KUALA LUMPUR: RHB Research Institute said MALAYSIAN AIRLINE SYSTEM BHD [] (MAS) struggled to defend its decision to put an end to its low-cost jet operation under Firefly.
'We feel that it has failed to dispel the perception that the decision was a 'concession' made to AirAsia/Tune Air,' it said on Tuesday, Aug 16.
RHB Research said it felt that MAS has too simplistically attributed its problems to 'being distracted to competition with a low-cost carrier' and also too simplistically believes that the problems can be solved with 'a strategic shift' back into focusing on the premium segment.
'We are giving MAS the benefit of the doubt that it will turn around in FY12/12, driven largely by rising yields on the back of the roll-out of higher-yielding products from its new aircraft, partially offset by sustained high fuel cost,' it said.
RHB Research said fair value was raised by 18% from RM1.68 to RM1.98 based on 2x book value (from 1.7x previously).
This was a premium to regional peers' average of 1.5x to reflect strong trading sentiment on expectations of changes to be brought about by the revamped top management as well as the entrance of a new shareholder, Tune Air. Fair value is upgraded from RM1.68 to RM1.98.
'We feel that it has failed to dispel the perception that the decision was a 'concession' made to AirAsia/Tune Air,' it said on Tuesday, Aug 16.
RHB Research said it felt that MAS has too simplistically attributed its problems to 'being distracted to competition with a low-cost carrier' and also too simplistically believes that the problems can be solved with 'a strategic shift' back into focusing on the premium segment.
'We are giving MAS the benefit of the doubt that it will turn around in FY12/12, driven largely by rising yields on the back of the roll-out of higher-yielding products from its new aircraft, partially offset by sustained high fuel cost,' it said.
RHB Research said fair value was raised by 18% from RM1.68 to RM1.98 based on 2x book value (from 1.7x previously).
This was a premium to regional peers' average of 1.5x to reflect strong trading sentiment on expectations of changes to be brought about by the revamped top management as well as the entrance of a new shareholder, Tune Air. Fair value is upgraded from RM1.68 to RM1.98.
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