Saturday, August 1, 2009

Analysts positive on AirAsia placement plan

01 August 2009

PETALING JAYA: Analysts have responded positively to AirAsia Bhd’s plan to place a private placement of 20% of its share capital to raise about RM500mil, saying the move would “substantially enhance” AirAsia’s ability to restructure its finances while earnings dilution would be minimal.

The airline recently proposed a private placement of new shares amounting to 20% of its existing paid-up share capital or 475 million shares, with the aim to reduce debts and have more cash.

Affin Investment Bank said it has turned “sanguine” on AirAsia following the announcement of the private placement plan, in addition to the budget airline’s decision to defer delivery of eight aircraft in 2010 and seven in 2011 to 2014.

“We were previously concerned over AirAsia’s increasingly stretched balance sheet in lieu of its aggressive fleet expansion as well as steep earnings dilution arising from a potential cash call,” the brokerage said.

Based on AirAsia’s closing price on Thursday at RM1.48 and an estimated RM500mil to be raised, the research house calculated that some 338 million new shares would be issued.

“This represents 13% of the enlarged share base of 2.7 billion. Together with the guidance that the placement price will be close to prevailing market price, we thus believe that the potential earnings dilution will be minimal,” it said.

Affin Investment also said the lower capital expenditure (capex) requirements in tandem with the deferment in aircraft delivery addresses its concerns over AirAsia’s future funding commitments, and estimated that its net gearing position would fall to 2.6 times from 3.7 times in first quarter.

The budget airline’s capex has been reduced to RM4.5bil over fiscal year 2010 (FY10) to FY11 from RM6.8bil based on initial aircraft delivery schedule.

Affin also lifted its core earnings forecast by 6%-7% for AirAsia, projecting that the airline would make RM545.5mil in fiscal year 2010 and RM591.7mil in 2011.

However, after accounting for an enlarged share base in FY10, the budget airline’s earnings per share (EPS) would decline 7%, the brokerage said.

Affin has lifted its recommendation on AirAsia to “trading buy” from “reduce” with the target price raised to RM1.81 from RM1.10 previously.

TA Securities said the private placement would substantially enhance AirAsia’s ability to restructure its finances.

“Gearing ratio would decline to 2.7 times from 3.7 times,” it said in a note to clients recently, noting that a high gearing level was a key investment concern on the stock.

The brokerage adjusted upwards AirAsia’s earnings estimates by 10.9% to RM574.8mil in fiscal year 2009 and by 45.3% to RM758.5mil in 2010.

TA has maintained its “buy” call on the stock with a target price of RM2.20.

The brokerage said it estimated AirAsia’s private placement would raise gross proceeds of about RM487mil, with the proceeds to be allocated for working capital purposes only.

“The group is more likely to allocate 10% to institutional investors, while the balance will be allocated to existing shareholders,” analysts with the brokerage said.

ECM Libra Investment noted that AirAsia’s shares have surged 27.5% in just two weeks, saying it did not expect its trading target price of RM1.50 to be achieved so fast.

The brokerage recommended a “buy” call on AirAsia with a 12-month target price of RM1.90.

“If AirAsia can break above its major resistance at RM1.70, it will likely head towards the RM2.00 region soon,” ECM Libra said in a research note.

The counter was heavily traded yesterday to close two sen higher, or 1.3% at RM1.50, with 15.7 million shares changing hands.

Abu Dhabi is new Mideast hub for AirAsia's long-haul carrier

01 August 2009

KUALA LUMPUR: AirAsia's Group CEO Tony Fernandes has confirmed that Abu Dhabi will be the new Middle East hub for its long-haul carrier AirAsia X.

Having a hub means that the carrier will be able to base its planes outside Kuala Lumpur, and it will not be limited to servicing destinations within an eight-hour radius from the Malaysian capital.

This will allow its network to extend to North Africa and Europe, as it can use the Middle East port as a stopover.

AirAsia to start daily direct services from Kochi to Kuala Lumpur effective October 1, 2009

31 July 2009

Low Cost Carrier AirAsia, based in Kuala Lumpur, will start daily direct flight services from Kochi to Kuala Lumpur from October 1, 2009. For this service, the airline will use A320 aircraft that has a seating capacity of 180 people. This information was given by A C K Nair, Airport Director, Cochin International Airport Limited (CIAL). According to Nair, a group of AirAsia delegates recently visited CIAL to finalise the airline’s daily service from Kochi to Kuala Lumpur. The airline which presently has daily direct flights from Trichy (Tamil Nadu) to Kuala Lumpur has now decided to add one more daily flight on this route, effective September 1, 2009.

AirAsia announce extra Gold Coast flights to meet demand

31 July 2009

AirAsia have added a further two weekly return flights on its Kuala Lumpur-Gold Coast route due to demand, the carrier announced Thursday.

The additional flights will start from October 21, increasing from the existing four flights a week to six.

To celebrate AirAsia is offering sale fares from $149 ex Gold Coast to Malaysia available for booking from now until 9 August 2009 for travel between 20 October 2009 and 10 January 2010.

Fares include include airport taxes with no extra charge for administration or fuel surcharges.

“For the Gold Coast market alone, our passenger traffic grew by almost 15 per cent in the first half of 2009 versus the same period in 2008” said AirAsia X Chief Executive Azran Osman-Rani.

