PETALING JAYA: The easing of air travel restrictions and borders gradually opening up are expected to reinforce AirAsia Group Bhd’s recovery from the fourth quarter of 2021 (Q4’21) onwards.

       For full-year 2021, AirAsia’s losses are also expected to be narrower, as recovery in demand for air travel to its regional destinations continues.

       However, analysts are wary that it might take some time for revenue from seat bookings to fully return to the pre-pandemic levels.

       Furthermore, rising crude oil in tandem with jet fuel prices is a key concern to its profitability going forward, said MIDF Research.

       The research house is positive on the endemic shift, and also believes that the market will look beyond AirAsia’s earnings weakness in 2021 towards a meaningful recovery in 2022 and business normalisation in 2023.

       MIDF Research noted that AirAsia was well-positioned to capitalise on the post-pandemic leisure recovery.

       UOB Kay Hian Research is forecasting a steep revenue recovery of 379% quarter-on-quarter (q-o-q) for AirAsia in Q4’21.

       This assumption takes into account the surge in passenger bookings and pent-up demand amid the upcoming year-end holiday season, the higher load factor and aircraft utilisation.

       The research firm also believes that the worst is likely over for the carrier after having garnered sufficient cash flow through various funding exercises.

       This year, the group managed to secure fresh funds of above RM2.5bil.

       UOB Kay Hian Research said for 2022, AirAsia is planning another debt issuance of RM500mil Danajamin loans and the restructuring of its aircraft lease payment, which will further boost liquidity.

       It said the group now had enough cash flow to last through 2022 to 2023 at least, assuming monthly operating cash burn stays constant at RM68mil.

       AmInvestment Research has projected a narrower net loss of RM3.1bil for the financial year 2021 (FY21) for AirAsia versus RM3.5bil in net loss projected previously.

       However, it has kept its FY22–FY23 forecasts unchanged.

       The research house has retained a “sell” call on the stock, but has raised its fair value by 35% to 84 sen a share.

       UOB Kay Hian Research has also raised its 2021 full-year loss estimates by 19%.

       It has upgraded its call to a “hold’’ with a higher target price (TP) of 92 sen a share.

       In view of the bigger-than-expected losses in Q3 of FY21, MIDF Research has revised its FY21 loss estimate downwards by 18% to RM2.43bil.

       It has maintained AirAsia’s TP at 77 sen and its “sell’’ call.

       In Q3’21, AirAsia reported a revenue of RM118mil, which was 37% down year-on-year (y-o-y), and adjusted net losses of RM674mil, down 2.8% y-o-y.