Aviation: Malaysian passenger traffic takes some time to recover – MIDF
KUALA LUMPUR: MIDF Amanah Investment Bank Bhd expects Malaysian passenger traffic to take some time to recover following the challenges experienced by airlines recently, including aircraft delivery issues and shortages of spare parts and manpower.
A research note by MIDF projected Malaysia’s passenger traffic to reach 94 percent compared to the previously expected growth of 102 percent.
In the first half of 2024, the total seat capacity recovery reached 85 percent, with the average load factor increasing to 79 percent (3.4 percentage points above the first half of 2019).
“A quick review of passenger traffic numbers in July 2024 saw a strong recovery of 92 percent, driven by the international sector, outpacing the domestic sector since November 2023.
“This recovery is supported by the resumption and launch of foreign airlines, bringing the number of airlines operating in Malaysia to 71 (financial year 2019: 69 companies), with five more expected to operate in the second half of 2024,” he said.
Therefore, the research firm maintains a ‘neutral’ recommendation on the aviation sector.
It selected Capital A as the sector’s top pick with a ‘Buy’ recommendation at a target price (TP) of RM1.06 as its airline business was less affected by the recent disruption.
In addition, Capital A’s aircraft lineup was not significantly affected during the pandemic, allowing it to focus on expansion and giving the company the opportunity to fill capacity gaps by its competitors.
“On a separate note, the group is also in the final stages and is on track to complete the PN17 restructuring plan by the fourth quarter of 2024,” he said.
In the second half of 2024, Capital A plans to reactivate 15 aircraft and expects eight new deliveries, thus increasing its operating fleet from 82 percent in the second quarter of 2024.
Its airlines (excluding Cambodia) managed to increase seat capacity by 79 percent in the quarter, with a strong average load factor of 90 percent.
It expects passenger traffic to recover to 89 percent in the third quarter of 2024, supported by an 82 percent recovery in seat capacity.
Meanwhile, the recovery of the level of passenger operations in the first half of 2024 Malaysia Airports Holdings Bhd (MAHB) achieved momentum, with overall passenger traffic, including operations in Malaysia and Turkey (ISG), reaching 95 percent of pre-pandemic levels.
This recovery was largely driven by a 63 percent increase in international traffic on ISG compared to 2019, he said.