He said the increased growth the carrier was experiencing had proved that it was not a seasonal holiday route, as it is widely believed by skeptics.

“Loads have been consistently strong year-round and this has given us confidence to increase our capacity by 50 per cent with our two additional weekly flights.”

AirAsia X flies into the Middle East

31 July 2009

AirAsia X will shortly reveal its new base in the Middle East to expand its reach into Europe/North Africa and take the pressure off its congested Kuala Lumpur hub. CEO, Azran Osman-Rani, told The Centre, “we’re basically looking at using the Middle East/Gulf airport to launch one-stop services [from Kuala Lumpur] to Europe/North Africa”, adding “obviously, the airport we choose must allow full fifth freedom ‘beyond’ rights to make this work”.

High aircraft utilisation rates are crucial to the long-haul LCC’s business model, providing it a significant cost advantage over its rivals. But increasing congestion at the Kuala Lumpur LCCT, which has not expanded as quickly as the AirAsia Group would like, has forced the carrier to consider other options. But there are also powerful strategic reasons for basing there. For example, short-haul low cost operations by the growing number of Gulf LCCs expands opportunities for connections into India and other Middle East destinations. This "connectivity: has been extremely valuable for AirAsia X in Kuala Lumpur, as well as London Stansted.

The Middle East, which continues to exhibit strong rates of traffic growth, represents a key opportunity for AirAsia X, suiting the range of its growing A330-300 fleet for services to destinations in Europe and North Africa.

Mr Osman-Rani explained, “instead of the plane flying back to KL, it may fly off to Europe/North Africa, and then back to Middle East and back to KL. It’s not a ‘real’ hub, in the sense that the aircraft will be based there [in the Middle East]. But it allows us to tap new markets (obviously ones where there are no direct services to Southeast Asia) and to keep the aircraft out of KL, so that we reduce potential parking space congestion at the KL LCCT”.

Mr Osman-Rani added an announcement would be made “in a couple of weeks’ time” about the airport to be used.

AirAsia X yesterday announced plans to add two weekly frequencies between Kuala Lumpur and Australia's Gold Coast for a total of six from 21-Oct-2009, to cater for increasing demand. The carrier reports an almost 15% year-on-year increase in passenger traffic there in 1H2009.

Mr Osman-Rani stated the Gold Coast had proved to be “an enduring route for the airline”, which now also operates to Melbourne and Perth. The carrier had been seeking rights to launch services to Sydney, but the Malaysian Government turned down its application.

Thursday, July 30, 2009

AirAsia X expanding despite flying rights halt

30 July 2009

KUALA LUMPUR: The failure to secure the rights to fly to Sydney and Seoul will not stop AirAsia X from expanding.

The long-haul budget carrier planned to redeploy excess capacity through an expansion in existing routes as well as flying into Chengdu and the Middle East, said chief executive officer Azran Osman-Rani.

“With the turn of events, we will devise a new strategy and not delay our expansion. We also have more route approvals (that we could use).

“We do not want to lose the (growth) momentum created in the past 20 months,’’ he told a press briefing here yesterday, adding that AirAsia X would fly to Chengdu soon and the Middle East before Hari Raya Haji

He declined to name the destination in the Gulf region, merely saying it has a Formula One racing circuit with vast connectivity.

Both Bahrain and Abu Dhabi have F1 circuits; sources told StarBiz it could be Abu Dhabi.

AirAsia X now flies to seven destinations – Gold Coast, Melbourne, Perth, Tianjin, Hangzhou, Taipei and London – using five aircraft.

It will add three new aircraft before year-end, thus the interest to fly to Seoul and Sydney.

The Government has delayed making a decision on AirAsia’s request to fly to Sydney and Seoul.

Asked when it could get the nod to fly to Seoul and Sydney, Azran said: “No visibility, but we are moving on.

“We also need lead time to market the routes and it would be too late, so we decided to redeploy by adding more flights to existing routes and being creative in opening new routes.’’

AirAsia X will increase capacity by 40% to Taipei, 50% for Gold Coast and 20% for Hangzhou, according to Azran.

It now flies five times weekly each to Taipei and Hangzhou and four times weekly to Gold Coast.

AirAsia X has rights to fly to Melbourne and Perth 14 times weekly and will look to raise the capacity there.

“Adding more flights to Melbourne and Perth will benefit the network, transit time and improve yields,’’ Azran said.

Other points in China on AirAsia X’s radar screen are Xian, Wuhan and Shenyang.

Next year, it will fly to India and has submitted an application to fly to New York.

The airline’s growth momentum was strong in the first half of 2009, with more passengers carried than all of 2008.

July is also the fourth consecutive month that AirAsia X had sold 100,000 tickets, with its London sector achieving record 90% load factor.

It will also set up a virtual hub in the Gulf region in 2010 in partnership with an airport there.

That will be its springboard to new markets and a strategy to build a wider network ahead of it taking delivery of its A350 aircraft in 2016.

The point in the Gulf region will serve to link up cities in Europe and Africa.

According to Azran, 22% of the airline’s passengers to London go to other cities, which gives AirAsia X the confidence to set up a hub outside Malaysia.

The rationale to have a hub outside Malaysia was also due to concerns that the new Low-Cost Carrier Terminal might not be ready by 2011, and that flying from Kuala Lumpur limited the airline to an 8-hour radius, he said.

