KUCHING: The recent decision made by AirAsia Bhd (AirAsia) to defer deliveries of ten A320 aircraft from 2012 to 2015 was generally seen by analysts as a good decision, bearing long term benefits to the low cost carrier.
In its research report yesterday, ECM Libra Capital Sdn Bhd (ECM Libra) believed the decision was made to allow the group to switch from its order of the classic Airbus A320s to a newer variant, the A320 NEO (New Engine Option), which was designed to reduce fuel consumption by eight to 15 per cent.
The research firm recalled that AirAsia had agreed to a firm order of 175 Airbus A320s to be delivered between December 2005 and October 2014.
So far, the group had taken delivery of 16 A320 aircraft in 2010 and was looking at eight more this year.
“Most of these aircraft will be deployed in Thailand and Indonesia, in order to grow the associates’ fleet size in line with their increase in flight frequencies and additions of new routes,” ECM Libra said.
“The 14 aircraft expected in 2012 will be mainly for its joint ventures in the Philippines and Vietnam.” In another report, OSK Research Sdn Bhd (OSK Research) made no change to its earnings estimates as the aircraft delivery was within its assumptions.
“This included an average 12 aircraft being deployed in 2012, taking into consideration that some of the aircraft will be delivered towards the year-end before the peak travel period,” the research team reported.
“Note that we have yet to incorporate income contributions from the newly set-up Philippines
venture, pending clarity from management on its capacity guidance and route offerings.
“Also, we gather that AirAsia is still hopeful of expanding to Vietnam.
“We are positive on this move should this materialise as this will give AirAsia full coverage of the Asean space.” Analysts at Kenanga Investment Bank Bhd (Kenanga Research) did not expect AisAsia to impose a fuel surcharge at the current crude oil price (US$90 to US$100 per barrel) as the firm believed that the ancillary income would be enough to mitigate such impact to its earnings.
“Based on our numbers, we see that AirAsia will opt to impose the fuel surcharge when the crude oil price shoots up higher than US$120 per barrel.”
“We are not entirely expect Thai AirAsia (TAA) will be settled by cash upon listing as we opined that it will be used to set-off its 49 per cent stake in TAA.
“Hence, we do not expect any cash dividend for at least the next two years,” it concluded Kenanga Research.
Based on this, Kenanga Research, ECM Libra and OSK Research pegged a target price of RM3.08 per share, RM3.50 per share and RM3.78 per share respectively.
GROWING ITS FLEET: ECM Libra believes that most of these aircraft will be deployed in Thailand and Indonesia in order to grow the associates’ fleet size in line with their increase in flight frequencies and additions of new routes.
Posted on February 15, 2011, Tuesday
In its research report yesterday, ECM Libra Capital Sdn Bhd (ECM Libra) believed the decision was made to allow the group to switch from its order of the classic Airbus A320s to a newer variant, the A320 NEO (New Engine Option), which was designed to reduce fuel consumption by eight to 15 per cent.
The research firm recalled that AirAsia had agreed to a firm order of 175 Airbus A320s to be delivered between December 2005 and October 2014.
So far, the group had taken delivery of 16 A320 aircraft in 2010 and was looking at eight more this year.
“Most of these aircraft will be deployed in Thailand and Indonesia, in order to grow the associates’ fleet size in line with their increase in flight frequencies and additions of new routes,” ECM Libra said.
“The 14 aircraft expected in 2012 will be mainly for its joint ventures in the Philippines and Vietnam.” In another report, OSK Research Sdn Bhd (OSK Research) made no change to its earnings estimates as the aircraft delivery was within its assumptions.
“This included an average 12 aircraft being deployed in 2012, taking into consideration that some of the aircraft will be delivered towards the year-end before the peak travel period,” the research team reported.
“Note that we have yet to incorporate income contributions from the newly set-up Philippines
venture, pending clarity from management on its capacity guidance and route offerings.
“Also, we gather that AirAsia is still hopeful of expanding to Vietnam.
“We are positive on this move should this materialise as this will give AirAsia full coverage of the Asean space.” Analysts at Kenanga Investment Bank Bhd (Kenanga Research) did not expect AisAsia to impose a fuel surcharge at the current crude oil price (US$90 to US$100 per barrel) as the firm believed that the ancillary income would be enough to mitigate such impact to its earnings.
“Based on our numbers, we see that AirAsia will opt to impose the fuel surcharge when the crude oil price shoots up higher than US$120 per barrel.”
“We are not entirely expect Thai AirAsia (TAA) will be settled by cash upon listing as we opined that it will be used to set-off its 49 per cent stake in TAA.
“Hence, we do not expect any cash dividend for at least the next two years,” it concluded Kenanga Research.
Based on this, Kenanga Research, ECM Libra and OSK Research pegged a target price of RM3.08 per share, RM3.50 per share and RM3.78 per share respectively.
GROWING ITS FLEET: ECM Libra believes that most of these aircraft will be deployed in Thailand and Indonesia in order to grow the associates’ fleet size in line with their increase in flight frequencies and additions of new routes.
Posted on February 15, 2011, Tuesday
By Agence France-Presse, Updated: 1/12/2012
AirAsia X to cut Europe routes, India flights
The long-haul unit of Asian budget carrier AirAsia said Thursday it would suspend services to Paris and London and cut India flights in a bid to rein in costs.
The Malaysia-based airline cited global economic uncertainty, soaring taxes and higher jet fuel prices for the move, adding it would redeploy its fleet to profitable Asian and Australian routes.
The airline, a unit of AirAsia, will cease services to Mumbai and Delhi from January 31 and March 22, respectively while routes to London and Paris will end on March 30 and March 31 respectively.
The London route was launched in 2009, Mumbai and Delhi in 2010 and Paris in 2011. London and Paris were the only European routes the airline services.
AirAsia X's successful sister airline AirAsia handles regional Asian routes under four hours' flight time.
AirAsia X chief executive Azran Osman-Rani said the changes would boost the carrier's bottom line, refocusing its network "on markets where it can build a leadership position in 2012."
"We intend to concentrate capacity in our core markets of Australasia, China, Taiwan, Japan, and Korea where we have built up stable, profitable routes within an infrastructure that supports low cost services," he said.
Azran blamed high jet fuel costs and weak passenger demand from Europe as among a host of factors compromising its efforts to offer low fares to the continent.
He blamed the weakened demand on "the current economic situation together with exorbitant government taxes."
"The implementation of the emissions trading scheme and the escalating air passenger duty taxes in UK, which will rise yet again in April 2012, forced our decision to withdraw our services to Europe," he added.
Azran said the Delhi and Mumbai routes were cut because of rising "airport and handling charges" and visa restrictions hampering travel between India and Malaysia.
AirAsia X was launched in 2007. Richard Branson's Virgin Group has a 20 percent stake in the airline.
Last month flag carrier Malaysia Airlines said it would cut routes in Asia and axe flights to some global destinations such as to Rome and Johannesburg as it tries to return to profit.
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