Up to 60% of AirAsia fleet hedged

SEPANG: About 60% of AirAsia Bhd’s fleet of aircraft are hedged to minimise exposure to the currency fluctuation and volatility of oil price, said group CEO Tan Sri Tony Fernandes.
He said the low cost carrier has natural (currency) hedging or fuel hedging strategies to mitigate its risks.
“We’re quite comfortable. Our load factor in AirAsia and AirAsia X is strong, so that is most important,” he told reporters after its EGM here yesterday.
AirAsia’s average load factor stood at 85% in the first quarter of 2016, while its fleet size totaled 170 aircraft at the end of the quarter.
The ringgit has continued to weaken against the US dollars from August last year, falling to as low as RM4.42 in Oct 2, 2015, RM4.39 in Jan 15, 2016 and to about RM4 now. Oil price has also plunged below US$30 per barrel in February as it rallied to about US$45 per barrel now.
Meanwhile, Fernandes hopes to consolidate its Asean subsidiaries to create an Asean airline parked under a holding company eventually.
“Asean consolidation and the Asean open skies is exciting. The dream of having an Asean airline, one holding company owning Malaysia, Thailand, Indonesia and Philippines is possible. It’s a good time to be in Asean and we need some Asean champion and AirAsia is well into it,” said Fernandes.

He said compared with EasyJet or Ryanair that has only one entity, AirAsia’s current structure is different due to ownership rules. AirAsia is restricted in consolidating its associate companies by aviation regulations in operating countries despite its willingness to do so.
“It’s early days and we’re still looking at it (Asean consolidation). This is our goal of creating one holding company.”
He added that AirAsia is short of aircraft and is also looking at adding capacity.
“We’ve been aggressive in cutting back capacity but now things have stabilised around the region and it’s something that we’re considering,” said Fernandes.
Earlier at the EGM, shareholders approved its proposed issuance of 559 million new shares in AirAsia at RM1.84 per share, equivalent to a 16.7% stake, to Tune Live Sdn Bhd, which is equally controlled by Fernandes and executive chairman Datuk Kamarudin Meranun. The duo will pump RM1 billion into AirAsia via the exercise, which will raise their stake to 32.4%, from 18.9% now.
Kamarudin said the fact that they are committing RM1 billion goes to show that both will be there and will not be retiring for the next couple of years.
“We enjoy what we are doing and we have a mission unaccomplished. When we accomplish the mission, then we’ll retire,” said Fernandes, adding that the “unfinished mission” includes upping the value of the company, embarking on its Asean consolidation and making AirAsia a great company.