“We need to get a contract from MAHB (Malaysia Airports Holdings Bhd) that provides incentives for us to grow or we will use more hubs and keep our aircraft outside of KL.

“The virtual hub is a strategic twist to the way we will operate our business, given the constraints,’’ he said.

Another possible area for a virtual hub is the Trans Tasman area (Australia/New Zealand).

Next year, AirAsia X would also focus on improving its seat configuration to add more leg-room and flat beds as part of its strategy to improve its products and services, Azran said.

AirAsia X has no plans for merger with AirAsia

29 July 2009

Malaysia long-haul low-cost carrier AirAsia X says there are no plans for a merger with parent AirAsia.

"As far as AirAsia X is concerned, nobody here is looking at [a merger]," says AirAsia X CEO, Azran Osman-Rani. "We've received no proposal from AirAsia."

In early June, AirAsia CEO Tony Fernandes brought up the possibility with Hong Kong's South China Morning Post newspaper, saying that "logically [AirAsia X and AirAsia] should be together but it has to be up to the board to decide." He then told ATI in an email that the suggestion was his "personal view."

AirAsia has a 16% stake in AirAsia X. Aero Ventures, which Fernandes started with other prominent Malaysians and Air Canada's Robert Milton, owns 48%. The other investors are Richard Branson's Virgin Group [16%], Bahrain's Manara [10%] and Japan's Orix [10%

AirAsia launches ‘Singapore Night Fever’ Promotion

29 July 2009

AirAsia’s latest ‘Singapore Night Fever’ F1 promotion features direct flights from Kuala Lumpur to Singapore with all-in, low-fares from as low as RM39 (Sin$29).

Bookings for this promotion are open until 9 August 2009 for travel between 17 August and 30 November 2009.

This latest promotion from the low cost airline also offers special deals to Singapore from Langkawi, Penang, Kuching, and Kota Kinabalu, plus regional connectivity to the Lion city via Indonesia (Bandung, Bali, Jakarta, Pekanbaru, Yogyakarta) and Thailand (Bangkok, Phuket).

In addition to the low-fare deals, passengers also stand a chance to win bay grandstand passes to the ‘2009 Formula 1 Singtel Singapore Grand Prix’ worth Sin$298 each, when they book flights to or from Malaysia, Indonesia, Thailand or Singapore during the specified booking period.

Every 50th guest that books during the specified booking period will win a pair of passes for all three race days. Terms and conditions apply.

AirAsia X to set up virtual hub in Middle East

29 July 2009

KUALA LUMPUR: AirAsia X Sdn Bhd, a long-haul budget airline and related company to AirAsia Bhd, is looking to set up its first ever virtual hub in the Middle East next year.

AirAsia X chief executive officer Azran Osman-Rani told reporters Wednesday that this hub would serve the region and beyond and was part of the airline’s expansion strategy.

He said the hub would be used for flights from Malaysia to Middle Eastern destinations as well as from the Middle East to Europe.

Wednesday, July 29, 2009

AirAsia Aerhad

29 July 2009

AirAsia is pleased to announce that it has today entered into a Cooperation Agreement with Tune Talk Sdn Bhd (“TTSB”) (the Agreement”). The purpose of the Agreement is to generate extra revenue and further boost the AirAsia’s branding.

Details of TTSB TTSB was incorporated on 13 January, 2006 and is principally engaged in business as providers of telecommunication services and other related services. TTSB is 35.75% owned by Tune Ventures Sdn Bhd (“TVSB”) in which both Dato’ Sri Tony Fernandes (“DSTF”) and Dato’ Kamarudin Bin Meranun (“DKBM”) are substantial shareholders.

Salient terms of the Agreement Under the terms of the Agreement, the Company will:

(a) Become the Launch Partner of TTSB; (b) Purchase 200,000 units of TTSB SIM Cards worth RM860,000 (“Purchase Price”) that will bear AirAsia’s branding along with TTSB’s branding;

(c) Satisfy the Purchase Price by way of 5,059 e-gift Voucher in RM200 denomination less 15% discount;

(d) Be offered free of charge advertising in the various advertising platforms of TTSB in the value of the Purchase Price;

(e) Further, the Company will market TTSB’s Top Up Vouchers and will be remunerated with a 5% sale commission on total top-up sales;

(f) Any unsold TTSB SIM Cards will be disposed off in a manner to be mutually negotiated and agreed upon by Parties.

4. Rationale for entering into the Agreement The rationale for entering into the Agreement is as follows:

(a) To generate extra revenue through sales of TTSB SIM Cards and Top Up Voucher;

(b) To generate additional online ticket sales via distribution of e-gift voucher by TTSB through its loyalty programs;

(c) To enhance and further boost AirAsia’s branding through various advertising platforms made available by TTSB free of charge;

5. Financial Risks The downside financial risks associated with the Agreement are expected to be very limited because the Company does not need to make extra investment to market or sell the TTSB SIM card or Top Up Voucher, which will be sold on board all AirAsia’s flights by the Company’s existing manpower. In addition, the Company will be able to generate more online sales via the e-gift vouchers and additional revenue from selling TTSB’s SIM Card and Top Up Voucher.

