Asiana Airlines expects to return to profit in 2010; AirAsia adds Vietnam to its JV portfolio
Asiana Airlines’ shares slipped 3.2% yesterday, as the carrier reported continued losses in 4Q2009 and FY2009, but it expects a return to operating profits in FY2010.
Asiana Airlines reported increased operating and net losses of USD202 million and USD299 million, respectively, in FY2009 (compared to an operating loss of USD45 million and a net loss of USD196 million in the previous corresponding period), as revenues slipped 8.0% (to USD3.4 billion) and passenger and freight yields weakened (down 8% and 7%, respectively).
In the final quarter of 2009, the carrier reported a swing back to operating profits as revenues were up 2.8% in the quarter, while operating costs were reduced by 9%. Passenger yields, however, were weaker, slipping 17% year-on-year, although cargo yield improved by 5%.
Looking forward, the carrier is anticipating a 16% revenue increase, to USD3.9 billion in FY2010, producing an operating profit of USD276 million. Yields are also expected to improve (domestic passenger yield by 7.7%, international passenger yield by 4.7% and cargo yield by 11.0%), with international passenger traffic also expected to gain (by 13.6%, although domestic passenger traffic is expected to be down by 8.9%).
AirAsia’s shares gained 3.0% yesterday, on the same day the LCC acquired a 30% equity stake in VietJet Aviation Joint Stock Company (VietJet Air), to establish a Vietnam-based JV LCC, which will carry the name VietJet AirAsia. The Ministry of Transportation of Vietnam approved the share acquisition on 09-Feb-2010. The carrier is expected to commence operations in 2Q2010. See related article: AirAsia's fourth cross-border JV: Vietnam. Next stop: The Philippines (then India and North Asia)?
Meanwhile, Jetstar CEO, Bruce Buchanan, stated the carrier is considering expanding the Jetstar franchise into other Asian markets, with the carrier confirming its intention to remain in Vietnam despite recent challenges. Shares in parent, Qantas, gained 2.1% yesterday.
Also among the region’s major LCCs, Tiger Airways (shares unchanged) transported 428,000 passengers in Jan-2010, a 53% year-on-year increase, with a 12 ppt load factor improvement to 86%.
RBS upgrades China Southern target price
The Royal Bank of Scotland has maintained its 'buy' rating for China Southern Airlines and upgraded its target price from HKD2.75 to HKD3.15. The target price represents a premium of 18.9% from the current price. Shares in the carrier gained 3.1% yesterday.
RBS stated passenger transport data of China Southern is improving and its cargo business is also expanding, with the potential recovery of the company currently being undervalued.
Asia Pacific selected airlines daily share price movements (% change): 10-Feb-2010