We don’t think the bad 2Q20 result will have much impact on the stock price (no one expected a good result). In the interim, the govt is expected to announce some sort of remedy for air carriers soon (otherwise Thailand’s tourist industry—a major economic driver and employer—would take a very long time to recover). Looking forward to 2021, when a reliable vaccine or treatment is available and the public discontinues wearing masks, huge pent-up demand for travel will release in the face of reduced supply and cheaper operating costs (both staff costs and jet fuel price). And over the long-term, AAV could build business by opening another hub at Suvarnabhumi Airport. BUY!
The deepest red ink
AAV reported a net loss of Bt1,141m for 2Q20, deeper into the red by 137% YoY and 70% QoQ and its weakest number since listing on the SET. But that reported red ink was 26% shallower than our estimate and 47% shallower than the consensus, due to a big FX gain. Stripping out extra items, the core loss would be Bt2,046m, 32% deeper than our estimate (a lower average fare and a higher cost of sales than assumed), but 22% shallower than the street number.