Company Coverage
Bangkok Airways (BA TB): Expect Weak Earnings In 2Q26
SELL (Maintained)
Current price:
Target price:
Upside:
Bt19.60
Bt11.70
-40.3%
Analyst
Analyst
Nonpawit Vathanadachakul
Highlights
- We expect BA to report a weak 2Q26 net profit of Bt290m (-27.7% yoy, -86.1% qoq), pressured by a strong yoy increase in fuel expense due to the war.
- The special dividend from BDMS should be the key contributor. If we exclude the special dividend, BA would be loss making from its operations in 2Q26.
- Forward bookings in 3Q26 remain weak despite being the high season at Samui. The high fuel price will remain as a significant headwind to BA’s
earnings in 2H26. Maintain SELL with a target price of Bt11.70.
Analysis
- Weak earnings expected in 2Q26. Bangkok Airways (BA) is projected to report a net profit of Bt290m (-27.7% yoy, -86.1% qoq). If we exclude a foreign exchange gain of around Bt50m in this quarter, core profit should be at Bt250m (-49.3% yoy, -87% qoq). The biggest savior in 2Q26 should be the special dividend income from Bangkok Dusit Medical Services (BDMS), amounting to around Bt343m. If we exclude this special dividend, BA would be loss making from its core operations due to rising fuel expenses, which could increase by 40% yoy as a result of the war in the Middle East. We expect around 12% yoy reduction in average seat kilometers (ASK), similar to 1Q26, due to the flight frequency reduction in several regions and fewer planes yoy. The passenger yield on the other hand should grow by around 6.5% yoy due to more optimised routes and higher ticket prices. EBITDA margin should decline significantly yoy.
- Forward bookings remain flat. Since end-May 26, forward bookings for 3Q26 have remained broadly flat yoy, indicating that demand has yet to show a meaningful improvement. The only route delivering growth is Samui, where bookings are increasing by around the mid-single digits yoy, while bookings across other routes continue to decline from last year. This suggests that overall travel demand remains soft despite the improvement in air connectivity. Coupled with BA’s limited ability to raise ticket prices further, the company’s earnings outlook could remain under pressure in the coming quarters.
- Limited ability to pass through higher costs. BA implemented a 15-20% airfare increase on 1 Apr 26 in an effort to offset the sharp rise in jet fuel prices. However, the company has limited flexibility to raise fares further, particularly on its key Samui routes where management believes ticket prices can only increase by less than 8% before demand begins to weaken. As a result, management acknowledged that the fare adjustment implemented earlier this year will not be sufficient to fully compensate for the higher fuel costs. Consequently, we expect the company to absorb part of the higher operating costs, leading to margin compression, with the impact likely to become increasingly visible from the 2Q26 earnings onwards.
- Jet fuel prices remain a key earnings pressure in 2H26. Previously, BA had hedged 30% of the total fuel usage for this year, but as of end-1Q26, this had declined to 25-26% of fuel usage for 2Q-4Q26 as some contracts had expired. This gives BA less protection against high fuel prices as it will still need to purchase jet fuel at the market price of around US$160 per barrel vs its hedged price of below US$80. This would put pressure on BA’s earnings in 2H26, as bookings for 3Q26 have not yet shown a strong sign of incoming travel demand despite it being the high season for Samui.
Highlights
- We expect BA to report a weak 2Q26 net profit of Bt290m (-27.7% yoy, -86.1% qoq), pressured by a strong yoy increase in fuel expense due to the war.
- The special dividend from BDMS should be the key contributor. If we exclude the special dividend, BA would be loss making from its operations in 2Q26.
- Forward bookings in 3Q26 remain weak despite being the high season at Samui. The high fuel price will remain as a significant headwind to BA’s
earnings in 2H26. Maintain SELL with a target price of Bt11.70.
Analysis
- Weak earnings expected in 2Q26. Bangkok Airways (BA) is projected to report a net profit of Bt290m (-27.7% yoy, -86.1% qoq). If we exclude a foreign exchange gain of around Bt50m in this quarter, core profit should be at Bt250m (-49.3% yoy, -87% qoq). The biggest savior in 2Q26 should be the special dividend income from Bangkok Dusit Medical Services (BDMS), amounting to around Bt343m. If we exclude this special dividend, BA would be loss making from its core operations due to rising fuel expenses, which could increase by 40% yoy as a result of the war in the Middle East. We expect around 12% yoy reduction in average seat kilometers (ASK), similar to 1Q26, due to the flight frequency reduction in several regions and fewer planes yoy. The passenger yield on the other hand should grow by around 6.5% yoy due to more optimised routes and higher ticket prices. EBITDA margin should decline significantly yoy.
- Forward bookings remain flat. Since end-May 26, forward bookings for 3Q26 have remained broadly flat yoy, indicating that demand has yet to show a meaningful improvement. The only route delivering growth is Samui, where bookings are increasing by around the mid-single digits yoy, while bookings across other routes continue to decline from last year. This suggests that overall travel demand remains soft despite the improvement in air connectivity. Coupled with BA’s limited ability to raise ticket prices further, the company’s earnings outlook could remain under pressure in the coming quarters.
- Limited ability to pass through higher costs. BA implemented a 15-20% airfare increase on 1 Apr 26 in an effort to offset the sharp rise in jet fuel prices. However, the company has limited flexibility to raise fares further, particularly on its key Samui routes where management believes ticket prices can only increase by less than 8% before demand begins to weaken. As a result, management acknowledged that the fare adjustment implemented earlier this year will not be sufficient to fully compensate for the higher fuel costs. Consequently, we expect the company to absorb part of the higher operating costs, leading to margin compression, with the impact likely to become increasingly visible from the 2Q26 earnings onwards.
- Jet fuel prices remain a key earnings pressure in 2H26. Previously, BA had hedged 30% of the total fuel usage for this year, but as of end-1Q26, this had declined to 25-26% of fuel usage for 2Q-4Q26 as some contracts had expired. This gives BA less protection against high fuel prices as it will still need to purchase jet fuel at the market price of around US$160 per barrel vs its hedged price of below US$80. This would put pressure on BA’s earnings in 2H26, as bookings for 3Q26 have not yet shown a strong sign of incoming travel demand despite it being the high season for Samui.
SELL (Maintained)
Current price:
Target price:
Upside:
Bt19.60
Bt11.70
-40.3%
Analyst
Analyst
Nonpawit Vathanadachakul
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