PETALING JAYA - With Khazanah Nasional's recovery plan for Malaysia Airlines (MAS) laid out, analysts believe the AirAsia group is the likely direct beneficiary of the potential industry route restructuring on the medium-haul network, which allows the industry yields to rise in Malaysia.
CIMB Research noted that AirAsia X's share price has already reflected the positive impact from Khazanah's announcement which had specifically mentioned the need to focus and build scale on regional routes.
AmResearch also noted that there was no clear winner from MAS' restructuring plan other than AirAsia X, potentially.
"We think sector yields are reaching a bottom - MAS' targeted cost of available seat-kilometre is already close to current revenue of available seat-kilometre, which means it will unlikely be much more aggressive in pricing, but a recovery could be sometime away given continued capacity expansion on regional routes."
In Alliance DBS Research's opinion, however, AirAsia Bhd will be the prime beneficiary of the MAS restructuring.
"Although AirAsia X would also benefit, foreign airlines could still encroach on its routes and negate the impact of the absence of competition from MAS."
CIMB Research noted that the short-haul aviation market encompassing the domestic, ASEAN and south India and south China routes would remain the natural and most lucrative playground of Malaysian air carriers.
However, Khazanah's equal insistence on profitability and 10 per cent to 15 per cent revenue per available seat-kilometre increases directly points to the industry's aggressive pricing on the domestic and short-haul routes that has hurt AirAsia since March 2013.
"In our view, today's rock-bottom industry yields cannot get any lower and the only way is for it to rise. Also, we believe that the industry's cost-down efforts are meant to give shareholders reasonable returns on their capital, not to ignite another future price war," CIMB said.
On the contrary, any cutback in airlines' route networks will be negative for Malaysia Airports Holdings Bhd (MAHB) as the smaller network capacity will cause a decline in the number of passengers travelling through MAHB's airports.
CIMB Research said the airport operator could see a decrease in its collection of the airport's passenger service charge while fewer aircraft movements also meant MAHB would have lower landing and parking revenues.
"The number of travellers should also fall because the reduced competition in the airline space should result in higher ticket prices, which will have a negative demand impact," the report noted.
Another impact on MAHB will come from slower sales at MAHB's duty-free outlets, Eraman.
On Khazanah's privatisation offer, analysts said it was the sensible way to move MAS out of its financial doldrums.
Hong Leong Investment Bank Research opined that the delisting exercise would smoothen the restructuring process, as MAS would not be subjected to the requirement and scrutiny of Securities Commission and Bursa Malaysia as well as the public.
"Furthermore, any strategic plans and actions will not be easily grasped by close competitors," the report said.
RHB Research advised minority investors to accept the 27 sen offer price to avoid further dilution and deterioration in their shares.
"Investors can potentially revisit MAS' investment once it comes up for a targeted relisting in three to five years," the analyst said in a clients' note.
Alliance DBS Research also advised the same despite the rosy picture painted by the restructuring plan.
Affin Investment Bank Research added that should investors decline the general offer in the hope that things improved at MAS, they could risk MAS share price falling to its fundamental fair value of only 10 sen based on one-time 2015 estimated price-to-book value.
Khazanah's plan to delist MAS and shift the airline's operations, assets and liabilities to a new company by July 1, 2015 will enable new MAS to operate as a commercial enterprise, with the target to bring it back to profitability by 2017 to 2019 and also allow the carrier to renegotiate its supply and labour contracts, Lee noted.
The state investment arm will inject RM6bil into MAS on a conditional and staggered basis over the next three years.