By Stephanie Jacob
Analysts do not believe that new airline Flymojo will be a threat to Malaysia’s other carriers.
The new Malaysian owned airline was introduced to the public at the LIMA airshow yesterday and is expected to focus on intra-Asean routes and its bordering regions.
The new carrier will hub at the Senai airport in Johor, and use Kota Kinabalu airport as its secondary base. Fly Mojo Sdn Bhd has signed letter of intent (LOI) with Bombardier Commercial Aircraft for the sale and purchase of 20 CS100 aircraft. It also has the option for an additional 20 CS100 planes.
The group’s chairman is Alies Anor Abdul, while its managing director is Janardhanan Gopala Krishnan.
Commenting on the airline’s chosen airports, RHB Research said “while Kota Kinabalu makes rational sense as a hub with feeder traffic from smaller Tier 2 and 3 cities, we doubt that making Senai as a hub will work in the near term due to lack of sizeable feeder traffic.”
With the high-speed rail link between Singapore and Kuala Lumpur likely to happen this will pose another challenge towards making Senai a sizeable hub for carriers.
Overall, RHB Research said it is maintaining “overweight” on the aviation sector.
AirAsia Bhd remains its top pick and is given a “buy” call at a target price of RM3.45. This is based on the low cost carrier’s strong earnings outlook on the back of margins expansion coming as a result of the fall in fuel prices.
It is also positive on Malaysia’s airports, as it sees them benefitting from the entrance of a new player. It has a “buy” call on Malaysia Airports Holdings Bhd (MAHB) at a target price of RM7.35.
AmResearch said it does not expect Flymojo to be competition for AirAsia in the near future given the low quantum of traffic passing through Senai airport.
It said “we do not see a new competitor at the Senai hub to be much of a competitive issue for AirAsia in the near term.”
Furthermore, even after full delivery of all Flymojo’s ordered aircraft (likely to be delivered over three to four years) the new airline would still only have 19% of AirAsia Malaysia’s current capacity.
AmResearch has maintained its “buy” call in AirAsia at an unchanged target price of RM3.30.
As at 3.45pm, AirAsia Bhd was trading while down 2 sen at RM2.26, while MAHB was up 6 sen at RM6.96.
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