Thursday, August 11, 2011

AirAsia extends losses in early trade

KUALA LUMPUR: Low cost carrier AIRASIA BHD [] extended its losses in active trade on Thursday, Aug 11 in line with the weaker market sentiment and investors' views that it would not benefit from the tie-up with MALAYSIAN AIRLINE SYSTEM BHD [].

At 9.06am, AirAsia fell 16 sen to RM3.38 with 3.89 million shares traded.

UOB Kay Hian Malaysia Research on Aug 10 had downgraded it to a Sell with a lower target price of RM3.50 from RM4.60.

The research house said that while an alliance between AirAsia and MAS would benefit Khazanah Nasional Bhd, it did not see AirAsia getting any benefit.

Under the Aug 9 collaboration, Khazanah Nasional Bhd, which owns 69.5% in MAS, will take up a 10% of shares in AirAsia while Tune Air Sdn Bhd, which owns some 23% in AirAsia will hold 20.5% shares in MAS.

Although AirAsia and MAS officials said it was too early to estimate synergy gains as a result of the partnership, it is estimated that the tie-up can potentially save both airlines as much as RM1 billion annually.

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