MIDF Research: AirAsia to benefit from Malaysia Airlines’ Boeing 737 MAX suspension delivery

AirAsia is poised to be the market beneficiary in terms of capacity following Malaysia Airlines Bhd's (MAB) suspension delivery of its 25 Boeing 737 MAX. — Reuters pic
AirAsia is poised to be the market beneficiary in terms of capacity following Malaysia Airlines Bhd's (MAB) suspension delivery of its 25 Boeing 737 MAX. — Reuters pic

KUALA LUMPUR, Jan 16 ― MIDF Research has maintained its "buy” call on AirAsia Group Bhd (AAGB) in view of positive outlook as the airline is poised to be the market beneficiary in terms of capacity following Malaysia Airlines Bhd's (MAB) suspension delivery of its 25 Boeing 737 MAX.

The research house has also kept the target price unchanged at RM2.04 per share.

The Boeing 737 MAX is a narrow body jet with a capacity of 160 to 220 passengers.

AAGB’s Malaysian arm, Malaysia AirAsia (MAA) on the other hand is expecting a delivery of three new A321 Neos with 236 seats each, and one A320 neo that has 186 seats, in 2020.

“Therefore, we believe that AAGB’s fleet plan for Malaysia is poised to grab some market share from MAB, increasing its share of circa 60 per cent.

“Moreover, this will stand well with the expected increase in tourism activity in conjunction with the Visit Malaysia Year 2020,” the research house said in a note today.

In line with the expectation of AAGB grabbing more market share of MAB, MIDF Research believed that the airline would have a positive impact on passenger traffic in Kuala Lumpur International Airport 2 (KLIA2).

“We believe that AAGB will continue to attract more passenger traffic to KLIA2 in 2020,” it said.

Meanwhile, MIDF Research opined that passenger growth in Malaysia to remain intact despite the departure levy which took effect in September 2019 as the levies gazetted were lower than regional peers such as Thailand and Hong Kong.

As for low-cost carriers such as AAGB, the percentage of departure levy from the total ticket price is still immaterial at around 1.6 per cent on average for normal fares, it added.

As at 10.36am, AirAsia was flat at RM1.66 after 428,700 shares changing hands. ― Bernama

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