OSK bullish AirAsia Japan will be profitable

OSK Research Sdn Bhd has reaffirmed its bullish view that AirAsia Japan will be profitable from the first year of
operation from the high-yield market.

In
a research note today, OSK said Japan's low-cost passenger segment was
under-served, with its penetration rate at only 9.1 per cent.

"AirAsia
Japan's planned destinations are among the top four domestic
destinations in Japan, while on the international side, Seoul is in the
top spot with Busan (also in South Korea) ranked somewhere between 10
and 15," it said.

OSK said AirAsia would be competing head-on
(in terms of routes operating from Narita airport) with Jetstar Japan,
which was expected to commence operation a month earlier.

It
said Jetstar's presence would certainly add heat to the competition but
the fact that penetration of low-cost travel in Japan was relatively low
compared to other regions meant that the market was big enough for all.

AirAsia
Japan last week received the air operator certificate (AOC) to start
operations by Aug 1, 2012 from Narita airport to Sapporo, Fukuoka and
Okinawa and to Seoul and Busan in October.

Meanwhile, OSK said it was optimistically cautious on AirAsia Inc, AirAsia's Philippines associate.

It
said the Philippines, an attractive market for low-cost carriers given
the archipelagic nature of its geography, was conducive for air travel.

OSK
said coupled with the high number of Filipinos working abroad as a
boost to international travel, the Philippines offered significant
growth potential given the propensity for air travel on the back of
rising per capita income.

AirAsia Inc has received its AOC from the Civil Aviation Authority of the Philippines.

It is expected to commence flights as early as March or April 2012 to Singapore, Hong Kong and Macau.

OSK has maintained earnings and 'buy' call on AirAsia with the fair value unchanged at RM4.57. -- BERNAMA