6. Directors’ and major shareholders’ interests DSTF and DKBM are Interested Directors by virtue of their directorships in both the Company and TTSB respectively. DSTF and DKBM are also Interested Major Shareholders by virtue of their shareholdings in both TVSB (a major shareholder of TTSB) and Tune Air Sdn. Bhd. (a major shareholder of the Company). Save for the Directors and major shareholders as disclosed below (respectively known as “Interested Director(s)” and “Interested Major Shareholders”), none of the Directors and/or major shareholders of AirAsia and/or persons connected to them have any interest, direct or indirect, in the Agreement. The shareholdings of DSTF and DKBM in AirAsia as at 28 July, 2009 are as set out in the table below.
No. of Shares%No. of Shares%
DSTF2,627,0100.11(1) 729,458,382 30.71
DKBM1,692,9000.07(1)729,458,382 30.71

(1) deemed interested by virtue of Section 6A of the Companies Act, 1965 through a shareholding of more than 15% in Tune Air Sdn Bhd

Accordingly, the Interested Directors have abstained from all Board and management deliberations in respect of the Agreement and provision of the services.

7. Statement By The Board Of Directors
Save for the Interested Directors, the Board having considered all the relevant factors in respect of the Agreement is of the opinion that entering into the Agreement is in the best interest of the Company.
8. Financial effect of the Agreement

This Agreement will not create any material financial impact nor will it have any effect on the share capital and substantial shareholders’ shareholdings of AirAsia in the current financial year. It is also not expected to have a material effect on the consolidated net assets of AirAsia and the consolidated earnings of AirAsia for this financial year ending 31st December 2009.
9. Approval required
AirAsia does not require the approval of its shareholders or any authorities to enter into the Agreement.
10. Document available for inspection
The Agreement is available for inspection at the registered office of the Company at 25-5, Block H, Jalan PJU 1/37, Dataran Prima, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia during normal business days from Mondays to Fridays (except public holidays) for a period of 3 months from the date of this announcement.

AirAsia to boost revenue via Tune Talk partnership

29 July 2009

PETALING JAYA: AirAsia Bhd yesterday signed a cooperation agreement with Tune Talk Sdn Bhd aimed at generating extra revenue and further boosting the AirAsia brand.

Incorporated on Jan 13, 2006, Tune Talk is principally involved in providing telecommunication services and other related services.

The company is 35.75%-owned by Tune Ventures Sdn Bhd, in which AirAsia group chief executive officer Datuk Seri Tony Fernandes and AirAsia deputy CEO Datuk Kamarudin Meranun are substantial shareholders.

In a filing with Bursa Malaysia, AirAsia said the rationale for the agreement was to generate extra revenue through sales of Tune Talk SIM cards and Top Up Voucher.

It was also to generate additional online ticket sales via distribution of e-gift vouchers by Tune Talk through its loyalty programmes as well as to enhance and further boost AirAsia’s branding through various advertising platforms made available by Tune Talk free of charge.

AirAsia said under the agreement, it would become the launch partner of Tune Talk and purchase 200,000 Tune Talk SIM cards (worth RM860,000) that would bear AirAsia’s and Tune Talk’s branding.

“The downside financial risks associated with the agreement are expected to be very limited because the company does not need to make extra investment to market or sell the Tune Talk SIM card or Top Up Voucher,” it said.

The products would be sold on board all AirAsia’s flights, it added.

AirAsia said it did not require the approval of its shareholders or any authorities to enter into the agreement with Tune Talk.

It also said the agreement was not expected to have a material effect on its consolidated net assets and consolidated earnings for the current year ending Dec 31.

AirAsia X to name new flight destinations

29 July 2009

PETALING JAYA: AirAsia X will today announce some new destinations it will be flying to in the coming months in its quest to expand.

“We are not going to slow down just because we have not get approval yet to fly into Sydney and Seoul. We will add more flights and services and continue with our expansion,’’ AirAsia X chief executive officer Azran Osman-Rani told StarBiz yesterday.

Several weeks ago, AirAsia X had asked for rights from the Government to fly into Sydney and Seoul as these markets offered good growth potential for the carrier.

However, in an interview with StarBiz which was published yesterday, Azran said “the Government decided to defer granting us the approval. They want (AirAsia) to settle (its) dues with Malaysia Airports Holdings Bhd (MAHB).’’

“It is unfortunate that we are brought into the AirAsia issue but we have written (to the Government) and explained that our accounts are all current,’’ he had said. AirAsia owes MAHB RM65mil in airport service charges. AirAsia and AirAsia X have common shareholders.

Maybank Investment Bank senior analyst Khair Mirza said it was unusual for the Government to withhold approval for the reasons quoted.

“It suggests that there may be more issues than those quoted and there could be reciprocation issues as well,’’ Khair said.

Another analyst said AirAsia X should just go ahead with its expansion into other markets as there were many more destinations that offered equally exciting opportunities as Seoul and Sydney.

The likely markets that AirAsia X will fly to with the three new aircraft it will be taking delivery of this year are speculated to be the Middle East, particularly Abu Dhabi, and China. It is likely to increase frequency on its flights to Melbourne, Perth, Gold Coast, Taipei and Hangzhou.

