Brahims (MAS related company)

Its earnings could see a 22% cut should MAS assume a 30% cut in capacity.

However travelers may opt got other airlines (which could be Brahim’s existing customers), and hence the impact could likely to be much les than 22%.

These could result in Brahim’s FY2014 earnings and FY2015 declining. On a worst case scenario (assuming variable costs constant despite lesser passengers travelled).

In the event MAS ceases operations entirely, MAS/government would need to compensate Brahim’s based on the concession agreement of fair value plus 20% premium.

Based on the rm130 million paid by Brahim’s to purchase additional effective stake of 34.3%, Brahim’s would be paid rm318 million for the termination.

The company’s latest collaboration with the Makkah government to supply food to the pilgrims would potentially result in a significant boost to Brahim’s earnings starting FY2016.