AirAsia X says taking carrier private is option as shares plunge

An aircraft operated by AirAsia X taxis on the runway at Kuala Lumpur International Airport.
An aircraft operated by AirAsia X taxis on the runway at Kuala Lumpur International Airport.PHOTO: BLOOMBERG NEWS

KUALA LUMPUR (BLOOMBERG) - The chief executive officer of AirAsia X Bhd. said taking the company private is an option, after shares of the long-haul budget carrier in Tony Fernandes's AirAsia group plunged 65 per cent in the past year to become the worst- performing airline in Asia.

Sister company AirAsia Bhd. also is examining that option, Benyamin Ismail said in an interview Wednesday in New Delhi. 

"That's something that I'll let shareholders comment, both of us, as an option, both companies are looking at, AirAsia Bhd., us," said Mr Benyamin, who was in India to announce the resumption of AirAsia X flights to New Delhi. "As a shareholder, the valuation of the company is very cheap at the moment, it's very good to take it private." 

However, he added, there currently are no plans to take the companies private and it could be a challenge to find investors willing to do so. AirAsia didn't immediately reply to an e-mail seeking comment.  AirAsia X and AirAsia Bhd. became Asia's worst-performing airline stocks in the past year after a fatal crash by an Indonesian affiliate, mounting competition and a weaker ringgit currency damped investor demand. The decline was exacerbated by a GMT Research report last June questioning AirAsia's accounting.

Shares of AirAsia X rose as much as 14 per cent Wednesday, their largest gain on record, and closed up 11 per cent at 0.20 ringgit in Kuala Lumpur. AirAsia shares rose 0.7 per cent to 1.39 ringgit.

Reuters reported in October that founders of Southeast Asia's biggest low-cost carrier were sounding out investors about taking the company private, citing unidentified people familiar with the matter. AirAsia said at the time it had "no knowledge" of any plans to take it private.

AirAsia X has hedged half of its 2016 oil requirements at about US$60 (S$86.22) a barrel and could hedge further if oil prices fall to about US$20 to US$25, as the lifting of sanctions on Iranian exports could aggravate oversupply, Mr Benyamin said.

The carrier has held off from hedging more at the US$60 level because it expects prices to fall further, he said. Crude oil futures in the U.S. fell below US$30 for the first time in more than 12 years on Tuesday.