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Capital A Berhad
RedQ, Jalan Pekeliling 5, Lapangan
Terbang Antarabangsa Kuala Lumpur (klia2
Phone: +60 386604333p:+60 386604333 SELANGOR DARUL EHSAN, 64000  Malaysia Ticker: CAPITALACAPITALA

Affin Hwang: AirAsia likely to fly back to profitability in 2022


KUALA LUMPUR: AirAsia Group Bhd is expected to incur large net losses in its financial years 2020 and 2021, and be profitable again only in 2022, said analysts.

Affin Hwang Investment Bank Bhd expects AirAsia to post a larger net loss of RM2.92 billion this year before narrowing it to a RM663 million net loss next year.

Its analyst Isaac Chow said this was after incorporating a lower revenue projection due to the weak recovery in travel demand and prolonged travel restrictions imposed by various countries.

“We expect the low-cost carrier to report a profit of RM238 million in 2022 in anticipation of stronger demand recovery following the availability of Covid-19 vaccines starting in the second half of next year,” he said in a report yesterday.

Affin Hwang has maintained its “sell” call on AirAsia due to its weak balance sheet and the challenging business environment over the next few quarters.

However, it has raised its 12-month share price target for the low-cost carrier to 50 sen from 46 sen previously.

“Although we are more optimistic on the long-term recovery of the aviation sector, we expect AirAsia to continue running its business as a going concern, in anticipation of a liquidity boost from new loans and equity raising(s), though the latter would weaken its share price if priced at a significant discount,” said Chow.

MIDF Research said AirAsia continued to be severely hit by Covid-19 events that had highly impacted its operations.

The carrier recorded a normalised net loss of RM1.3 billion in the third quarter, which was a 34 per cent slump quarter-on-quarter and -638 per cent year-on-year.

MIDF Research said despite how the odds were stacked against the airline, AirAsia was poised to survive the pandemic.

“Its management has indicated it needs between RM2 billion and RM2.5 billion until the end of its financial year 2021.” The research firm added that AirAsia was securing commitments from banks under Danajamin Prihatin Guarantee Schemes while their Philippines and Indonesia entities were in various stages of bank loan applications.

“There are talks on raising capital from the equity market but nothing is concrete yet. The management has indicated it wants to complete the bulk of fundraising by end of January next year,” MIDF Research added.

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Tuesday, April 23, 2024