KUALA LUMPUR, Feb 20 ― Maybank Investment Bank Bhd opined that it is unlikely that the Malaysian aviation industry will experience overcapacity this year à la 2019 as it views Boeing’s woes from halfway across the world will limit the fleet growth of domestic carriers.
The investment bank said in a note today that this scenario may preclude Malaysia Airports Holdings Bhd's (MAHB) domestic passenger traffic from recovering to pre-Covid levels.
Nevertheless, it said this will help airlines like Capital A Bhd and AirAsia X Bhd (AAX) maintain a floor on fares.
“We like non-Boeing operators Capital A and AAX. Notwithstanding the above, we still like MAHB for its potentially positive new operating agreement,” it said.
To recap, Malaysian carriers operated 274 aircraft in 2019.
Today, they operate 260 aircraft, which is similar to the figure as at end-2017.
The Boeing 737 MAX, especially the Boeing 737 MAX 8 variant, was gaining popularity in Malaysia.
Maybank Investment Bank highlighted that Batik Air Malaysia operates 16 Boeing 737 MAX 8s and expects to take delivery of one more next month.
Malaysia Airlines operates three Boeing 737 MAX 8s out of a planned 25 with an option to lease another 25.
Following the Alaskan Air Incident, the US Federal Aviation Administration (FAA) ordered Boeing to limit the monthly production of Boeing 737 MAX to 38.
“Yet, industry observers estimate that Boeing is producing only 20 Boeing 737 MAXs a month due to increased oversight.
“With Boeing’s order book of 4,759 Boeing 737 MAXs as at January 31, 2024, the delivery of Boeing 737 MAX 8s to Malaysia Airlines and Batik Air Malaysia will likely be delayed,” it noted.
Overall, it is maintaining the 'buy' call on MAHB, Capital A and AAX.
It also foresees a potential upside for MAHB from the new operating agreement with the government. ― Bernama
