Shares of Malaysian Airline System (MAS) hit a record low on Monday after a 777 operated by the airline went missing over the weekend. MAS shares fell almost 18% at the open, but regained some ground to 23 sen per share. The fact is that MAS was on watch lists anyhow given its recent losses posted for 2013 at 1.17 billion ringgit and expected losses, and thus there are worries about reputational damage that could further impact on future plans. If we put the MAS share impact into context against a day when markets across Asia fell quite heavily then it is clear that the airline has not been singled out quite so badly as many news outlets would have you believe. At the same time AirAsia shares fell 1.19% to 2.49 ringgit per share while AirAsia X shares, already depressed, fell 0.62%, in line with the market fall, to 80 sen on the back of the poor regional economic data. Thus MAS shares, if you can get your hands on them given that most are held by the Malaysian government (in effect), are at a very impressive price at this moment in time. Those with deeper interest in Malaysian aerospace might wish to ask why AirAsia shares fell by quite some margin compared to the exchange average for today? The answer might well have something to do with Indian ambitions (see APAC section below), aircraft over ordering and heating competition. I would argue that AirAsia Group is in a far better position than any other competitor in the APAC region, which has a low-cost market seemingly proliferated with aircraft over ordering. In the end, much like Ryanair in the EU, AirAsia can afford a blip here or there as it adapts to competition. In the end AirAsia shares also seem undervalued today.
MAS takes it on the chin
