Capital A 4Q23 results may underwhelm but operations were better in the more recent 2H of 4Q23. Going into FY24E, Maybank said it is wary that it is taking a long time to return its entire fleet to service but believe it will eventually materialise. Positively, more details on its PN17 regularisation plan ought to be known soon. The house has widen the FY23E core net loss by 58%, forecast FY24E core net loss of MYR63.7m, trim FY25E core net profit by 13% and trim SOP-TP by 9sen to MYR0.92.
The house expects the low cost airlines 4Q23 may disappoint but operations still improving, passengers carried and load factor were counter seasonally flattish as Maybank says it understands that demand in Oct and Nov 2023 was less than ideal. Moreover, fares in Oct and Nov 2023 were counter seasonally flat. By Dec 2023 however, it understands that demand
improved. Furthermore, efforts to raise fares after MYAirlines suspended operations was truly felt in Dec 2023 after competitively priced fares in Oct and Nov 2023 ran their course.
As at 31 Dec 2023, operating aircraft accounted for only 75% of its existing fleet. The slower-than-expected return to service of its remaining aircraft is due to the unavailability of engine spare parts. CAPITALA expects the remaining parked aircraft to be returned to service by mid this year but the house assumes that they will be returned to service by end this year instead. While disappointed, Maybank believes that it is merely a question of ‘when’ its entire fleet will be returned to service and not ‘if’.
More details on CAPITALA’s plan to sell its shareholding in its 4 airlines to AirAsia X ought to be known before month’s end. Maybank said it also understand that more details on its plan to reverse takeover a SPAC and inject its AirAsia brand and aircraft leasing business into it ought to be known by 30 Apr 2024. With the 2 aforementioned transactions, CAPITALA is reasonably confident that it can narrow its negative shareholders’ equity position
