OSK: AirAsia set to paint Asean skies red

KUALA LUMPUR: AirAsia Bhd's growth story in the next decade will be an exciting one, OSK Research said in its research note yesterday.

With the management change as announced on Monday and having set its sights on five other potential markets, AirAsia will be painting the skies over the Asean region red with its signature colour.

Aireen Omar, who is currently the company's regional head of corporate finance, will take over as chief executive officer (CEO) of AirAsia Malaysia on July 1 while Tan Sri Tony Fernandes will move on as group CEO at the AirAsia Asean office in Jakarta.

"The setting up of AirAsia Asean will allow the group's regional team to focus on AirAsia group's overall growth regionally. We have great confidence that Aireen will take AirAsia Malaysia to greater heights," the research firm said.

It added that the regional management might in immediate term focus on growing its Indonesian market, given that air travel remains under-penetrated among its population of more than 200 million people.

AirAsia currently operates hubs in Malaysia, Indonesia, Thailand and the Philippines.

OSK Research said AirAsia had yet to establish an entity in Singapore despite the republic already functioning as a hub to some degree, given its significant market share at Changi airport.

In terms of expansion, Fernandes identified five countries - South Korea, China, India, Vietnam and Cambodia - as potential markets that AirAsia could tap into.

He said to cater for these new markets, the rate at which AirAsia was expanding its fleet was insufficient.

"We understand that AirAsia is pushing to bring forward the delivery of its aircraft, and also note that AirAsia's board will also approve the proposal to order about 50 new A320s with an option for 50 more from Airbus SAS in one to two months," OSK Research said.

Meanwhile, MIDF Research said it expected a quantum leap in the growth of Indonesia should AirAsia execute the right strategy upon full implementation of Asean's open sky policy in 2015.

"We believe the moves by its rivals, Tiger Airway, to acquire Indonesia's Airline Mandala and Lion Airway and to purchase 201 new Boeing 737 aircraft have compelled AirAsia to base its regional office in the country," it said.

The research firm added that AirAsia's profitability in the coming quarters should improve with the softening of oil price. Jet kerosene price fell sharply by 15.8 per cent to US$112.31 per barrel since last month.

"Our house view is that crude oil price will remain depressed at current level for the remaining part of 2012 due to weakening economic outlook in eurozone. We expect the same for jet kerosene price as it moves in tandem with crude oil price," it said.

AirAsia shares rose seven sen to RM3.70 on Bursa Malaysia yesterday.