AirAsia X denied rights to Sydney, Seoul

28 July 2009

KUALA LUMPUR: Long-haul budget airline AirAsia X has been denied permission by the Malaysian government to fly into Sydney and Seoul, due to a row over its sister carrier AirAsia, a report said Tuesday.

The move has forced AirAsia X to scramble to make plans to utilise the three new Airbus A330 aircraft due for delivery this year, the Star daily said.

"We had asked for rights to fly to Sydney and Seoul and the government decided to defer granting us the approval," AirAsia X's chief executive officer Azran Osman-Rani reportedly said.

He said the government first wanted AirAsia to settle the issue of an outstanding 65 million ringgit (US$18.5 million) payment for airport services with Malaysia Airports Holdings (MAHB) before giving the green light.

"The dispute is between the two (AirAsia and MAHB) but delaying us from flying into these two destinations will not help travellers who have limited choices," Azran told the daily.

"We know the Koreans are keen to have us and both the airports - Sydney and Seoul - welcome us," he added.

AirAsia was not immediately available to confirm the reported comments.

An affiliate of regional low-cost carrier AirAsia and Virgin Group, AirAsia X was launched in January 2007. AirAsia and AirAsia X have common shareholders, including AirAsia founder and CEO Tony Fernandes.

AirAsia X currently flies to three Australian destinations - the Gold Coast, Melbourne and Perth.

AirAsia X fails to get Govt nod for flights to Sydney and Seoul

28 July 2009

SEPANG: AirAsia X’s expansion into Sydney and Seoul will be delayed as it has failed to get the nod from the Malaysian Government to fly to the two cities, forcing the long haul low-cost carrier to formulate a back-up plan to utilise some of the new aircraft that will be delivered later this year.

“We had asked for rights to fly to Sydney and Seoul and the Government decided to defer granting us the approval. They want (AirAsia) to settle (its) dues with Malaysia Airports Holdings Bhd (MAHB),’’ AirAsia X chief executive officer Azran Osman-Rani told StarBiz in an interview recently.

“It is a high profile issue and needs a lot of justification but we are AirAsia X and not the ones that owe MAHB money for airport services. Every invoice that we receive is paid within 30 days.”

“It is unfortunate that we are brought into the AirAsia issue but we have written and explained that our accounts are all current,’’ he said.

About RM65mill payment due to MAHB from AirAsia is in dispute.

Azran reiterated that “the dispute is between the two (AirAsia and MAHB) but delaying us from flying into these two destinations will not help travellers who have limited choices and we lose opportunities of the multiplier impact (that) tourism has.”

“We know the Koreans are keen to have us and both the airports – Sydney and Seoul – welcome us,’’ he said.

The delay may be seen as a setback in its expansion plans as with so much capacity coming onstream, AirAsia X has to work fast to secure rights for other markets so that its planes are not grounded for too long.

“We believe the two markets are big enough for more players. MAHB has been trying hard to get Qantas and Jetstar back and here we are waiting to fly to Sydney,’’ Azran added.

Whether it is AirAsia or AirAsia X, there are common shareholders in both companies and allowing AirAsia into newer markets will certainly heat up competition and drive fares down as seen from its flights to Gold Coast, Melbourne, Perth and London.

“Fundamentally, we do not fly to a destination and take passengers away. We create a new market which even other players can tap into,’’ the AirAsia X chief said.

AirAsia X is set to take delivery of three A330 this year – one each in September, November and December.

It needs to utilise these aircraft and Azran said he was now busy trying to come up with a plan so that the aircraft would be fully utilised since the Sydney and Seoul routes would be delayed.

“We will look at the near term first since we will take delivery of an aircraft in September. We may add capacity on our existing routes to Gold Coast, Hangzhou and Taipei. The new destinations that we are considering include Chengdu. We are hoping to get the time slots soon and the Transport Minisntry has been really helpful in all this,’’ he said.

AirAsia X might fly into either Sharjah or Abu Dhabi sometime this year as part of its plan to venture into the Middle East, he said, adding that Baharin was also on the cards but Teheran would be delayed.

India is a market that AirAsia X wants to look at in 2010 but Amritsar may come earlier if it manages to get the rights, but via Bangkok.

As for the US, the airline liked New York, San Francisco and Los Angeles but formal submissions had not been made, although the process had begun, Azran said, adding that AirAsia X hoped to cover the US by next year.

AirAsia to have second daily flight to Tiruchirapalli from Sept 1

28 July 2009

PETALING JAYA: Good news for those who travel to Tiruchirapalli often. Low-cost carrier AirAsia will launch a second daily flight to the Indian district from Sept 1.

To celebrate the introduction of the flight, AirAsia will be offering an all-in fare of RM129 for the travel period between Sept 1 and April 30.

The booking period for the flight will be from today to Aug 2.

AirAsia Group commercial regional head Kathleen Tan said the airline was proud to be servicing an underserved route and opening up this market to the world.

“Tiruchirapalli is a highly popular and desired destination among Hindus in Malaysia as it has an abundance of temples, which are popular for pilgrimage,” she said in a statement yesterday.

She said that there was an increase in visiting travellers from the district in Tamil Nadu who were progressively using Kuala Lumpur as a connecting gateway to over 130 routes in South-east Asia and beyond.

“In fact, within the first month of flying to India, we have enjoyed a load factor of 100% on this route,” Tan said.

She added that it was timely to add a second frequency.

