AirAsia announced its 3QFY17 preliminary operating statistics, with the Group’s load factor at 86% (2QFY17: 88%). Its passenger volume surged by 16.4% YoY to 16.0m, in-line with its seats capacity increase of 17.6% YoY. For its consolidated AOCs operation (Malaysia, Indonesia and Philippines), the passenger numbers jump by 12% YoY as 4 aircraft was added during the quarter, resulting in its available seat km (ASK) to increase by 13% YoY. Meanwhile, Thailand (TAA) and India (AAI) reported load factors of 85% levels. AirAsia’s 3QFY17 results and passenger yield data is expected to be released on 29 November 2017. We maintain our Neutral call with TP of RM3.19, pegged on 8x FY18F EPS.
3QFY17 statistics. AirAsia consolidated operations recorded passenger load of 86.7%, down by 2ppts compared to 2QFY17 (load factor at 88.7%). This was on the back of 5.3% QoQ increase in seat capacity to 11.4m, higher than 2.9% QoQ increase in passenger carried to 9.9m. During the quarter, it added 4 aircraft to its fleet size (i.e. 3 for Malaysia, 1 for Philippines), resulting in ASK rising by 13.5% YoY to 14.9bn. We believe the demand in air travel during the quarter was mainly due to Malaysia’s long weekend for the National Day, Term 2 school holiday and Eid celebration. Meanwhile, revenue-passenger-kilometres (RPK) increased by 11.1% YoY to 12.9bn.
Associates’ performance. Thailand AirAsia (TAA) remained strong at load factor of 85% on the back of passenger volume and capacity growth YoY rose by 14% and 12.5% respectively, due to increase in fleet size by 5 aircraft YoY. Despite unchanged fleet size QoQ, its passengers carried and seat capacity jump by 5% and 6% respectively, as it commenced 4 new routes and added frequencies to 3 routes during the quarter. Meanwhile, AirAsia India (AAI) load was also strong at 85%, as 3 additional aircraft was added to its fleet size. During the quarter, it commenced 6 new routes and added frequencies to 3 routes, leading to ASK improving by 18.4% QoQ to 1.4bn.
Pending more details on yield data and results for 3QFY17, we maintain our Neutral call on AirAsia with a target price of RM3.19 pegged on 8x FY18F EPS
