Asia Aviation Public Company Limited (SET: AAV), the operator of Thai AirAsia, continues to face significant challenges amid surging jet fuel prices and ongoing geopolitical tensions. KGI Securities (Thailand) spoke with AAV’s management to gain insight into the company’s second-quarter 2026 performance and its outlook for the remainder of the year.
In 2Q26, jet fuel prices spiked to $240 per barrel, well above the company’s standard cost base of $180 per barrel, due to the Middle East conflict. This surge prompted airfares to rise nearly 30% year-over-year, and these elevated ticket prices are expected to persist through the third quarter.
AAV also reduced its operational capacity by 20–30% year-on-year in 2Q26, operating a fleet of 52 aircraft, with plans to ramp up to 60 by the end of 2026. The third quarter is forecasted to remain weak, coinciding with the industry’s seasonal low. Fuel hedging coverage for 3Q26 is currently modest at 13%, with management assessing further opportunities to lock in prices.
Looking to the fourth quarter, AAV is optimistic about robust passenger demand, bolstered by numerous events and the ‘Silver Care’ program. The company aims to reach 19 million passengers in 2026. Forward bookings remain strong, even as booking windows move closer to departure dates, indicating resilience in the face of higher fares.
Financially, AAV maintains strong liquidity with almost THB 3 billion in cash on hand. KGI is holding its full-year projections, forecasting a net loss of THB 3.72 billion in 2026 and a return to profitability with a net profit of THB 656 million in 2027.
Following these, the ‘Neutral’ rating is maintained by the brokerage, with a FY27 target price of THB 1.10 per share, based on a 5x EV/EBITDA valuation.
