Yuanta Securities (Thailand) has released its analysis on Asia Aviation Public Company Limited (SET: AAV), noting that while the company’s first quarter 2026 results remain strong, the outlook for subsequent quarters is expected to become increasingly challenging.
AAV’s net profit for 1Q26 is estimated at THB 413 million. Excluding foreign exchange losses (after tax) of approximately THB 960 million, normalized profit is expected to reach THB 1.4 billion, marking an increase of 21% QoQ and 6% YoY. Total revenue is forecasted at THB 14 billion, up 4% QoQ and 5% YoY.
Key factors driving this performance include an expected total passenger number of 6.2 million (+5% QoQ, +11% YoY) and a load factor of 88% (+400 basis points QoQ, +100 basis points YoY), despite a slight decrease in average fare to THB 1,850 per passenger (-2% QoQ, -5% YoY) due to domestic capacity expansion.
This expansion strategy aligns with the persistent strong demand for domestic travel, as evidenced by a 16% YoY growth in domestic passenger count, compared to a 2% YoY increase in international passengers, serving as the primary driver for overall revenue growth.
Gross profit margin (GPM) for the quarter is expected at 23%, representing a 180bps QoQ and 64bps YoY increase, supported by improved revenue and lower jet fuel costs, with the average jet fuel price for 1Q26 at $85.2 per barrel (-4% QoQ, -7% YoY) due partly to a one-month lag in cost recognition.
Selling, general, and administrative expenses (SG&A) as a percentage of sales are anticipated to decline to 6.3%, down from 6.7% in 4Q25 and 7.0% in 1Q25, reflecting lower seasonal marketing and advertising costs.
In 2Q26, AAV is expected to face pressure from the ongoing Middle East conflict throughout the entire quarter. Performance is likely to decline on a QoQ basis following the high season, even though travel demand during the Songkran festival is expected to grow YoY for both domestic and international markets.
The conflict may negatively affect tourism sentiment, leading to a preliminary YoY decrease in forward bookings for 2Q26, as well as higher jet fuel costs due to elevated crude oil prices and an unusually wide jet crack spread. The average jet fuel price so far in 2Q26 has risen significantly to $199.3 per barrel (+134% QoQ, +145% YoY).
To mitigate these impacts, AAV has proactively reduced capacity by 10% on unprofitable routes for 2Q-3Q26 and raised average fares by approximately 25-30%. However, if the conflict is prolonged, persistently high energy costs are likely to be a major constraint, and the company could potentially post a normalized loss for 2Q26.
If the 1Q26 normalized profit meets expectations, it would surpass Yuanta’s full-year 2026 forecast of THB 486 million. Nonetheless, the analyst emphasizes that the remainder of 2026 could prove challenging due to the Middle East conflict, although revenue impacts may be somewhat contained amid AAV’s focus on the domestic and Asia regional travel markets.
Meanwhile, year-to-date jet fuel costs are averaging $125.9 per barrel, which exceeds Yuanta’s 2026 assumption of $100 per barrel (based on a scenario of jet fuel at $200 per barrel for one month and $90 per barrel for the rest of the year). The conflict remains a key risk factor, and if it becomes protracted, downside risk to current estimates will increase.
Yuanta Securities maintains its ‘Trading’ recommendation and an end-2026 target price of THB 1.10 per share, suggesting a ‘wait and see’ strategy. Any positive developments, such as the resolution of the conflict or a significant drop in jet fuel prices, could serve as entry points for further investment.
