Malaysian Airline System -
Load Factor Hits Fresh High
Malaysian Airline System (MAS)’s passenger load factor hit a new high of 84.3% in June. Its 2QFY13 overall load factor improved by 3.9% q-o-q and 4.9% y-o-y. This seems to indicate that MAS may be able to mitigate its losses in 2QFY13 amid yield pressure. Maintain Trading BUY on MAS, with our MYR0.43 FV unchanged.
- Operating stats continue to improve. MAS’ 2QFY13 operating stats continued to show positive growth. Total revenue passenger kilometers (RPK) climbed 13.3% q-o-q and 29.3% y-o-y, while total available seat kilometers (ASK) grew 7.8% q-o-q and 18.7% y-o-y. It is worth noting that the growth of domestic passenger RPK in 2QFY13 (+22.1% q-o-q, +23.3% y-o-y) may indicate that the company’s fleet modernization is drawing more passengers. Meanwhile, its participation in the oneworld alliance also helped lift MAS’ international passenger RPK by 12.3% q-o-q and 30.1% y-o-y. In June, the national carrier’s passenger load factor hit a new high of 84.3% (up 6.9% y-o-y), breaking its earlier record of 81.4% in Dec 2012.
- Yields remain under pressure. We believe that the yields of full-service carriers (FSC) including MAS are still under pressure. Nonetheless, given the strong improvement in its operating stats, we think MAS may be able to mitigate its losses in 2QFY13, for which the results will be released next Wednesday (31 July). That said, we are hopeful that the improved frequency/passenger volume would help mitigate the company’s costs associated with slashing airfares.
- Maintain Trading BUY, MYR0.43 FV. We keep our Trading BUY recommendation on MAS, with our MYR0.43 FV based on 9x adjusted FY14F EV/EBITDAR. As highlighted previously, we advise caution on MAS’ potential losses in 2QFY13 – which is a seasonally weak quarter in the year – although we believe that the losses should narrow in the current quarter.
Publish date: 25/07/13