AirAsia X earnings expected to improve

AirAsia X Bhd’s Q2 2023 earnings are likely to be weaker quarter-on-quarter but its forward booking trends are encouraging. Its 49%-owned Thai AirAsia X (TAAX) is expected to start contributing soon, which will be positive for the PN17 classified airline. Maybank Investment Bank (Maybank IB) Research expects its 2Q23 core net profit to hit about RM30m as compared to 1Q23 earnings of RM42.5m. More importantly, AAX stated demand and fares are rising in 3Q23 on seasonally higher demand. Traditionally the airline carries fewer passengers in 2Q23 due to seasonally lower demand. The research house has forecast AAX’s financial year 2023 (FY23) core net profit to hit record high of RM160.1m driven by high airfares and more aircraft. For FY24, it has forecast the carrier’s core net profit will hit another record high on more aircraft capacity but moderated by lower airfares. The airline is sensitive to fuel price movements and a US$1 (RM4.55) per barrel change in fuel price will impact earnings by RM7m to RM13m. Maybank IB Research said efforts to uplift its PN17 classification are ongoing and more importantly, have not received any negative feedback. It said that AAX qualifies to have its PN17 classification lifted as its shareholders’ equity is already more than RM40m and it has generated three consecutive quarters of profits. AAX hopes to receive a reply by month end on the matter.<br/>