to meet its FY13 full-year forecast as 3Q and 4Q are seasonally robust quarters for the aviation industry.
Furthermore, it opined, “We believe that AirAsia X is poised for exponential growth as all its expansion plans (which are fleet expansion and the opening of a new hub) are well on track.”
As such, the research firm maintained a ‘buy’ call on the airline and pegged its fair value at RM1.65 per share, derived from an unchanged 8.5-fold adjusted FY14 forecast enterprise value per earnings before interest, tax, depreciation, armotisation and rent cost.