More cuts on China flights

The coronavirus outbreak has caused local airline businesses to take further actions to cut routes


LOCAL airline companies have moved to cut routes as the death toll from the 2019 novel coronavirus (2019-nCoV) outbreak continues to rise.

Malindo Airways Sdn Bhd is suspending two more international services between Malaysia and China temporarily until the end of this month.

The carrier stated it will continue to closely monitor the situation in China as the health and safety of its passengers and employees are the top priority.

“We will provide the latest development to our passengers in our website accordingly,” it said.

The two services are between Kota Kinabalu (KK) and Tianjin, which came into effect on Feb 1; and between Johor Baru and Guangzhou, effective Feb 11, which are three weekly scheduled flights each.

In the same vein, the airline had also earlier announced a temporary suspension of its thrice weekly services between KK and Wuhan, effective from Jan 24 until further notice.

Passengers who hold valid bookings for travel to each of these destinations were advised to contact its call centre or walk into its ticketing offices.

Meanwhile, AirAsia Group Bhd has cancelled its flights between the Philippines and China as of Feb 2 until further notice, in compliance with the government’s directive imposing travel restrictions from the People’s Republic of China.

The services include all flights from Manila, Kalibo and Cebu to mainland China cities, including Guangzhou, Shenzhen and Shanghai, Hong Kong Special Administrative Region of the People’s Republic of China (SAR) and Macao SAR.

The low cost carrier said all affected guests would be notified via SMS or email, and strongly encouraged guests to update their contact details to ensure the reception of timely notifications.

“AirAsia will also be implementing a mandatory temperature screening of all passengers prior to boarding any domestic and international Z2 flight. This is being done with proper coordination with the health and airport authorities,” it said.

Malaysia Airlines Bhd also permitted cancellations with full refunds, as well as free ticket alterations on flights to and from mainland China, following the Sarawak Disaster Management Committee Secretariat’s temporary entry restriction on Chinese citizens and foreigners who have travelled to China in the last 14 days.

The airline said the offer for cancellations apply to partially used and wholly unused tickets, adding that the revised or alternative travel must be on or before May 31, and subject to availability.

“Malaysia Airlines’ ground staff will be distributing the forms at the boarding area prior to departure to passengers travelling from Kuala Lumpur to Kuching, Miri, Sibu, Bintulu, Kuching and Singapore to Kuching,” it said.

Nomura Group transport analyst Ahmad Maghfur Osman noted that aviation stocks have declined between 5% and 10% over the past week.

“While it is too early to tell the impact on earnings, and how long this situation will last, we still think this is a temporary event — not a structural one — from a longer- horizon perspective.

“In the meantime, we expect continued pressure on stock prices as valuation multiples are squeezed. Once the dust settles, as history has repeated itself, stocks will reverse sharply, in our view,” he noted in a research report.

He added that earnings of AirAsia and Malaysia Airports Holdings Bhd will fall by 65% and 18% respectively, while the Airports of Thailand pcl being the least impacted.

The risks for the sector stocks include a jump in oil prices, lower load factor and yields due to weakening demand and political unrest reducing tourism demand.