AirAsia share price plunges on spectre of Indonesian ops shutdown

KUALA LUMPUR (July 8): AirAsia Bhd (Financial Dashboard)’s shares fell 11 sen or almost 8% to RM1.38 in early trade today on the back of concerns that Indonesia AirAsia [IAA] may be shut down by the end of the month due to new capital requirements.

IAA will require an injection of at least 3,035 billion rupiah to reverse its negative equity position, of for which AirAsia will have to fork out RM419 million due to its 49% shareholding.

IAA has been making losses of up to IDR 531 million in the first quarter of 2015 (1Q15).

Since AirAsia will only recognise its share of profits once future cumulative profits sufficiently offset negative reserves, its current interest in IAA has been reduced to zero.

“This means that if IAA were to cease operations, the P&L impact on AirAsia will be ‘positive’ as AirAsia will not have to recognise its share of IAA’s loss,” Maybank Investment Bank Research analyst Mohshin Aziz said in a note to clients today.

However the long-term business strategy and operational impact would be negative for AirAsia, he said.

“AirAsia has MYR1,600m of cash as at end of 1Q15 and therefore can make this payment.

“However, we doubt the other local shareholders have the ability to pay for the remaining IDR1,548 billion within the next three weeks,” he added.

Mohsin said that the ruling, especially the short three-week time frame for compliance, came as a surprise, although the Ministry was expected to provide concessions for the airlines.

He kept a ‘Buy’ call on AirAsia with a target price of RM2.45 pending the outcome of IAA’s meeting with the MOT.

At 9.48, AirAsia was the second most actively traded stock across the bourse with 26.6  million shares done.

Source: TheEdge

AirAsia earnings still intact

PETALING JAYA: Industry analysts generally concur that AirAsia Bhd’s earnings prospect remains intact despite its decision to abolish fuel surcharges across all airlines in the group.

The total removal of surcharge effective yesterday also includes low-cost long-haul affiliates AirAsia X, Thai AirAsia X and Indonesia AirAsia X, in line with declining global oil prices.

Largely, the analysts had already factored in the removal of surcharges to some extent in their previous estimates and believed that this would boost sales for the budget airline group.

AirAsia domestic flight fare could now go to as low as RM19 one way all-in, and international flights from RM49 one way all-in, said AirAsia in a statement.

MIDF Research analyst Tay Yow Ken said there wouldn’t be any changes in the company’s estimates published in a report last Friday as he had expected the fuel surcharge abolishment to be implemented soon.

“We have already factored it in our estimates,” he told StarBiz yesterday.

In the report, the research house said the removal of fuel surcharge would be positive for AirAsia.

“Even with the lower fuel surcharge, management expects yields to remain resilient.

“This is mainly due to the higher passenger volume expected in anticipation of Malaysia Airlines’ (MAS) planned capacity reduction,” it said.

MIDF Research explained that when AirAsia last removed its fuel surcharge in November 2008, Brent crude prices averaged at US$54.7 per barrel for that month.

“Despite that, yield was sustained at 14.1 sen before rising to 16.2 sen in 2010 due to higher passenger volume and the introduction of new routes. Furthermore, AirAsia, which adopts a lean operating cost structure, would have an edge over its rivals.

“We also believe that the fuel surcharge removal would generate positive publicity for AirAsia in the wake of the QZ8501 crash,” it said.

According to MIDF Research, the management guided that for every dollar of change in jet fuel price, earnings would be impacted by RM15mil.

Crude oil prices have plunged by more than 50% over the last seven months to around US$45 per barrel currently due to oversupply of the commodity in the international market amid weak demand. About 50% of AirAsia’s jet fuel requirements for 2015 are hedged at US$88 per barrel while it is presently hovering at US$60 per barrel.

On whether MAS would follow suit, Tay said MAS had, to some extent, lowered its fuel surcharges, adding it was hard to predict the immediate action now that the airline had been taken private.

MAS’ community airline, Firefly, had announced special fares with the removal of fuel surcharges under a Chinese New Year promotion deal recently.

MIDF has maintained its “buy” call on AirAsia with a target price of RM3.70 pegged to financial year 2015 price-to-earnings ratio of 10 times.

Source: http://www.thestar.com.my/Business/Business-News/2015/01/27/AirAsia-earnings-still-intact-Analysts-upbeat-despite-carriers-move-to-abolish-fuel-surcharges/?style=biz

AIRASIA Q2'14

AirAsia is world's best LCC

Source: The Edge Financial Daily

Rakuten-AirAsia budget airline to take off next year

TOKYO: AirAsia Bhd said on Tuesday it would set up a low-cost airline with Japan's biggest online retailer Rakuten Inc and other firms, marking the budget carrier's second attempt to tap one of Asia's lucrative air travel markets.

