Kiatnakin Phatra Securities (KKPS) has revised its outlook on Asia Aviation Public Company Limited (SET: AAV), slashing the 2026 core loss forecast from THB 0.9 billion to THB 1.6 billion. Profit estimates for 2027-28 were also trimmed by 7-8%, while AAV’s rating was downgraded to ‘Neutral’, with a target price of THB 1.20 per share.
This revision is based on an 11.3x projected P/E ratio, a 20% discount to regional peers due to higher customer price sensitivity and lower fuel-hedging coverage. Despite narrowing the valuation discount from 30% to 20% on signs of an improving outlook in the second half of 2026, AAV’s valuation remains low at 9x 2027E P/E, compared to 14x for peers.
KKPS expects AAV’s losses to narrow in 3Q26, with a potential return to profitability in the last quarter of the year, driven by peak tourism season, a smaller capacity reduction, and further ticket fare increases. AAV plans to cut capacity by 23% year-on-year in 3Q26, including the suspension of all domestic flights from Bangkok and all international flights to Hong Kong. Although load factor is estimated to remain stable quarter-on-quarter at 78-79%, it is expected to decline year-on-year.
Ticket fares, on the other hand, are projected to rise nearly 30% year-on-year to help offset surging jet fuel costs, which jumped from $87/bbl in 2025 to $135-140/bbl in 2Q26. Passenger revenue should see a mild annual increase, but this is insufficient to fully counterbalance higher fuel expenses. As a result, while losses are set to persist in 3Q26, they are expected to narrow from the THB 2.1 billion recorded in 2Q26.
From an operational standpoint, AAV plans a sale-and-leaseback of two aircraft in 3Q26 to raise cash and will return 2-4 leased aircraft in 2H26 to optimize its fleet and reduce lease expenses, while this will temporarily increase maintenance costs.
KKPS notes that AAV’s positive EBITDA, even in 2Q26, points to some resilience, but flags concerns over a sharp rise in receivables from parent company AirAsia Group Berhad (AAGB)—from THB 9 billion in 4Q25 to THB 14.6 billion in 2Q26—signaling possible liquidity concerns at the parent company level.
According to AAGB, there are significant funding initiatives in progress, including a $1 billion capital raise and new loan facilities worth RM 700 million.
