AirAsia's Fernandes says carrier can withstand jet fuel cost spike

AirAsia's co-founder Tony Fernandes has assured investors that the low-cost carrier can withstand rising jet fuel costs, despite concerns over the airline's financial stability. Speaking at a media briefing, Fernandes highlighted AirAsia's strong liquidity position, stating the company is well-equipped to manage the increased expenses.

He revealed plans to raise over $1 billion by December or January, primarily to refinance existing debt. Fernandes emphasized that, unlike previous challenges, the current situation is manageable given strong demand for AirAsia's services. The remarks came following reports that Malaysia's government is considering absorbing AirAsia's domestic market share, a move seen as part of scenario planning to monitor the carrier's financial health.

AirAsia's liabilities currently stand at 18.4 billion ringgit, with cash and bank balances amounting to 954 million ringgit. Fernandes noted that the second quarter was the toughest period for the airline, with fuel costs surging by 66% in Q2. Despite a 24% drop in shares since Reuters' report, Fernandes expressed optimism about the fourth quarter, pointing to strong bookings and a focus on cost reduction across the group.