The new carrier, AirAsia Japan, will start flying in about a year with a fleet of five aircraft, the carrier's CEO Yoshinori Odagiri told reporters.

The airline will fly to both domestic and international destinations, but has yet to decide which airport it will be based out of, he added.

Rakuten will own an 18% stake in the new airline, while Noevir Holdings Co Ltd, a diversified conglomerate that owns an aircraft leasing business, will own 9%. AirAsia is also partnering with Octave Japan Infrastructure Fund and sports firm Alpen Co Ltd.

The total cost of the venture was not immediately clear.

For AirAsia, the venture is another attempt to expand to Japan after it pulled out of a partnership with the country's biggest carrier ANA Holdings Inc last year.

That venture, launched in 2011, failed to woo travellers and ANA blamed poor marketing and a user-unfriendly website.

The airline has since been rebranded into Vanilla Air, and is now wholly owned by ANA and based out of Tokyo's Narita airport.

"This is AirAsia part two, and I hope there is no part three," Tony Fernandes, the owner and CEO of AirAsia, told reporters in Tokyo.

Rakuten, controlled by Japan's fourth-richest man Hiroshi Mikitani, aims to boost its online travel site through the partnership and create new business to fend off increased competition from the likes of Amazon.com Inc.

Rakuten's travel site is already one of the largest in Japan. Two decades ago, travel company H.I.S pioneered the trend, setting up Skymark Airlines, which is now Japan's leading discount carrier.

Mikitani said he saw great potential in the budget travel market in Japan.

"In America, discount carriers account for 30% of travel. In South-East Asia, it's 50%. In Japan, it's only 3%," he said. – Reuters

Source: theStar

AirAsia making waves in Indonesia, India

KUALA LUMPUR, June 12:
While all attention is focused on AirAsia India’s maiden flight today, the budget carrier group’s unit in Indonesia has again delayed its plans for an initial public offer (IPO) and may be in the running to take over the TigerAir outfit there.
Indonesia’s Transportation Ministry’s director for air transportation Djoko Muratmodjo has reportedly revealed that AirAsia and Garuda’s low-cost subsidiary Citilink are keen to take control of TigerAir Mandala.
The Jakarta Globe quoted Djoko as saying both carriers had submitted proposals to TigerAir Mandala.
The ailing Indonesian unit is 33%-owned by Singapore-based budget airline Tiger Airways while Indonesian private equity firm Saratoga Capital has a 51.3% stake.
“Both the Singaporeans and the Indonesians are eager to cut their losses and dispose of their respective shareholdings before July 1,” the paper reported.
“TigerAir Mandala suspended a big part of its routes in February in an effort to curb mounting costs.”
It isn’t clear if TigerAir Mandala is also a factor why AirAsia Indonesia has delayed its IPO yet again, though group chief executive officer Tan Sri Tony Fernandes was reported by The Jakarta Post as saying it is due to the upcoming presidential election affecting the stock market sentiment.
“We won’t make money at the moment. The market has to be stabilised first. We’ll see how the market goes after the election,” Fernandes had reportedly said.
The paper said AirAsia Indonesia had initially expected to launch an IPO in the third quarter of 2013 and had appointed an underwriter.
Plans by AirAsia Indonesia to open new international routes from the archipelago have also been shelved “due to rising costs in the airline industry resulting from the weakening of the rupiah against the US dollar”.
“AirAsia has tried to develop many international routes but the airport tax keeps going up so we have to cancel routes,” Fernandes had said.
“Indonesian aviation could be massive but costs are going up too fast and its not as affordable as it was.”
To rationalise costs, AirAsia Indonesia has stopped services from Makassar, South Sulawesi, to Surabaya, East Java and to Denpasar, Bali from June 1.
The budget carrier now operates 30 airplanes – covering five main hubs in Bali; Bandung, West Java; Jakarta; Medan, North Sumatra; and Surabaya.
But in India, Fernandes was upbeat as the Indian venture’s maiden flight took off from Bangalore to Goa today and prompting other fiercely competitive budget carriers to match its low fares.
“It’s a proud day for me as my dad was from Goa. He was an amazing man. Down to earth, selfless doctor. He will be proud looking form above,” Fernandes had tweeted.
Based in Chennai, the 49:30:21 joint venture between AirAsia, Tata Sons and Telestra Tradeplace is launching its second route next week linking Bangalore-Chennai.
AirAsia India is eyeing a fleet size of between six and eight by end of 2014, said CEO Mittu Chandilya.

