OSK: MAS to benefit if AirAsia X scraps services to 4 cities

OSK Research says MAS will benefit from higher air fares fetched with the exit of its direct long-haul low-cost competitor.



KUALA LUMPUR: Malaysia Airlines stands to benefit if AirAsia X
cancels its services to four cities, including London and Paris, a
research house said.

OSK Research said MAS will benefit from higher air fares fetched with the exit of its direct long-haul low-cost competitor.

"While we understand that MAS' London route is already profitable, we
reckon yields are not as high as it used to be before AirAsia X came
into the picture," the firm said.

It was commenting on Business
Times' report yesterday that AirAsia X had written in to the Ministry of
Transport to withdraw its services to Paris, London, Mumbai and Delhi
as early as February next year.





OSK Research noted that both AirAsia's London and Paris routes are loss-making or only breaking even at the very least.

The firm, however, said it was surprised with the reports as it
understood that AirAsia intends to maintain its market and branding
exposure in Europe for future expansion possibilities.

"This
applies also to the New Delhi and Mumbai routes, which we reckon are
seeing better demand relative to its London and Paris flights," it
added.

Meanwhile, OSK Research said rumours are rife that
AirAsia X supposedly had its Sydney route application approved by the
MoT yesterday.

OSK Research has an "overweight" call on the aviation sector, with AirAsia Bhd being its top pick with a fair value of RM4.57.

The
research house reaffirmed its "sell" call on MAS on concerns whether
the carrier can implement a timely turnaround amid a high cash burn rate
that is fast depleting its cash hoard