AirAsia Holds Off On Fuel Hedging Amid Price Surge, Eyes Demand Upside
KUALA LUMPUR, April 6 (Bernama) -- AirAsia has not engaged in fuel hedging despite plans to do so, as rising oil prices and financial constraints hinder the airline’s ability to secure costs.
AirAsia X group chief executive officer Bo Lingam said the airline had been in discussions on hedging strategies in January, prior to the recent geopolitical conflict, but those plans were ultimately shelved due to timing and liquidity considerations.
“We were working on this and preparing for hedging, but this happened before we could execute. It is just bad timing,” he told reporters after the AirAsia X media briefing here today.
Lingam said that the group currently lacks the financial flexibility to hedge fuel, adding that fuel prices have effectively doubled, placing significant pressure on operating costs.
He highlighted that hedging at current price levels would not be viable.
“It makes no sense to hedge now. We do not have the money to hedge at these levels,” said Lingam.
Instead, the airline is focusing on operational adjustments and cost management to navigate the volatility, optimising capacity deployment.
On capacity, he said the airline is taking the opportunity to accelerate aircraft maintenance schedules, temporarily grounding some planes for servicing rather than expanding operations aggressively in a high-cost environment.
“We have the aircraft, but with fuel being expensive, we are using this period to carry out maintenance earlier than planned,” said Lingam, adding that government policy measures such as visa exemptions have further boosted inbound travel, supporting passenger demand.
AirAsia X has also removed certain fees, including transfer charges, to stimulate traffic and improve connectivity.
He said the carrier has hiked its fares by between 30 per cent and 40 per cent as it faces rising jet fuel prices.
Lingam noted that jet fuel prices had risen from US$90 per barrel pre-West Asia conflict to US$200 per barrel currently, with the fuel surcharge alone rising 20 per cent.
Meanwhile, the newly appointed AirAsia X independent non-executive chairman Tan Sri Jamaludin said that the airline’s fundamentals were solid, supported by a lean and disciplined cost structure, a resilient Asean-focused network and robust connectivity (Fly-Thru) that allows it to respond quickly to market changes.
-- BERNAMA