Source: therakyatpost

AirAsia Q1'14

或不延長馬航額外資助 AIR ASIA將成為主要受益者

　（吉隆坡12日訊）隨著政府宣布，不再延長對馬航（MAS，3786，主要板貿易）的額外資助，馬航料將趕緊採取措施以保持現金盈余，亞洲航空（AIRASIA，5099，主要板貿易）將成為主要受益者。

　根據《星報》報導，馬航重組計劃可能會在本月底掀開面紗，並可能會在7月落實。當中可能會涉及公司破產后對債權人採取保護措施的法庭命令，讓馬航與供應商和員工重新商談條約，又或者是減少僱員人數。

　聯昌證券研究指出，如上述般開放的“心臟手術”是馬航相當需要的。在此之前，重組計劃已提出多次，最近一次是在2011年8月。

有望維持穩定盈利

　“如果這是一項新重組政策，馬航將可以自保，我們的預測和目標價等都會提高。但是，前進的道路充滿著風險，在過去14年，馬航讓外界太失望，我們不輕易下定論。我們維持虧損預測，維持減持評級不變，目標價為14仙。”

　亞航在過去3年內，股價下跌了近35%，目前股價低于清算價值（liquidation value）。公司成本架構相當有效，在競爭激烈的本地市場有望維持穩定盈利，該行給予“增持”評級，目標價2.88令吉。

　馬航削減開支，亞航長程（AAX，5238，主要板貿易）雖然也會成為主要受益者，但該行維持“持有”評級，目標價85仙。

　今日閉市時，馬航報平盤21仙，成交量達1386萬9400股；亞航起5仙至2.26令吉，成交量達2126萬8100股及亞航長程起0.5仙至75.5仙，成交量達50萬4500股。

Source: ChinaPress

AirAsia wins Indian permit to start airline

NEW DELHI: AirAsia's low-cost Indian joint venture airline has won an operating permit, paving the way for the carrier to launch services and increasing competition in a market where most airlines are losing money.

The Directorate General of Civil Aviation (DGCA) issued the air operator permit, the last approval required to launch an airline, to AirAsia India on Wednesday, a senior government official said. AirAsia India Chief Executive Mittu Chandilya confirmed the company had received the permit.

"I can't wait for us to start flying," he told television channels. "We are working on being the lowest cost (airline)."

It was not immediately known when AirAsia India, a three-way venture between the Malaysia-based low-cost airline, India's Tata Group and investment firm Telestra Tradeplace, would start services.

Earlier plans to start the airline in the last quarter of 2013 were delayed, pending the air operator permit.

An airlines industry body, and a politician of India's main opposition Bharatiya Janata party, which is the favourite to form a government after a general election ending this month, had opposed AirAsia's entry into the Indian market.

AirAsia India has said it will offer one of the lowest fares to lure travellers and will rapidly expand its fleet by adding 10 Airbus A320 planes a year. But the entry of a new competitor is not good news for an industry where all carriers except market leader IndiGo are losing money.

High fuel prices, taxes and fees have squeezed existing Indian airlines. The sector lost a combined $1.3 billion in the financial year to March, according to estimates by aviation consultancy Centre for Asia Pacific Aviation (CAPA).

"Domestic airlines continue to be very precariously placed and AirAsia's entry will further challenge the existing airlines," said Kapil Kaul, South Asia CEO at CAPA.

The arrival of new carriers like AirAsia may lead to a price war and will further hurt passenger yields, Kaul said.

Singapore Airlines' joint venture with the Tata Group to start a full-service airline in India is awaiting an operating permit.

India has five operational national carriers and one regional airline. Competition had eased after the grounding of cash-and-debt-strapped Kingfisher Airlines in October 2012.

In 2012, the Indian government relaxed rules allowing foreign carriers to buy up to 49 percent in an Indian airline. Abu Dhabi's Etihad last year bought 24 percent of Jet Airways , the No.2 carrier by domestic market share. - Reuters

Source: TheStar

AirAsia First and final dividend for FYE2013

Stronger US dollar a key risk for AirAsia

Source: The Edge Financial Daily

KLIA2 is now certified fit for use

PETALING JAYA: KLIA2 has finally been given the long awaited Certificate of Completion and Compliance (CCC) on Friday.

The certificate was handed over by the main contractors, the UEM-Bina Puri consortium to Malaysia Airports Holdings Bhd, in a ceremony on Friday.

There are three parts to the issuance of a CCC; it needs to comply with the Fire and Rescue Department, Sepang Municipal Council and Indah Water Konsortium Sdn Bhd (IWK) specifications and KLIA2 has complied with all the conditions and is now certified safe for use.

The Operational Readiness and Airport Transfer (Orat) procedures has been under way for over a month now and the new low cost air terminal will open for operations on May 2.

Orat is a comprehensive methodology and holistic approach employed to ensure the operational readiness of a new airport or airport infrastructure project.

Five airlines – Malindo Air, Cebu Pacific Air, Tiger Airways Singapore, Lion Air and Indonesia’s Mandala Airlines will begin operations on May 2 and AirAsia will join in before May 9. On May 9, the existing LCCT will cease operations.