Tiruchirapalli was AirAsia’s first destination in India since its inception on Dec 1 last year.

Sunday, July 26, 2009

Stock picks in key sectors

25 July 2009

IN good or bad times, there is always value to be found. StarBizWeek polled several analysts’ views on their stock picks and have compiled a list of eight stocks from several key sectors.

On the back of a 23% passenger growth and 77% load factor, analysts are expecting AirAsia Bhd’s quarterly results next month to surprise on the upside.

“Ancillary income will offset fuel price increase. It acts as the best defence against fuel price increase as every RM1 per pax increase will offset US$1 per barrel increase in fuel price,” says an analyst from ECM Libra.

He adds that ancillary income has doubled to RM29 per pax within the last two years and management targets to double it again to RM60 per pax by introducing more value-added services.

Meanwhile, AirAsia plans to defer the delivery of 15 A320 aircraft as it expects the construction of the new LCCT to be further delayed. Hence, capital requirement will be reduced by RM2.3bil while gearing will also be lowered.

“We reiterate our buy call on AirAsia with a target price of RM1.90. AirAsia is poised to outperform on consensus earnings upgrade in anticipation of strong second quarter results, sustained low fuel price and potential dual listing (or merger),” he says.

The analyst forecasts an 8.89% increase in revenue to RM2.87bil while net profit is expected to jump 211.13% to RM598.3mil for its year ending Dec 31, 2009.

irTran soars on positive outlook; Allegiant slumps on ancillary revenue fall; AirAsia higher

22 July 2009

Worldwide LCC share prices were mixed on Wednesday (23-Jul-09), reflecting softer conditions in European, Asian and North American equity markets. Oil prices in New York eased USD 32 cents to USD65.40 for Sep-2009 delivery, but rose 48 cents to USD67.19 in London.

Among the gainers, AirTran's shares jumped 10.8%, as the LCC reported a strong net profit of USD74.8 million 2Q2009, as it benefited from a combination of lower fuel prices, its decision to reduce capacity and its low cost structure, in what is otherwise a challenging and uncertain operating environment. AirTran CEO, Bob Fornaro, stated that, while the industry likely faces a slow recovery, AirTran's low cost structure puts it in a good position. He added that, as AirTran was one of the first airlines to react to the changing economic environment last year, it is “among the first airlines to show signs of recovery”.

Allegiant – yields and ancillaries down, remains unhedged

Also reporting yesterday was Allegiant Air. Despite the carrier reporting another solid performance in the quarter, with a nine-fold increase in net profit, the carrier’s share price slumped 9.4%.

While Allegiant remains a star performer in the US aviation industry, there are a few signs of weakness for the carrier: probably the most concerning is that, for the first time in years, ancillary revenue per passenger declined (albeit slightly, to a still impressive USD32.36/pax), with average fares also down in the quarter (-13%), although the carrier expects this to trend upwards in 3Q2009.

The carrier, which operates a fleet of geriatric MD80 aircraft, is also unhedged moving forward, making the carrier very susceptible to significant oil price increases in the future. However, contrary to the investor reaction, Allegiant CEO and President, Maurice Gallagher Jr, remains optimistic, stating, “we find ourselves in an exceptional place”, with the carrier also remaining hopeful that Jun-2009 “may mark the bottom of revenue softness”, as it approaches the seasonally-weak third quarter.

Mr Gallagher, added, "fares for July, including ancillary, are, thus far, trending slightly upwards, despite the large year-over-year capacity increase we have in this month. An improvement in the revenue environment as well as the recent moderation in fuel prices will help us to extend strong year-over-year earnings growth into the third quarter, historically the seasonally weakest of the year,” he concluded.

The unique airline has always been an enigma for the market, which tends to interpret its results uncertainly. It seems that investors are particularly anxious at the slightest indication of weakness, in particular the three issues – of reduced yields (over the previous, low season quarter), reduced ancillary income per unit and a – predictable – sequential quarter-on quarter increase in fuel costs for the unhedged carrier. Compared to carrier’s sequential comparisons, RASM fell 12% year-on-year for the quarter.

Elsewhere, in Europe, shares in Air Berlin, easyJet and Ryanair were all weaker yesterday, down 3.0%, 1.1% and 0.2%, while in Asia Pacific, AirAsia gained 2.4%.

Selected LCCs daily share price movements (% change): 22-Jul-09

AirAsia Submitting Merchant Bank

22 July 2009

We are pleased to announce the proposed issue by CIMB Bank of up to 100,000,000 European-style non-collateralised cash-settled call warrants over ordinary shares of RM0.10 each in AirAsia.

The AirAsia CW is constituted by the Deed Poll dated 7 April 2009 and First Supplemental Deed Poll dated 22 June 2009 executed by us, as supplemented from time to time. The AirAsia CW is subject to the terms and conditions of the Base Prospectus dated 8 May 2009, First Supplementary Base Prospectus dated 27 May 2009, Second Supplementary Base Prospectus dated 6 Jul-2009 and the Term Sheet for the AirAsia CW dated 22-Jul-2009.

The AirAsia CW is to be listed on the Warrants Board of Bursa Malaysia Securities Berhad and is the 7th call warrant to be issued by CIMB Bank under the Base Prospectus dated 8 May 2009.

