Thursday 1 March 2012

HDBSVR sees challenging outlook for MAS

KUALA LUMPUR (March 1): HwangDBS Vickers Research expects 2012 to be challenging for MALAYSIAN AIRLINE SYSTEM BHD [] (MAS) as the group continues to battle high jet fuel costs.

It said on Thursday that MAS’ management had implemented part of its business plan, but needs more time to turn around operations.

“We also remain concerned about its balance sheet. At end-2011, MAS had a much lower RM1.1 billion cash balance versus RM2.2 billion at end-2010, while its net gearing could surpass its current 4.4 times as MAS continues to seek funding for its sizeable RM6 billion capex for 2012 and RM3.5 billion for 2013 to take delivery of new aircraft,” it said.

On Wednesday, MAS announced RM1.28 billion net loss for 4Q11 due to a RM1.1 billion provision charge (RM602 millio for redelivery of aircraft, RM314 million for impairment of freighters, and RM179 million for stock obsolescence).

“Stripping out provisions, forex gain (RM22 million) and derivative gain (RM38 million), it still registered RM232 million core net loss. This took FY11 core net loss to RM1.5 billion, worse than our and market expectations,” it said.

HDBSVR said 4Q is a seasonally stronger quarter for airlines due to year-end holidays, but MAS experienced a 6% on-quarter drop in traffic and 5 percentage points drop in load factor.

It added that MAS was plagued by higher fuel costs (up 25%) of RM305 million in the quarter. At end-2011, jet fuel prices remained at US$133 per barrel (up 40% on-quarter).



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