Source: TheStar

AirAsia to implement AMI service

PETALING JAYA: AirAsia Bhd has signed an agreement to implement the Airbus Managed Inventory (AMI) service for its A320 and A330 fleets at its bases in Kuala Lumpur and Bangkok.

In a statement released by Airbus, the AMI service ensures the automatic and continuous replenishment of high-usage and non-repairable parts at the customer's facilities.

AirAsia is confident that the AMI service will support the company and its associated company AirAsia X in paving the way for low-cost aviation through innovative solutions and efficient processes.

"With AMI, we will minimise our spares investment costs while maximising delivery of parts when needed," said Anaz Ahmad Tajuddin, group head of engineering of AirAsia.

AirAsia is the fourth customer in the region to choose the AMI automated inventory management solution, which works to reduce inventory holding costs.

This is done by capturing material consumption information in real-time and automatically triggering replenishment orders within the agreed inventory levels, the service guarantees high on-shelf part availability while decreasing the overall inventory stock level.

Source

AirAsia Group says will move into KLIA2 by May 9

KUALA LUMPUR: AirAsia Group says it will move to KLIA2 by May 9 although there are still a few outstanding commercial issues.

“We will be notifying all of our guests accordingly to ensure a smooth transition from the current LCC Terminal to KLIA2,” according to the joint statement issued by AirAsia executive chairman Datuk Kamarudin Meranun and AirAsia X Bhd chairman Tan Sri Rafidah Aziz on Tuesday.

They said the group expressed its appreciation to Prime Minister Datuk Seri Najib Razak and the government for the decision to enlist the expertise of the International Civil Aviation Organization (ICAO) to further evaluate KLIA2 and to determine the long term safety of the new airport.

“This decision reflects the priority that the government is giving to the issue of safety, and assuring the public that KLIA2 is safe. We are very grateful for this priority that the government has placed on this issue.

“Although there are still a few outstanding commercial issues, this should not hold back our operations at KLIA2 as planned. As such, AirAsia Group will move into KLIA2 by May 9, 2014,” they said in the statement.

Kamarudin and Rafidah said AirAsia and AirAsia X were looking forward to operate from KLIA2, as well as to the next stage of our growth and development through KLIA2.

They said ongoing discussions with relevant authorities were in progress.

“However, should the negotiations not be completed or concluded expeditiously, we hope the Government will be able to provide necessary mediation, in order to enable MAHB (Malaysia Airports Holdings Bhd) to get its dues as the airport operator; and at the same time, enabling the AirAsia Group to efficiently operate based on our proven low-cost carrier business model through reasonable charges and levies,” they said in the statement.

Source: TheStar

Other LCCs may take advantage of AirAsia's absence from klia2

Source: The Edge Financial Daily

AirAsia sings brand licence agreement woth Thai AirAsia

Source: The Edge Financial Daily

AirAsia CEO appeals for PM's intervention in klia2 issue

KUALA LUMPUR: AirAsia Bhd is appealing for Datuk Seri Najib Tun Razak to intervene in resolving the klia2 issue as it wants to be given a voice since it will be the main user of the terminal.

The low-cost carrier's CEO Aireen Omar said on Wednesday the Prime Minister's intervention was crucial in resolving this national issue.

She pointed out the airline was ready and committed to make the best out of klia2 "although it is not the design we wanted."

The klia2, she added, was longer a fully low-cost carrier terminal as initially promised by Malaysia Airports Holding Bhd (MAHB).

Aireen was clarifying news reports over AirAsia's decision to remain in the current low-cost carrier terminal after May 9, 2014.

She said while AirAsia was more than ready to move to klia2 but the shift must be done under the right circumstances.

"We will be the anchor tenant at the new airport, accounting for more than 80% of klia2's traffic, hence the critical need for klia2 to be fully functional and operationally viable in the long term," she said.

She said the articles could have given rise to a perception that AirAsia was not deliberately moving to klia2 or being difficult on purpose.

However, she assured this was not its intention as there were many concerns especially functionality, safety and security of klia2.

"Klia2 has the potential to be a global aviation hub, just like Dubai. AirAsia, as the largest low cost carrier in the region can and will contribute towards making that a reality, directly elevating the nation's aviation industry as a whole.

"As a major contributor to Malaysia's economy, AirAsia must be given a voice as we are the main user of klia2. AirAsia looks forward to resolve this issue as soon as possible," Aireen added.

http://www.thestar.com.my/Business/Business-News/2014/04/02/AirAsia-CEO-wants-PM-to-intervene-in-klia2-issue

AirAsia inks entertainment deal worth RM109m

Source: The Edge Financial Daily

AirAsia India now to take off end-May

Source: The Edge Financial Daily

Lean cost structure gives AirAsia competitive edge

Source: The Edge Financial Daily