MAHB’s passenger, aircraft traffic recovery hinges on vaccine approval

MIDF Research expects a more attainable timeline of 2H21 on the impactful administration of vaccines


MALAYSIA Airports Holdings Bhd’s (MAHB) passenger and aircraft traffic recovery will depend on how soon a coronavirus vaccine is approved and consumer confidence, said research firm MIDF Amanah Investment Bank Bhd (MIDF Research).

MIDF Research noted that the July to August period is the possible inflection point for the airport operator on a monthly basis.

“From an overall perspective, we believe the current recovery does not yet imply the return to normalcy for air travel.

“This also includes domestic air travel,” the research house said in a note yesterday. It reiterated its previous stance that a full recovery scenario would not be feasible in the near term.

MIDF Research added that in a best-case scenario, MAHB’s passenger traffic estimates for 2020 will only register circa 45% of last year’s level, while the Malaysian Aviation Commission projected around a 49% to 50% contraction for this year.

MIDF Research maintains its ‘Sell’ recommendation for the counter with an unchanged target price of RM4.52.

MAHB’s network of airports recorded 3.28 million passengers in August 2020, a decline of 74.4% year-on-year (YoY) from 12.8 million passengers in the same month last year.

Domestic and international passenger movements recorded 2.76 million and 527,000 passengers with a decline of 59% and 91.3% respectively compared to the movements in August 2019.

Overall aircraft movements declined by 61.7% (YoY) to 37.68 million from 98.44 million in August 2019.

Its international and domestic aircraft movements contracted by 82.5% and 47.7% respectively over August 2019.

MAHB said August 2020 domestic passenger movements for Malaysia were mainly driven by the school holidays and public holidays, mainly the National Day, Awal Muharram and the continuation of Hari Raya Aidiladha to the first few days of the month.

Meanwhile, Istanbul’s Sabiha Gokcen International Airport (SGIA) had fewer public holidays with similar weekly passenger movement patterns observed following the number of weekly frequencies offered by airlines.

MAHB added that since May 2020, the domestic sector has recorded more than 80% market share over the total passenger traffic for the system of airports, with Malaysia and Istanbul’s SGIA registering more than 90% and 70% domestic passenger movements respectively over the total passenger traffic.

“We are sceptical of the recovery timeline which implies significant reduction of cases by the end of 2020.

“To achieve such a feat, a consequential amount of resources and organisation need to be in place as of now,” it said.

Taking these into consideration, MIDF Research expects a more attainable timeline of second half of 2021 (2H21) on the impactful administration of vaccines.