Reflections on Volume

Big volume without further upside equals distribution
Big volume without further downside equals accumulation

Volume tends to peak at turning points
Volume often precedes price movement
Volume is a relative study

Wednesday, November 28, 2012

MAS falls on delayed aircraft delivery

KUALA LUMPUR: Malaysia Airlines System Bhd's (MAS) share
prices dropped 18.8 per cent or 19 sen to 81.5 sen as at 10.05 am after economists anticipated negative impacts from the delayed re-delivery of 10 ageing Boeing 737-400 aircraft.

MIDF Research said MAS originally entered into an Aircraft Sale Agreement with Bank of Utah to buy back 10 existing Boeing 737-400 aircraft at US$6.4 million (RM19.5 million) per plane to avoid the impairment charge incurred in the re-delivery conditions imposed during the lease tenure.

"But now the ageing 10 aircraft will be utilised until the end of 2014 and this will not reduce the average fleet to 7.7 years from 12.2 years as planned before," it said in a research note today.

MIDF Research said in order to strengthen its balance sheet, the national carrier has unveiled a new fourth pillar of financing comprising share price par value reduction to RM0.10 from RM1 and new rights issues with gross proceeds of RM3.1 billion.

It said the cancellation of the RM0.90 par value will give a credit of RM3 billion to partially offset the accumulated losses in the balance sheet.

The rights issuance, targeted for completion in the second quarter of financial year 2013, will be utilised to pare down debt by RM777 million with the remainder for capital expenditure and working capital requirements.

Read more: MAS falls on delayed aircraft delivery

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