A summary of the principal terms of the AirAsia CW is set out in Table 1.

AirAsia X CEO backs merger with AirAsia Bhd

23 July 2009

Azran: Merger will let AirAsia tap into long-haul markets

SEPANG: A merger between AirAsia X and AirAsia Bhd makes business sense and the combined balance sheet would make sourcing for future funding much easier, said AirAsia X chief executive officer Azran Osman-Rani.

“It would be difficult for AirAsia in the future if it did not have trunk routes as (this) is where the traffic volumes come from, so AirAsia needs growth from AirAsia X and the merger allows it to tap growth opportunities in the long-haul markets,” Azran told StarBiz in an interview.

“AirAsia cannot continue to just criss-cross and enter new markets, it needs a bigger base,’’ he added.

Given the nature of the business, which is counter-cyclical, a large base was necessary to balance the routes in peak and non-peak months, he said.

Azran Osman-Rani … ‘AirAsia needs growth from AirAsia X.’

That is why AirAsia X has to sell beyond Kuala Lumpur or else only 20% of the seats will be taken up. It has to sell destinations, be it in Malaysia or the region, and 80% of those travelling with AirAsia X use AirAsia to travel to Langkawi, Penang, Phuket or even Bali.

“That is why AirAsia needs growth from AirAsia X and for that greater control of AirAsia X is needed,’’ Azran said.

Recently, AirAsia group chief executive officer Datuk Seri Tony Fernandes was reported as saying his personal preference was for a merger of the two companies.

AirAsia has a 16% stake in AirAsia X and an option to increase it to 30%.

The remaining shareholders in AirAsia X are Aero Ventures Sdn Bhd (48%), the Virgin Group (16%), while Bahrain-based Manara Consortium and Japan-based Orix Corp hold the remaining 20%.

Aero Ventures is owned by Fernandes, Datuk Kamarudin Meranun, Datuk Kalimullah Hassan, Lim Kian Onn and former Air Canada chairman and CEO Robert Milton.

Fernandes and Meranun are controlling shareholders in AirAsia with a 30.7% stake via Tune Air Sdn Bhd.

Even though it is still at the idea stage, critics are already saying the merger is necessary to rescue AirAsia X as, to them, AirAsia is now subsidising AirAsia X.

“Rubbish, we can clearly dispute that. For the first quarter ended March 31, 2009 our net profit was RM18mil and we are net cashflow positive. We even had a little cash at RM3mil.

“We are in a very good position and on a much firmer footing and now is an interesting time to talk about merger,’’ Azran said.

Fernandes, in a separate interview with StarBiz recently, said the merger was merely his proposal but felt it was a good model. However, no decision has been made thus far.

“When we started AirAsia X, a lot of critics said we could not do it but AirAsia X has turned out to be a very cash-flow positive company. Azran will be going on a roadshow soon to explain so that people have a better understanding that this long-haul, low-cost model can work,’’ Fernandes said then, adding that the roadshow would cover Kuala Lumpur, Singapore, Hong Kong, New York and London.

A share swap is likely but Azran said AirAsia had an option to increase its stake from 16% to 30% and with that it could equity account its venture in AirAsia X.

“They can either put cash in and increase the stake from 16% to 30% or do a share swap. It is a decision only the shareholders can make and I am not privy to that,’’ he said.

Asked when the merger was likely to happen, he said: “I will be surprised if it happens this year. AirAsia X has not received any offer and the process cannot begin. We also have to appoint a valuer and AirAsia has to hold an EGM.’’

AirAsia X was last valued at RM1.3bil when Manara and Orix took up their stakes.

Good response, so AirAsia increases KL-Taipei flights

22 July 2009

PETALING JAYA: AirAsia is expanding the frequency of its Kuala Lumpur-Taipei route from five a week to daily flights, starting Oct 19.

The route was launched in April and had received overwhelming response, said AirAsia chief executive officer Azran Osman Rani.

“We are running at more than 75% load factor. More than 20,000 seats were sold within the first 12 hours of the sales announcement in April and forward bookings were exceptionally strong,” he said.

The all-in-fare is priced at RM129. Tickets for the period from Oct 19 to Jan 10, 2010 can be booked from tomorrow to July 31.

Citibank AirAsia credit cardholders get to enjoy 24-hour priority booking, starting today.

Free room stay is also offered, via the airline’s GoHoliday package, at Hotel Renaissance, Hotel Equatorial, One World Hotel, Corus Hotel and Tune Hotels.

Another promotion, Best Online Rates in Taipei, offers five-star hotel rooms for as low as RM383 per night.

AirAsia to fly from Miri, Tawau to Singapore

20 July 2009

will launch two new flights from Miri and Tawau to Singapore from Sept 9 to build up a stronger virtual hub in the “lion city”.

The introduction of these new routes makes AirAsia the first and only airline flying the Singapore-Miri and Singapore-Tawau sectors.

With its vast connectivity around the region, AirAsia now has a total number of 406 weekly flights to and from Singapore.

“We are proud to open up new markets as these sectors are not served. Students, families and foreign workers can now take advantage of our low fares and renew their social ties more frequently or even indulge in leisure holidays to both countries,” said AirAsia regional head of commercial Kathleen Tan.

“There are countless attractions in East Malaysia and Singapore offering a wonderful journey of discovery into their culture and heritage.

