AirAsia Q2 results seen flattish on higher jet fuel price (5099)

PETALING JAYA: AirAsia Bhd's
second quarter results, which is due to be announced next week, is
likely to be flattish year-on-year following the rise in jet fuel
prices, according to analysts.
“We expect AirAsia's first six months results to meet our forecast but trail the market expectations.
“First
half ended June 30 core pre-tax profit of RM350mil to RM360mil will
have accounted for 42% to 43% of our full-year pre-tax profit forecast
of RM828.1mil but only 36% to 37% of the full-year consensus pre-tax
profit of RM965.4mil,” RHB Research said.
RHB
estimated that AirAsia's second quarter pre-tax profit would have
increased by about RM39.4mil sequentially, mainly due to RM27.4mil
positive topline impact coming from an actual 2% rise in number of
passengers carried and a 1% sequential growth in average passenger
revenue and fuel costs that would have been RM12mil lower on the back
of an estimated 3% decline in average jet fuel.
It said as at
March 31, AirAsia hedged forward about 40% of its group fuel
requirement for second quarter at US$122 per barrel of jet, 12% of its
group fuel requirement for July 2012 at US$125 a barrel jet and 27% of
its group fuel requirement for second half at US$116 per barrel Brent.
Analysts
said typically for airlines, their second quarter tends to be the
slowest but expect AirAsia's high passenger volume to cover the high
fuel prices.
In the second quarter, AirAsia's Malaysian
operations flew 4.9 million passengers, taking the number of passengers
carried in the first half of 2012 to 9.7 million, which was 10.6% more
than the first half 2011.
A local bank-backed analyst said
AirAsia would still be profitable but its second quarter results was
likely to be slightly weaker year-on-year mainly due to high oil prices
and the reduction of ancillary income during the quarter.
Ancillary income comprises core ancillary income in the form of baggage fees, in-flight meals and its duty free operations.
He
said AirAsia had cut down on the fee for baggage check-in and would see
the impact in the second quarter. “Its yield could probably be better
as Firefly is no longer in the picture to compete with AirAsia,” he
said, adding that the industry was growing organically and the
re-rating would be gradual.
The analyst said high oil prices could continue to be high as geopolitical concerns remained.
RHB
Research said AirAsia's near-term earnings growth prospects were less
exciting as growth from its domestic operation is tapering off, coming
from an enlarged base.
“Not helping either, are lingering losses
from its new low-cost carrier start-ups in the Philippines and Japan,
as well as an online travel agent joint venture with Expedia Inc of USA (Expedia JV), given the long gestation periods for these new ventures,” it said.