Maybank said it came away feeling positive about Capital A’s prospects post sessions with the group, as it also expects its PN17 status to be lifted by mid-2025E.
The focus of discussions was on its airlines which will be sold to AAX in exchange for AAG shares. Recall that CAPITAL A shareholders will still have exposure to AAG as every 1 CAPITALA share entitles them to 0.4-0.5 AAG shares
After an eye watering 1Q24 average fare of MYR264, CAPITAL A reiterated that QTD average fare remains high at >MYR250 or >25% higher than preCOVID times. And, it is experiencing c.90% load factors or 5ppts higher than pre-COVID times. Domestic demand remains resilient while foreign demand improved markedly after the visa requirement for Chinese and
Indian visitors was waived by Malaysia on 1 Dec 2023. Long term, the hous is forecasting lower fares of MYR236-MYR242 and load factors of 86%.
Maybank believes the best quarters have yet to come, the group generated 1Q24 core net profit of MYR66.5m although only 78% of its aircraft were operational. It expects 92% of its 221 aircraft to be operational by year end. To be sure, it will be more challenging and expensive to return the remaining aircraft to service as they are older and have been idle for some time but concurs with Capital A’s timeline expectation. It also helps that spot jet fuel prices have fallen to c.USD95/bbl after averaging at USD103/bbl in 1Q24.
Aims to have PN17 status lifted in 1Q25/2Q25
On the disposal of its 5 airlines to AAX, CAPITALA expects submission of a circular to BME this month, approval from BME next month, EGM seeking shareholders’ approval in Aug, high court approval for the distribution of AAG shares in specie in Sep and listing of AAG shares in Oct. On its PN17 status, CAPITALA expects announcement of its regularisation plan in Jul,
submission of a circular to BME in Sep, approval from BME in Nov, EGM seeking shareholders’ approval in Dec and uplifting of its PN17 status in 1Q25/2Q25 after 2 profitable quarters
