Aviation Q1 Passenger Volume Shows Recovery Is On Schedule: MIDF

Malaysia Airports Holdings Berhad saw 6.7m passengers passing through their airports in Malaysia on March 23. This translates into a recovery of 75%. The domestic segment’s recovery continued to be above the 80% mark as local airlines restored and introduced new routes. Notably, the international segment recorded the highest number of passengers (3.0m) since the onset of the pandemic.

This brings the total passenger movements in 1QCY23 to 18.7m or translating into a recovery of 74% (domestic: 84%, international: 64%). As compared to 4QCY22, the passenger movements grew by +7.4%qoq with growth mainly coming from the nonASEAN sector (+28.6qoq). The resumption of operations by foreign airlines earlier this year, including Air Arabia, Ethiopian Airlines, China Eastern and Shenzhen Airlines, had partly driven this growth with a total of 9 destinations and 978 additional weekly flight frequencies being added to MAHB’s network.

MIDF’s outlook on the sector is Neutral, local airlines continue to be supported by narrowing jet fuel crack spread with fuel surcharges remaining largely in place, the appreciation of MYR against USD, and airfares being reasonably priced. Passenger movements in Apr-23 should be boosted by homebound trips for Eid Al Fitr as well as the entry of Indonesian-based TransNusa Airlines. The house anticipates a further recovery in passenger traffic, particularly as MAHB expects the total destination served within its network to recover to 79% of 2019 level by end-CY23 (end-CY22: 64%). MYAirline’s network growth should also help to rebuild pre-Covid capacities as it aims to start servicing international routes starting from Jun-23 and expand its fleet size from 6 to 20 aircraft by year-end.

MIDF makes no revisions to its passenger traffic assumptions as the total passenger traffic in 1QCY23 matched 21% of the full-year estimate. Relative to 2019 levels, it expects a traffic recovery of 85% in CY23 (domestic: 90%, international 80%). Potential upsides to our projections include: (i) local airlines rebuilding their fleet and (ii) faster-than-expected return of free-spending Chinese tourists.

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