Competition, rising fuel prices, crew shortage affect MAB’s 3Q

KUALA LUMPUR: Malaysia Airlines Bhd (MAB) said its third quarter (3Q18) operating performance was affected by stiff competition, rising fuel prices and adverse foreign exchange movements, further exacerbated by crew shortage, especially in July and August. In a statement yesterday, MAB said its yield came under pressure, recording 21.5 sen in 3Q2018, from 22.6 sen […]

AirAsia stands firm in tax row with MAHB

SEPANG: AirAsia Group Bhd (AirAsia) is adamant on its refusal to increase the airport tax charged on passengers departing from klia2 on behalf of Malaysia Airports (Sepang) Sdn Bhd (MASSB), a subsidiary of Malaysia Airports Holdings Bhd (MAHB). In reference to the Writ of Summons served to AirAsia X Bhd (AAX) and AirAsia, by MASSB, […]

MAB’s passenger yield down 4.86% in Q3

PETALING JAYA: Malaysia Airlines Bhd’s (MAB) saw its passenger yield come under pressure in the third quarter of 2018, falling 4.86% to 21.5 sen from 22.6 sen in the same quarter last year, partially due to the inability to deploy planned peak upgrading of aircraft to a widebody.

The airline said in a statement today that it was unable to deploy the planned peak upgrading of aircraft due to crew shortages, which also in turn impacted revenue.

Revenue per available seat kilometre (RASK) rose 1.43% to 21.2 sen from 20.9 sen a year ago driven by higher cargo revenue, which was up 29% year-on-year.

MAB carried some 3.47 million passengers in the quarter under review against the 3.40 million passengers flown in the third quarter of last year.

On-time performance (OTP) also increased during the quarter, up by 8% year-on-year to 74.9%, as a result of improved operational efficiencies in engineering and ground handling.

The national carrier said it experienced a challenging third quarter with stiff competition, rising fuel prices and adverse foreign exchange movements which was further exacerbated by crew shortages, especially in July and August.

The airline is confident that its crew shortage issue can be stabilised by early 2019, as it has since activated an extensive recruitment exercise, supported by an aggressive cadet enlistment and training programme to build a strong crew pipeline.

Passenger load factor during the quarter increased to 80.5% from 77.5% in the third quarter of 2017 while recovery in international business continued during the quarter with a load factor of 81.7% in 2018 versus 78.4% in 2017.

As for fleet developments, the airline saw the addition of its sixth A330-200 to its fleet of 21 such aircraft, which is deployed on higher density regional routes across Asia Pacific.

Meanwhile, its B737-800s continued to provide domestic and regional connectivity. The airline is also preparing for delivery of 10 B737 MAX8 in 2020.

MAB’s A380-800s continue to service Project Amal, a division dedicated to Hajj and Umrah traffic which successfully transported more than 15,000 pilgrims during Hajj on over 80 flights between Kuala Lumpur, Jeddah and Madinah throughout July and September 2018. The airline’s A380s are also deployed to key markets, such as Sydney and Seoul, during peak times.

MAB reported an overall improvement in Customer Satisfaction Index (CSI), which rose 7% year-on-year while its Net Promoter Score (NPS) increased significantly by 21 points during the period.

The airline attributed the improvements in its CSI and NPS to its continued focus on improving customer experience and enhancing product offering, including improvements to its call centre which saw satisfaction ratings rise 7% to 74%.

Group CEO Izham Ismail said the third quarter was challenging with volatile fuel prices, unfavourable foreign exchange movements and over capacity in key markets, compounded by pilot shortage.

“Nevertheless, in line with our emphasis on customer experience, I believe our efforts in that area continue to show positive traction as evidenced by the improvements in our CSI and NPS ratings. We are maintaining a strong focus on cost management and will continue to invest in aspects of the customer experience that deliver a competitive edge,” he said.

“Our pioneering digital initiatives, including the recently launched WhatsApp Business solution, exemplify this. We have seen good quarterly traction in the year and we are expecting to finish 2018 by reducing the losses of the previous year,” he added.

Izham noted that while 2019 looks similarly challenging, MAB is committed to improving performance and reducing costs while managing external factors beyond its control.

Malaysia Airlines Q3 performance hit by rising fuel prices, crew shortage

KUALA LUMPUR, Dec 14 ― Malaysia Airlines Bhd (MAB) said its third quarter (3Q2018) operating performance was affected by stiff competition, rising fuel prices and adverse foreign exchange movements, further exacerbated by crew shortage,…

AirAsia stands its ground against MAHB on PSC spat

PETALING JAYA: Low-cost carrier AirAsia has paid a total of RM478.06 million in airport tax to Malaysia Airports (Sepang) Sdn Bhd (MASSB) to date, but stressed that it is not obliged to collect the additional charges.

AirAsia Malaysia CEO Riad Asmat said in statement today that the airline has been collecting on behalf of MASSB, RM50 airport tax or passenger service charge (PSC) from every non-Asean international passenger departing from klia2 since Jan 1, 2017.

MASSB raised the PSC charged on non-Asean international passengers departing from klia2 to RM73 on Feb 1, 2018, in a move to equalise the PSC between klia2 and KL International Airport (KLIA).

