Asian stocks weaker; Qantas profitable in FY2009 and seeing improving market conditions

Asian stocks were weaker yesterday, dragging down the MSCI Asia Pacific Index down the most in two months, as concern spread that the US Federal Reserve’s plans this week to boost economic growth indicate an economic recovery is in jeopardy. The Commerce Department also reported yesterday that the US trade deficit widened in Jun-2010 by a record USD7.9 billion as imports rose and exports fell.

Shares in Chinese carriers were especially hard hit, with China Southern tumbling 4.1%, followed by Air China (-3.6%) and China Eastern Airlines (-3.4%), with the Chinese carriers falling most among the Hang Seng Index components (the Hang Seng fell 179.1 points or 0.8% yesterday).

Stocks were also weaker in Japan, South Korea, Australia and New Zealand, with Japan’s Nikkei 225 Stock Average decreasing 1.5%.

South Korea’s Kospi index declined 1.1%, while Australia’s S&P/ASX 200 Index lost 1.3%, while New Zealand’s NZX 50 Index was 1.1% weaker. 

Shares in Korean Air, Asiana, Qantas, and Air New Zealand were all weaker, with share price reductions of 5.3%, 4.3%, 3.1% and 1.7%, respectively.

Asia Pacific selected airlines daily share price movements (% change): 11-Aug-2010

Qantas reports 4% reduction in net profit in FY2009; market conditions improving

Qantas today (12-Aug-2010) released its financial highlights for the 12 months ended 30-Jun-2010, reporting a net profit of USD100.5 million (-4.5% year-on-year) and total revenues of USD12.4 billion (-4.2%), while operating costs were reduced by 5.8% (to USD12.1 billion).

The carrier commented that trading conditions have “steadily improved”, with forward booking indicating that “yields in the first half of FY2011 will be higher than the first half FY2010”. Qantas added that domestic business and total international revenue is “expected to improve, while domestic leisure continues to be highly competitive”, continuing: “If present conditions continue, first half Underlying PBT for FY2011 may be materially stronger than first half FY2010.”  

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Thai Airways Board finalises Airbus order; approves additional term loans

Shares in Thai Airways slipped 0.7% yesterday. The carrier announced that it has finalised the purchase agreement with Airbus for seven A330-300 aircraft, confirming a commitment announced at last month's Farnborough Air Show. The Board had also approved the 15 aircraft types to be ordered:

  • Seven A330-300 regional aircraft (through financial lease);
  • Eight B777-300ER intercontinental aircraft (through operating lease).

The Board also approved plans to acquire additional term loans and committed revolving credit lines in accordance with the carrier's financial restructuring plan as follows: 

  • Bangkok Bank: THB12 billion for eight years;
  • Thanachart Bank: thb2 billion for seven years;
  • TMB Bank: THB2 billion for seven years and THB1 billion of five-year revolving credit line;
  • Tisco Bank: THB1.5 billion for seven years and THB1.5 billion of seven-year revolving credit line. 

Meanwhile, Thai Airways reported double digit traffic (RPKs) growth of 12.4% in Jul-2010, with a 5 ppts load factor improvement to 76.5%. Cargo traffic (FTKS) soared 48.2%, with an average load factor of 61.8%.

Cathay pacific pax increase 20% in Jul-2010; load factor also improve

Also reporting traffic yesterday was Cathay Pacific, which reported a 19.5% year-on-year increase in passenger numbers to 2.4 million, with an average passenger load factor of 87.5%, a 4 ppts year-on-year increase. Passenger traffic (RPKs) increased 14% in the month, driven by strong growth to China (+54.2%) and Northeast Asia (+22.1%). Shares in the carrier slipped 1.0% yesterday.