aviation sector


Air passenger traffic to grow 2.9-4.1pc, says Mavcom

KUALA LUMPUR, May 15 — Malaysia’s air passenger traffic is set to grow between 2.9 per cent and 4.1 per cent this year to between 105.5 million and 106.7 million passengers compared with 2018, according to the Malaysian Aviation Commission…

Test flights begin at Beijing’s new mega-airport

BEIJING, May 13 — Chinese airlines conducted test flights today at a new mega-airport in Beijing that is set to become one of the world’s busiest after it opens later this year. The tests at Daxing International Airport — which will have eight…

US-China trade dilemma: How to hold Beijing's feet to the fire

WASHINGTON, May 5 ― US and Chinese officials say a historic deal ending their ongoing trade war could be imminent, but a key question is how can Washington be sure Beijing will live up to its end of the bargain? With up to 100 Chinese officials…

Jet shares nosedive after flights grounded, lenders ‘hopeful’

MUMBAI, April 18 — Jet Airways shares plunged more than 32 per cent today, hours after the Indian carrier’s final flight landed following a decision to ground its entire fleet. The Mumbai-based carrier is on the edge of bankruptcy and has failed…

Mavcom approves 53 ATR in 1Q2019 with AirAsia the highest recipient

KUALA LUMPUR, April 3 — The Malaysian Aviation Commission (Mavcom) has approved 53 applications of Air Traffic Rights (ATR) for the period of January 1 to March 31, 2019 (1Q) with AirAsia Group received the highest…

End of an era in Indian aviation as Goyal bows out

MUMBAI, March 27 — Jet Airways founder Naresh Goyal rose from humble beginnings to be undisputed king of India's skies. But now, at 69, massive debts have forced him to cede control of the pioneering airline he founded. Goyal stepped down as Jet…

Report: India government asked banks to save Jet, avoid bankruptcy

NEW DELHI, March 19 — India’s government has asked state-run banks to rescue privately held Jet Airways without pushing it into bankruptcy, as Prime Minister Narendra Modi seeks to avert thousands of job losses weeks before a general election,…

Analyst suggests govt sell or get strategic partner for Malaysia Airlines

PETALING JAYA: Hong Leong Investment Bank (HLIB) Research has suggested that the government consider divesting Malaysia Airlines Bhd or roping in a strategic partner for the ailing national carrier.

Nonetheless, it said any options on the table will involve capacity cut, which may benefit AirAsia Group Bhd (AAG) in gaining further market dominance, but negative to Malaysia Airports Holdings Bhd (MAHB) (at least in the short term) due to lower airport traffic flow.

HLIB Research analyst Daniel Wong believes it will be wise for the government to divest Malaysia Airlines (instead of shutting down) or find a strategic partner, which will solve the issue of government’s cash drain while reducing the overall impact on staff layoffs, as the takeover entity will still need a workforce to run Malaysia Airlines operation.

Although the airline has been a national carrier since 1947 and is the nation’s pride, he is doubtful of Khazanah Nasional Bhd’s willingness and ability to sustain the continued losses of the airline, which may hit RM1 billion per annum. Khazanah is the owner of Malaysia Airlines.

“We note that Malaysia Airlines is not part of Khazanah’s core portfolio, indicating that Khazanah may be willing to part away from Malaysia Airlines, if the investment does not make financial sense and assuming government approval is granted,” he said.

Nevertheless, Wong opined that the government would also need to consider Malaysia Airlines’ large workforce of 14,000 employees.

Since the restructuring exercise in 2014, Malaysia Airlines has continued to incur heavy losses and the government is considering several options including shutting down the airline, selling it or refinancing it.

Prime Minister Tun Dr Mahathir Mohamad has said that the matter is being discussed and several experts are providing feedback to the government on the need to sell or shut down the airline.

According to SSM records, Malaysia Airlines incurred continuous losses of RM1.1 billion in 2015, RM439 million in 2016 and RM812 million in 2017. As at December 2017, the retained losses in MAB’s book was RM2.5 billion while net equity value was only RM1 billion.

“With the spike in jet fuel cost and a more competitive market condition in 2018, Malaysia Airlines may have incurred losses up to RM1.5 billion in 2018, potentially dragging down Malaysia Airlines’ net equity position into negative territory of RM500 million,” said Wong.

Khazanah incurred huge impairment losses of RM7.3 billion last year, with half of the amount (RM3.7 billion) being related to Malaysia Airlines.

For AAG, the loss of Malaysia Airlines as a main competitor would improve its market position in Malaysia. Malaysia Airlines has a market share of 20.6% for international traffic and 32.3% for domestic traffic in KL International Airport/klia2 and an estimated 35% of total traffic in other airports.

Wong noted that AAG will further gain market dominance and pricing power. Following the recent drop in share price, he has upgraded AAG to a “buy” from “hold” previously, with an unchanged target price of RM3.20.

Meanwhile, a restructuring of Malaysia Airlines would affect MAHB’s passenger traffic and earnings growth potential, while the replacement of Malaysia Airlines’ slot by other airlines would not be immediate.

HLIB Research maintained its “hold” call on MAHB with an unchanged target price of RM7.50. It also maintained its “neutral” view on the aviation sector.

Vietnamese carriers sign US$21 billion in aviation deals with US firms

HANOI: Vietnamese carriers signed aviation deals with US firms worth US$21 billion on Wednesday as President Donald Trump met with top business leaders in Hanoi ahead of his summit with North Korea’s Kim Jong Un. Budget carrier Vietjet will buy 100 Boeing 737 jets worth US$12.7 billion, the airline said, while startup carrier Bamboo Airways […]

Vietnamese carriers sign US$21b in aviation deals with US firms

HANOI, Feb 27 — Vietnamese carriers signed aviation deals with US firms worth US$21 billion (RM85.4 billion) today as President Donald Trump met with top business leaders in Hanoi ahead of his summit with North Korea's Kim Jong-un. Budget carrier…