Riad reiterated the airline’s stand, saying that it is not obligated to collect airport tax for MASSB, and has refused to collect the additional charge from passengers on behalf of MASSB.

“Passengers using klia2 should not be charged the same rates as passengers in KLIA, as klia2 is a low-cost terminal with far lower levels of service provided to passengers, compared with KLIA, which is a full-service terminal,” he said.

He said AirAsia had also previously lodged a number of official complaints regarding the substandard infrastructure and access at klia2, which has negatively impacted its operational performance and punctuality.

The complaints include unsatisfactory state of infrastructure at klia2, apron defects, ground depression, flooding, ruptured fuel pipelines, ad hoc runway closures due to continuous resurfacing requirements, closure of departure gates and damages to aircraft.

Riad said these cross-claims far exceed the amount of airport tax that the airline has refused to collect for MASSB from its passengers.

“It is to be reiterated that we have tried, on various occasions, and without success, to engage MASSB on these issues. Regrettably, MASSB has instead decided to take the matter public and instigate legal action based on claims that AirAsia will strongly refute,” he added.

Earlier on Tuesday, AirAsia Group Bhd and AirAsia X Bhd told Bursa Malaysia that they are being sued by MASSB for refusing to collect the additional RM23 PSC per passenger at klia2, with MASSB claiming a combined RM36.11 million for uncollected PSC and alleged PSC arrears.

The group had said that it will defend the proceedings vigorously as it believes that the claims were made without justification and are unreasonable.

The airline refused to collect the additional RM23 PSC per passenger, stressing that the charges levied should reflect the level of services provided.

Malaysia Airports handles 89.8m passengers for Jan-Nov this year

SEPANG, Dec 13 — Malaysia Airports Holdings Bhd’s (MAHB) operating airports in Malaysia saw 89.8 million passenger arrivals from January to November this year. Acting Group Chief Executive Officer Raja Azmi Raja Nazuddin said…

AAX net gearing ratio to remain manageable after MAHB summons

KUCHING: AirAsia X Bhd’s (AAX) net gearing ratio is expected to remain manageable even if it has to pay the summons issued by Malaysia Airports Holdings Sdn Bhd (MAHB) for the uncollected international passenger service charges (PSC), analysts say. Of note, on Tuesday, AirAsia Bhd (AirAsia), AAX’s wholly-owned subsidiary, with a Writ of Summons in […]

BAuto’s net profit surges more than threefold in Q2

PETALING JAYA: Bermaz Auto Bhd’s (BAuto) net profit for the second quarter ended Oct 31 more than tripled to RM73.92 million from RM22.2 million a year ago due to higher revenue and gross profit margin from domestic operations.

In a filing with Bursa Malaysia, the group said its higher earnings were also due to significantly higher share of profit contribution from its associate company, Mazda Malaysia Sdn Bhd.

“The improvement in gross profit margin was mainly attributed to favourable sales mix and a stronger Malaysian ringgit against the Japanese yen, while the higher share of profit contribution from Mazda Malaysia arose from the increase in production volume for the new CX-5 model to cater for both the domestic and export markets,” it said.

“This was slightly dampened by a lower profit contribution from the Philippine operations, in line with the decrease in their sales volume,” it added.

Revenue for the quarter rose 46.34% to RM690.32 million from RM471.71 million a year ago due to a surge in sales volume from its domestic operations as a result of the zerorisation of the Goods and Services Tax (GST) from June till August this year.

BAuto has recommended a second interim dividend of 3.75 sen per share in respect of the financial period ended Oct 31, payable on Jan 25, 2019. The entitlement date has been fixed on Dec 31.

The group’s decision to absorb the sales tax for bookings received before Sept 1 but with vehicle delivery after the introduction of the Sales and Service Tax (SST) boosted customers’ demand especially for the new CX-5 model.

“This was partly offset by weaker sales from the Philippine operations as the automotive industry of the country is still struggling with the impact of the Tax Reform for Acceleration and Inclusion (TRAIN) law that was implemented in January this year,” said BAuto.

The group said that the TRAIN law has caused an increase in excise tax and consequently, car prices have also increased, thus affecting the demand for motor vehicles in the Philippines.

For six months ended Oct 31, BAuto’s net profit almost tripled to RM124.2 million from RM42.41 million a year ago while revenue rose 36.25% to RM1.18 billion from RM862.94 million a year ago.

Mazda’s sales volume improved by 59% year-on-year, in line with the country’s total industry volume (TIV) for passenger cars which grew 5.7% year-on-year for the first 10 months of 2018. The full year TIV is projected to hit 585,000 units.

BAuto said trading conditions of the automotive segment is expected to remain challenging following the end of the tax holiday period, competitive trading environment, weakening of the ringgit and cautious consumer sentiment due to local and global economic uncertainties.

Despite the challenging conditions, BAuto’s Malaysian operations is in a competitive advantage position due to the huge back orders collected during the GST tax holiday as a result of the group’s absorption of the SST. The bookings collected since the implementation of the SST on Sept 1 remains encouraging due to the upcoming festive seasons.

