ASEAN airlines to boost earnings up to US$1.2m in 2018

This is mainly due to the 38m expected tourists visiting Thailand this year.

DBS Group Research forecasted an increase in earnings for ASEAN airlines in 2018, with an estimated amount of US$1.2m in aggregated core profits. Airlines covered were AirAsia, AirAsia X, Asia Aviation, Bangkok Airways, Cebu Air, Garuda Indonesia, Singapore Airlines, Thai Airways, Airports of Thailand, Malaysia Airports, and China Aviation Oil.

According to DBS Research, the increasing number of tourist arrivals in Thailand, which went up by 8.5% YoY to 35.4m people in 2017, may highly cause the rise in earnings. The number of international tourists is expected to reach 37.6m to 38m people this year.

Aviation players, such as airports and aeronautical support players, are also expected to improve as traffic growth continues.

Here’s more from DBS Research:

Fuel prices are a key focus for airlines this year, having crossed US$75/bbl compared to an average of US$64/bbl in 2017. With less hedging coverage, average costs per available seatkilometre (ASK) are set to rise for two successive years. That said, we find most players embarking on yield (fares per revenue-passenger-kilometre (RPK)) management strategies which will help stave off margin pressures. This is supported by peak load factors, having risen over the past three years.

We expect most ASEAN airlines to post improved bottomline figures this year, following broad declines in CY17. This is largely premised on our yield growth assumption (2-5% across the airlines) as volume/RPK growth is expected to be milder than CY17. We do not expect most airlines under coverage to revisit ‘peak’ earnings (in local currency terms) charted in CY16 – however this is not reflected in aggregated US$ terms as most reporting currencies have appreciated against the greenbacks since then.