Malaysia Airlines’ (MAS) share price dipped 2 sen to RM1.31 as OSK Research lowered its target price for the national carrier to RM1.15 per share.

OSK said this was because the current feud between the national airline and its workers’ unions might create a possible picket and even a strike in a worst case scenario, which would further dent MAS’ earnings.

“We maintain our sell call on MAS with a lower fair value of RM1.15 premised on 1.8 times price to fiscal year 2012 net tangible asset (NTA) per share (previously 2 times price /NTA),” it said in a note.

It added that news of a possible strike by MAS’ workforce would have an immediate impact on potential passengers of MAS as this would create fears of possible flight delays and cancellations, especially during the peak season for air travel in the fourth quarter.

Troubled airline: The feud between MAS and its workers’ unions has led to fears of a possible strike by the airline’s employees. — EPA

“As such, we foresee that news of a proposed picket would benefitAirAsia Bhd and other carriers as passengers resort to flying on (airlines with) more reliable flight schedules,” OSK said.

According to recent news reports, the national airline’s workers had given the management two months to cancel the share swap deal or face protests in December. All eight unionised groups of the airline want MAS to buy back the shares that had been sold to AirAsia and return those bought from the budget carrier.

Hong Leong Investmet Bank said since the appointment of new MASCEO Ahmad Jauhari Yahya on Sept 19, the revamp of MAS operations seemed to had been done in a swift manner.

“However, we remain concerned on the success of the revamp’s implementation, given heightened risk of a global slowdown (affecting premium demand), competitive pressure from existing full-service carrier such as SIA, Cathay Pacific and Emirates as well as growing competition from existing low-cost carriers like AirAsia and AirAsia X,” it said.

It rated MAS’stock “Sell” and maintain target price at RM1.19 based on 2.5x FY12 price to book.–The Star