In the Philippines, Bermaz Auto Philippines Inc seeks to mitigate the downturn impact and sustain its sales volume through more aggressive marketing and support to its dealer network. It also plans to expand its dealerships from 18 at the beginning of FY18 to 21 dealerships at end of FY19.

MAHB claims seen having little impact on AirAsia X

PETALING JAYA: The RM26.7 million claim by Malaysia Airports Holdings Bhd (MAHB) from AirAsia X Bhd (AAX) for uncollected passenger service charges (PSC) will not have any material impact on the airline’s operations.

“In the event that AAX would have to reimburse the RM26.7 million worth of uncollected PSC to MAHB, the impact would not be material to AAX’s day-to-day operations as the company has generated a net operating cash flow of RM47.3 million on average for the past three quarters. Moreover, AAX has a net gearing which is still manageable, remaining below 0.7 times after considering such payments to MAHB,” MIDF Research said in its report.

On Tuesday, AAX told Bursa Malaysia that it was served with a writ of summons by MAHB worth RM26.7 million for uncollected PSC since July 1, 2018, which is in relation to the RM23 additional charge per passenger for international passengers since AAX has only been collecting RM50 instead of RM73 per passenger.

MAHB stated that same rates should apply to both klia2 and Kuala Lumpur International Airport (KLIA). However, AAX reiterated its stance that klia2 is a low-cost airport and the charges levied should commensurate with the level of services provided.

“Future adherence to the full PSC could push average fares upwards to sustain margins but we believe this will be partly mitigated by AAX’s prudence in shifting some of the future capacity into other core markets namely, Japan, South Korea and India to factor in the slower growth from the China segment,” said MIDF Research.

It noted that a re-rating catalyst for AAX would be the possible equal downward revision of PSCs for klia2 and KLIA without any plans to reverse out any previous charges according to the Malay-sian Aviation Commission (Mavcom).

It maintained its “neutral” call on the stock with an adjusted target price of 22 sen per share.

Meanwhile, AirAsia Group Bhd’s (AAGB) deal with Castlelake LP indicates AAGB’s aspirations to invest in shifting from being asset-heavy to being more digitally focused.

“Operationally, AAGB has partnered with Airbus and Palantir to establish an integrated Big Data platform which includes forecast of predictive maintenance and efficient scheduling of parts with a potential saving of US$40,000 per aircraft per year,” said MIDF Research in a separate report.

On Tuesday, Reuters reported that Castle-lake, a US private investment firm, has signed a deal to acquire about 30 narrowbody planes from AAGB for about US$800 million (RM3.34 billion).

The deal entails the purchase of AAGB’s older aircraft, which are under lease to AAGB’s affiliated airlines and is expected to be concluded in a few weeks.

“Previously, management noted that there will be a net addition of 24 aircraft in FY19. Taking into consideration the sale of 30 aircraft to Castlelake, there would be a net reduction of AAGB’s fleet (including other AOCs) by six aircraft. As such, we expect aircraft utilisation across AAGB in FY19 to increase above the 2.2% recorded for 9MFY18,” MIDF Research said.

If the acquisition is satisfied via cash, AAGB’s cash pile would increase to about RM7.77 billion, translating into a net cash position of about RM4.57 billion. Meanwhile, the writ of summons by MAHB to AAGB worth RM9.4 million is only less than 1% of its cash pile and FY18F/FY19F earnings.

“Therefore, AAGB’s financial health will not be adversely impacted in the event that AAGB has to reimburse the monies owed to MAHB,” it added.

It maintained its “buy” call on AAGB with an unchanged target price of RM3.48 per share.

AAGB shares were down 10 sen or 3.8% to RM2.54 today, while AAX declined half a sen or 2.1% to 23 sen.

AirAsia Group, AirAsia X ’s share price down on MAHB suit

PETALING JAYA: AirAsia Group Bhd’s share price fell as much as 2.65% to RM2.57 this morning, after being served with a legal suit by Malaysia Airports Holdings Bhd (MAHB) for refusing to collect the additional RM23 passenger service charges (PSC) per passenger at klia2.

At 11.42am, the stock was trading at RM2.60 with 8.95 million shares done.

Meanwhile, the share price of the airline group’s long-haul arm, Airasia X Bhd (AAX) was fell 2.12% to 23.0 sen this morning.

At 11.42am, the stock was still trading at 23.0 sen twith 989,400 shares done.

In a filing with Bursa Malaysia yesterday, AirAsia Group said its wholly owned subsidiary AirAsia Bhd (AAB) was served with an unsealed copy of a writ of summons in the sum of RM9.4 million by MAHB’s wholly owned subsidiary Malaysia Airports (Sepang) Sdn Bhd (MASSB) pertaining to PSC that AAB has not collected and refuses to collect from traveling passengers.

In a separate filing, AAX also said it has been served with an unsealed copy of a writ of summons in the sum of RM26.7 million for alleged PSC arrears.

The group said it will defend these proceedings vigorously as it believes that the claims are made without justification and are unreasonable.

Both AAB and AAX said they have collected RM50 per non-Asean international passenger, which has been paid to MASSB.