Higher air traffic numbers a boon to aviation firms

Local air travel-related stocks, which suffered during MCO, have started to take off as operations resume and borders opened


HIGHER air traffic and passenger numbers for the month of July are driving interest back into aviation-related companies, signalling the start of a domestic tourism recovery as pandemic containment measures were eased.

Local air travel-related stocks, which suffered heavy selling in past months due to international and domestic travel restrictions during the Movement Control Order (MCO), have started to take off as operations resume and borders opened.

Malaysia Airports Holdings Bhd (MAHB) gained 13 sen or 2.61% to close at RM5.11 yesterday, while the FTSE Bursa Malaysia KLCI fell 0.5%. MAHB saw 3.81 million shares traded, ending the day with a market capitalisation of RM8.48 billion.

On March 17, the stock fell 4.6% or 25 sen to RM5.20, a day after Prime Minister Tan Sri Muhyiddin Yassin announced the MCO which started on March 18. On the second day of the MCO, MAHB closed at a 10-year low of RM4.07 as investors dumped travel-related stocks, given all non-essential travel was halted.

After registering record-low volumes of passenger traffic throughout the March to June period, MAHB said on Tuesday its total passenger traffic numbers in Malaysia jumped more than threefold to 1.3 million in July 2020 from 429,000 passengers in the preceding month, while aircraft movements doubled to 22,600 from 11,850 aircraft movements in June.

This was mainly due to domestic travel by locals following the reopening of domestic tourism. The airport operator also said on top of the current airlines operating from the Kuala Lumpur International Airport, over 30 other foreign airlines have indicated they will resume operations once borders fully reopen.

MAHB also recently announced the appointment of former Perak Mentri Besar Datuk Seri Dr Zambry Abd Kadir as its non-independent non-executive chairman with effect from Aug 12, 2020.

Low-cost carrier AirAsia Group Bhd closed 5.3% or four sen higher at 70 sen yesterday, while its long-haul affiliate AirAsia X Bhd gained 14.3% or one sen to close at eight sen.

AirAsia X carried just 2,291 passengers in the second quarter of 2020 (2Q20) compared to 1.46 million passengers last year, while capacity plunged to 6,032 seats from 1.81 million seats in 2Q19.

As such, the airline’s passenger load factor fell to 38% from 80% a year ago, it said on Monday. Available seat kilometres plummeted to 31 million from 8.44 billion in 2Q19, while revenue passenger kilometres tumbled to 12 million from 6.77 billion previously.

AirAsia is expected to launch daily flights between Kuala Lumpur (KL) and Singapore and one weekly flight each between Singapore and Penang, Kota Kinabalu, Kuching and Ipoh starting Aug 17, 2020.

Malindo Airways Sdn Bhd also said it will resume its international flights from KL to Singapore effective Aug 19, 2020, with a single daily flight under the Reciprocal Green Lane and Periodic Commuting Arrangement schemes.