PETALING JAYA: Both AirAsia Bhd and Malaysia Airlines (MAS) are not expected to report significant improvements to their financial performance in the third quarter, owing to the high cost of jet fuel, according to research analysts.
“It should be another bad quarter for MAS. AirAsia is also not likely to see stellar results,” said a bank-backed analyst.
He said that while the third quarter was seasonally a better period for MAS, it would be impacted by the high cost of jet fuel and also lower demand from full-service carrier passengers against a gloomy outlook for the global economy.
“We foresee further capacity cuts by MAS, notably on the domestic and Asean routes, given lower demand for full service travel,” said OSK Research in a report last month.
Both AirAsia and MAS had noted in their second-quarter reports, via Bursa Malaysia filings, that the outlook for the second half of 2011 would be challenging due to high jet fuel cost.
MAS recorded a net loss of RM769mil for the first half of the year, which was more than triple its net loss of RM224.68mil a year earlier. It also attributed its RM526.68mil net loss in the second quarter to higher fuel cost.
MAS suffered a second-quarter loss despite its total operating revenue increasing by 8.5% year-on-year to RM3.43bil.
“In response to the tough operating environment, MAS is moderating its short-term capacity growth,” the carrier said in August.
MAS added that other measures such as the implementation of fuel surcharges and improvement of its revenue management were expected to yield some benefits in the second half of 2011 but would not be adequate to offset the impact of high jet fuel price.
Meanwhile, AirAsia's net profit of RM276.2mil for the first half of the year represented a 34.7% dip compared with the RM423mil net profit a year earlier.
AirAsia's second-quarter net profit of RM104.3mil represented a 47.6% drop year-on-year.
The budget carrier suffered a dip in second-quarter profit despite its revenue increasing by 15.2% year-on-year to RM1.1bil.
“The introduction of a fuel surcharge during the second quarter is expected to mitigate, but not fully offset, the effect of higher fuel prices during the second half of the year,” AirAsia said.
Affin Investment Bank said in a report that third-quarter figures for AirAsia would be flat on a quarter-on-quarter basis but higher year-on-year, based on the budget carrier's July to September operating statistics.
The report noted that in the third quarter, AirAsia carried 4.3 million passengers, which was 3% lower quarter-on-quarter but 7.6% higher year-on-year.
“AirAsia's improvement in operating statistics would be partially offset by the spike in jet fuel prices. In the third quarter, the average jet fuel price was US$125 (RM391) per barrel, some 45% higher than the US$87 (RM272) per barrel average a year earlier,” the report said.
It also said its 2011 passenger growth forecast of 12% to 18 million was achievable as the October to December period was seasonally the strongest quarter due to the festive and holiday season.
“In addition, the collaboration with MAS, coupled with the potential re-branding of Firefly as a premium short-haul carrier, will reduce the fierce competition between the two airlines, and this is supportive of demand and yield,” the report said.
“It should be another bad quarter for MAS. AirAsia is also not likely to see stellar results,” said a bank-backed analyst.
He said that while the third quarter was seasonally a better period for MAS, it would be impacted by the high cost of jet fuel and also lower demand from full-service carrier passengers against a gloomy outlook for the global economy.
“We foresee further capacity cuts by MAS, notably on the domestic and Asean routes, given lower demand for full service travel,” said OSK Research in a report last month.
Both AirAsia and MAS had noted in their second-quarter reports, via Bursa Malaysia filings, that the outlook for the second half of 2011 would be challenging due to high jet fuel cost.
MAS recorded a net loss of RM769mil for the first half of the year, which was more than triple its net loss of RM224.68mil a year earlier. It also attributed its RM526.68mil net loss in the second quarter to higher fuel cost.
MAS suffered a second-quarter loss despite its total operating revenue increasing by 8.5% year-on-year to RM3.43bil.
“In response to the tough operating environment, MAS is moderating its short-term capacity growth,” the carrier said in August.
MAS added that other measures such as the implementation of fuel surcharges and improvement of its revenue management were expected to yield some benefits in the second half of 2011 but would not be adequate to offset the impact of high jet fuel price.
Meanwhile, AirAsia's net profit of RM276.2mil for the first half of the year represented a 34.7% dip compared with the RM423mil net profit a year earlier.
AirAsia's second-quarter net profit of RM104.3mil represented a 47.6% drop year-on-year.
The budget carrier suffered a dip in second-quarter profit despite its revenue increasing by 15.2% year-on-year to RM1.1bil.
“The introduction of a fuel surcharge during the second quarter is expected to mitigate, but not fully offset, the effect of higher fuel prices during the second half of the year,” AirAsia said.
Affin Investment Bank said in a report that third-quarter figures for AirAsia would be flat on a quarter-on-quarter basis but higher year-on-year, based on the budget carrier's July to September operating statistics.
The report noted that in the third quarter, AirAsia carried 4.3 million passengers, which was 3% lower quarter-on-quarter but 7.6% higher year-on-year.
“AirAsia's improvement in operating statistics would be partially offset by the spike in jet fuel prices. In the third quarter, the average jet fuel price was US$125 (RM391) per barrel, some 45% higher than the US$87 (RM272) per barrel average a year earlier,” the report said.
It also said its 2011 passenger growth forecast of 12% to 18 million was achievable as the October to December period was seasonally the strongest quarter due to the festive and holiday season.
“In addition, the collaboration with MAS, coupled with the potential re-branding of Firefly as a premium short-haul carrier, will reduce the fierce competition between the two airlines, and this is supportive of demand and yield,” the report said.