“Our recent initiative to remove the administration fee reiterates AirAsia’s commitment to offer big value so everyone can fly following our move to abolish fuel surcharge last year,” she added.

The two new routes will draw more inbound international tourist traffic arriving from Singapore into Sabah and Sarawak alongside from Kuala Lumpur through AirAsia X’s long haul network.

This brings in Chinese, Australians and European tourists, who are often interested to explore surrounding cities in the region and these routes will entice them to visit the state for its rich ecotourism activities.

AirAsia, through its holiday division GoHoliday, is also offering its guests free rooms (subjected to terms and conditions) when they book at its partner hotels in Singapore such as Concorde Hotel Singapore, Le Peranakan Boutique Hotel Singapore, Siloso Sentosa Hotel, The Metropolitan Y Hotel, Hotel Royal and Quality Hotel Singapore.

This promotion is valid via and is available on first come, first served basis.

Passengers can also follow AirAsia on Twitter, Facebook, and AirAsia blog where they will provide real time updates on the latest promotion.

Airasia celebrates Perth � Bali inaugural flight

20 July 2009

AirAsia, Skytrax World’s Best Low-Cost Airline celebrated the much awaited Perth-Bali flight The inaugural flight from Bali - Perth today carried 100% load both ways signifying the stout demand for the sector. Commencing August 19, 2009 AirAsia will be servicing the Bali-Perth route between Ngurah Rai International Airport and Perth Airport with 2 direct daily flights marking a major tourism and economic coup for both countries. Jointly, AirAsia Group has 21 flights weekly to Perth inclusive of one daily direct flight departing from Kuala Lumpur.

Perth is the first Australian destination to be serviced from Indonesia by AirAsia Indonesia and it is the 4th international route operated from the Bali hub after Kuala Lumpur, Bangkok and Singapore.
AirAsia Indonesia has succeeded to pass the strict regulations of the Foreign Airline Operating Certificate of Australia and has met the requirements of the Australian Civil Aviation Safety Authority (CASAA), demonstrating AirAsia’s high safety standard.

In addition to that, AirAsia, the champion of low fares will bring its innovative products and services, spacious and comfortable cabin, fun and friendly crew to its guests so that they will enjoy unparallel level of comfort and convenience. AirAsia also offers the most extensive route network in the region hence AirAsia guests will enjoy seamless access in the region and beyond including routes serviced by AirAsia’s long-haul affiliate, AirAsia X.

Chief Executive Officer of AirAsia Indonesia Dharmadi, says “Bali is an ideal and exciting choice as it is a prime holiday destination for Australians. With its unique culture, spectacular beaches, water sports activities, Bali needs no introduction to them. There are quite a number of Indonesians who are not only pursuing their studies but are also residing in Perth. The number of Australian tourists visiting Bali in the first quarter of 2009 rose 24.85 percent to 71,970 from 57,647 in the same period last year. The Australian tourists accounted for 14.67 percent of the total tourists coming to the Island of Paradise in the first quarter, out of the number, 71,199 of the Australian tourists visited Bali via Ngurah Rai International Airport in Denpasar,”

“We are very keen to position Bali as the gateway to Indonesia and other Asean cities as the airport also offers strong domestic and international connections. Indeed we have recorded an increase of inbound traffic to Bali and other parts of Indonesia from Perth and surrounding Western Australia with the inclusion of this new Perth-Bali service.” added Dharmadi

Kathleen Tan, Regional Head of Commercial of AirAsia Group commented “We are very thrilled with AirAsia Indonesia’s first foray to Perth, Australia today. AirAsia is breaking the trend with our aggressive expansion plans and increasing frequencies despite the challenging economic climate and when other airlines are cutting routes or downsizing capacity. The demand for Perth-Bali route has been phenomenal; we’ve sold over 75,000 seats since last May when we opened for sale. AirAsia is very competitive and committed in offering the lowest fares and many will find that AirAsia is a highly attractive option through our 8 hubs in Penang, Kuala Lumpur, Kota Kinabalu, Johor Bahru, Bangkok, Jakarta, Bali, Bandung and a virtual hub in Singapore. This has enabled us to build an extensive route network with the greatest Asean and Indochina connection.”

Meanwhile Mr. Brad Geatches, CEO of Westralia Airports Corporation says "The introduction of this new route is great news for West Australians who can now expect more competitively-priced flights and greater access to this favourite holiday destination. This new service not only offers great value flights to Denpasar, it also opens up the entire Asia region to travellers who can use Bali as a stop over to other destinations. We expect both our inbound and outbound traveller numbers to continue to grow over the coming months thanks to the new service."

AirAsia is also offering great hotel rates and exciting packages under GoHoliday, its one stop travel portal

at Guests can benefit from greater savings and value for money on their accommodation in addition to the low fares that AirAsia offers. Currently, GoHoliday has a wide range of over 50,000 hotel partners where guests can select from 3-star hotels, 5-star hotels or even Boutique hotels to cater to every traveler’s budget.

The new route will be served by AirAsia’s brand new Airbus A320 aircraft, one of the most modern aircraft that boosts efficiency, enhances reliability and provides higher service levels to AirAsia’s guests. The Airbus A320 family provides operators with the highest degree of operational commonality and ensures guests’ safety and comfort.