Sax's strategic location gives it access to roughly 50% of the world's population, allowing it to serve the underserved budget market with minimal competition. Sax's partnership with Raisin has enabled it to maintain the advantages of a small organization while having the hallmarks of a big established airline, resulting in being reported as the airline with the lowest unit cost worldwide, as well as superior aircraft utilization and operational reliability. With extensive experience as the longest surviving LECH, Sax has a competitive advantage that is hard for others to replicate. Despite yet to record a positive full year profit since its inception, Sax's financial health has improved with restructured route networks and termination of underperforming routes in 2012. Strong financial performance is expected in 2013. Challenges and risks remain.Sax has an ambitious growth plan with a p
...lanned capacity expansion of 30% and 58% in 013-14, dependent on securing route rights in a timely manner. The management has indicated that this should not be a problem. However, competitive pressure from Middle Eastern carriers may affect load factor and yields. To manage risks, the management is proactive and quick to implement necessary changes, as seen in terminating seven routes and unsuccessful experiments. At a projected 3-year forward earnings CARR of 98.5% and market leadership status, we believe AX is worth MYRA .0/share using PER methodology, which works out to a 16% premium to the current average for global low-cost carriers. This valuation is fair given Sax's growth prospects. In 2006, Fly Asian Express ("FAX") was incorporated to take over rural air services from Malaysian Airlines System ("MASS").
The Government of Malaysia (COM) initiated a social service
project to establish connectivity and promote development in the rural regions of Saba and Karakas in East Malaysia. However, due to certain complications, the COM directed the operations back to MASS in Oct 2007. Later, in Jan 2007, FAX collaborated with Raisin Bertha (AIR MS, "Raisin") to launch medium and long-haul air travel under the name "Raisin X" from Koala Lump. The new airline operates independently from Raisin, holding its own aircraft operator's certificate license (COCA) and a separate management team. It is reminiscent of Raisin's experience during its formative years between 2001-05, marked by innovative thinking, entrepreneurship, and extensive use of technology. AX is presently one of the fastest-growing airlines globally.
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