KUALA LUMPUR: Maybank Investment Bank Bhd expects AirAsia parent Capital A Bhd's return to profitability to be delayed by a year to financial year 2024 (FY24) due to slower than expected redeployment of aircraft.
The firm said challenges still remained in the post-Covid environment as the ringgit had weakened past RM4.50 against the US dollar.
US dollar-denominated expenses traditionally accounted for 60-70 per cent of an airline's expenses.
"Second, jet fuel prices remain relatively high. Fuel traditionally accounted for 30-50 per cent of expenses. Third, backlogs at maintenance, repair and operations service providers have delayed the redeployment of aircraft.
"Fourth, there is still no clarity as to when China, a major source of passengers, will lift its zero Covid policy and allow its citizens to travel freely again," it said in a report.
Maybank IB, however, noted that Capital A was still thriving as fares had not only remained high but climbed even higher in the second quarter of 2022.
The firm said many airlines cut supply during the pandemic which translated into higher fares after demand started recovering in the current post-Covid world.
It also stated that aircraft lease rates were meaningfully lower in the current post-Covid world.
"We estimate that Capital A stands to save a whopping RM860 million per annum," it said.
Maybank IB widened its FY22 core net loss for the company from RM2.44 billion to RM2.89 billion.
It also forecasted FY23 core net loss of RM700 million versus core net profit of RM250 million previously, and trimmed its FY24 net profit RM100 million to RM268 million.
"Our revised FY24 net profit forecast of RM268 million is similar to our previous FY23 net profit forecast of RM254 million. Essentially, we now expect Capital A's return to profitability to be delayed by a year only due to the slower-than-expected redeployment of aircraft," it added.
It maintained a "Buy" call on Capital A with a lower target price of 84 sen.