According to CIMB Research, 50% of Malaysia AirAsia's operating costs are US dollar denominated and 40% of its US-dollar-denominated aircraft loans are unhedged. Spot jet fuel prices averaged only US$49.50/bbl (RM219.26/bbl) in FY16F, down from US$67.60/bbl in FY15, driving AirAsia's strong financial performance during its cumulative nine months of 2016 (9M16)," it said. "Thankfully, AirAsia has hedged 74% of its FY17 consumption at US$60 per barrel, which will cushion the impact. Every US$5 per barrel increase in the spot price of jet fuel will reduce our FY17 earnings per share (EPS) forecast by 5.7%," it added. The firm said AirAsia and Malindo Air are planning to aggressively expand their aircraft fleets, which will lead to fiercer price competition.

Source: The Edge Markets January 31, 2017 03:45 UTC