1Q14 net profit of Bt139mn beats market by 20% on lower SG&A. This represents
a fall of 65% YoY and 38% QoQ. Excluding loss from exchange rate, normalized profit
was Bt148mn, down 63% YoY and 15% QoQ. 1Q14 net profit accounts for 16% of our
2014, less than half the ~40% historical average, hit by politics. We expect AAV’s
operations to improve in April-May after the lifting of the state of emergency and cost
controls such as lower marketing expense should provide some support from earnings
downside. We believe AAV’s share price has factored in the negatives in the sharp 29%
fall against the SET’s -4% since Nov 1, 2013 when politics took over. We will provide an
update after the May 15 meeting. Highlights:
Load factor was 80% in 1Q14, down from 87% in 1Q13 and 81% in 4Q13, as Available
Seat Kilometer (ASK) increased more than Revenue Passenger Kilometer (RPK).
ASK increased by 27% YoY and 6% QoQ due to fleet expansion (37 planes in 1Q14 vs.
28 planes in 1Q13 and 35 planes in 4Q13). RPK increased 17% YoY and 6% QoQ as
AAV carried 3.1mn passengers in the quarter, up 20% YoY and 5% QoQ.
Intense competition in the murky tourism outlook led to aggressive promotions
and this pulled AAV’s average fare down to Bt1,712, -14% YoY and -7% QoQ.
Ancillary revenue per pax was Bt396, +3% YoY but -1% QoQ. The YoY increase was
driven by the fly-through service.
Cost of operations increased 24% YoY and 4% QoQ, aligning with the rise in ASK.
SG&A declined 11% YoY and 32% QoQ, mainly from lower marketing expenses.