Aviation: Malaysia's Passenger Traffic Full Recovery May Be Delayed - MIDF

KUALA LUMPUR, Sept 13 (Bernama) -- MIDF Amanah Investment Bank Bhd expects delays in Malaysia’s passenger traffic recovery due to recent challenges some airlines face, which include aircraft deliveries and parts and labour shortages.

A MIDF research note forecasts Malaysia’s passenger traffic at 94 per cent versus a previous 2024 growth forecast of 102 per cent.

In the first half of 2024 (1H 2024), total seat capacity recovery hit 85 per cent, with the average load factor rising to 79 per cent (3.4 percentage points above 1H 2019).

"A quick review of July 2024 passenger traffic numbers revealed a strong 92 per cent recovery, fueled by the international sector, which has been outperforming the domestic sector since November 2023.

"Supporting this recovery is the return and introduction of foreign airlines, bringing the total number of airlines serving Malaysia to 71 (FY2019: 69 airlines), with five more expected in 2H 2024," it said. 

As such, the research firm maintained "Neutral" calls on the aviation sector. 

It picked Capital A as top sector pick with a "Buy" call with target price (TP) of RM1.06 as its aviation business is less affected by recent disruptions. 

In addition, Capital A's fleet was not significantly cut during the pandemic, allowing it to focus on expansion and creating an opportunity to capitalise on the capacity gaps left by its competitors.  

"On a separate note, the group is in the final stages and on track to complete its PN17 regularisation plan by 4Q 2024," it said. 

In 2H 2024, Capital A plans to reactivate 15 more aircraft and expects eight new deliveries, boosting its operational fleet from 82 per cent in 2Q 2024. Its airlines (excluding Cambodia) recovered 79 per cent of their seat capacity during the recent quarter, with a strong average load factor of 90 per cent.

Capital A guided that passenger traffic is expected to recover to 89 per cent in 3Q 2024, supported by an 82 per cent seat capacity recovery. 

Meanwhile, passenger throughput recovery in 1H 2024 picked up momentum for Malaysia Airports Holdings Bhd (MAHB) with overall passenger traffic, including operations in Malaysia and Turkiye (ISG), to reach 95 per cent of pre-pandemic levels. 

This recovery was largely fueled by a +63 per cent rise in international traffic at ISG compared to 2019, it said.

-- BERNAMA