AIRLINES TO SEE YIELD IMPROVEMENT IN 2H 2010

KUALA LUMPUR, July 14 (Bernama) -- Airlines are expected to see a gradual
improvement in yield going into the second half of 2010, given better capacity
utilisation, says ECM Libra Investment Research.

In a note, ECM Libra said this, however, would still depend on the
discipline among airlines to refrain from predatory airfare pricing again.

"While passenger traffic is growing, the greatest challenge to airlines
right now is the continued pressure on yields due to aggressive fare cutting
among airlines," it said.

ECM Libra said passenger traffic in the Asia-Pacific has continued to
improve after posting nine consecutive months of year-on-year (y-o-y) growth up
to May this year.

It said Malaysia Airlines (MAS) saw its yield y-o-y declined 21.2 per cent
to 23.2 sen/RPK (revenue passenger kilometre) in 1Q10, while AirAsia's revenue
per person decreased 7.1 per cent to RM210.70, or equivalent to 21.5 sen/RPK.

"AirAsia is still able to remain profitable with such depressed yields, but
full-serviced carriers with higher cost structures such as MAS are only breaking
even at best," it said.

ECM Libra said such crude oil price stability was positive for airlines as
it would support a stable fare structure going forward.

"West Texas Intermediate crude oil has stayed within a tight range of
US$70 and US$80 per barrel for a good start of this year," it said.

-- BERNAMA



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