Lion Air confirms 1H2012 IPO; Malaysian Airlines and Thai report results

Airline shares recovered on Friday, as increases in oil prices stabilised. Oil prices were up more than 10% last week, with both the Brent and West Texas Intermediate indexes hitting highs not seen since late 2008. Shares in Indian carriers were generally higher, with reports that the Indian Finance Ministry will discuss foreign direct investment in the aviation sector. Shares in SpiceJet gained 7.4%, while Jet Airways was up 4.7%.

Lion Air President Director Rusdi Kirana announced plans to sell a 30% stake in the company through an IPO in the first half of 2012 to raise USD1 billion, adding the proceeds will be used to strengthen the company's capital structure (Wall Street Journal, 25-Feb-2011). Mr Kirana stated the company plans capital expenditure of USD130 million in 2011.

Indonesia’s Wings Air and its parent company Lion Air signed (25-Feb-2011) an operational contract with ATR for the purchase of 15 additional ATR 72-500s. The aircraft will bring to 30 the total fleet of ATRs operated by Wings Air. With the introduction of the new ATRs in the coming months, Wings Air will further develop new routes from and to Sumatra, Sulawesi and Java, as well as connecting cities with a range within one hour, such as Surabaya and Denpasar. The 15 aircraft were an optional part of a USD650 million deal in 2009 to supply up to 30 aircraft, and would be delivered in 2012-2013. The first 15 aircraft would be fully delivered in 2011.

Malaysian Airlines reported an operating profit of USD44.9 million in 4Q2010 compared with its operating profit of USD9.5 million (MYR29 million) in 2009. The result bettered a forecast net loss of USD21.4 million. Full-year net profit of USD76.8 million also exceeded an estimated full-year net profit of USD62.8 million. MAS now aims for an operating profit of between USD98.3 million and USD197 million for the current financial year after achieving its target range of USD65.5 million-139 million in 2010. CEO Azmil Zahruddin stated the carrier will be affected by the increasing cost of fuel, attributed to the current political tensions in the Middle East.

Thai Airways financial highlights in 2010:

  • Total revenue*: USD6032 million, +12.4% year-on-year;
  • Total costs**: USD5756 million, +10.6%;
    • Fuel: USD1850 million, +20.2%;
    • Labour: USD1097 million, +28.0%;
  • EBITDA: USD949.0 million, -4.6%;
  • EBITDAR: USD1090.7 million, +4.4%;
  • Net profit: USD502.5 million, +109.0%;
  • Passenger numbers: 18.2 million, -1.7%;
  • Passenger load factor: 73.6%, +0.6 ppt;
  • Cargo traffic (FTKs): +17.2%;
  • Cargo load factor: 61.5%, +9.4 ppts;
  • Total assets: USD9616 million, ++8.1%;
  • Total liabilities: USD6902 million, -3.5%. 

*Based on the conversion rate at USD1 = THB30.55
**Excluding gains (losses) on foreign currency exchange but including share of profits (losses) from investments by the equity method and finance costs

Selected APAD daily share price movements (% change): 25-Feb-2011