AirAsia X Bhd. co-founder Tony Fernandes is preparing to launch a new airline, signalling an aggressive expansion push even as the aviation sector grapples with elevated oil prices. According to a Bloomberg report, Fernandes said the new carrier is expected to be announced within the next one to two months.
Speaking in a video interview with the news agency from Montreal late Wednesday, Fernandes said the group is reallocating aircraft for the upcoming venture, though he did not disclose further operational details. The move comes as the low-cost Southeast Asian airline group looks to scale up amid volatile market conditions.
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The move follows AirAsia’s multibillion-dollar aircraft order that Canadian Prime Minister Mark Carney described as the largest ever purchase of Canadian-made commercial planes. The deal covers 150 Airbus SE A220 jets and is part of a broader strategy to operate smaller aircraft aimed at increasing connectivity across Asia.
“Why waste a crisis? There are opportunities in a crisis,” Fernandes, 62, told Bloomberg. “We can’t control what happens in the Middle East, but we have to take a view that it’s not going to last for two years.”
AirAsia’s approach continues to stand out in the industry, particularly its decision not to hedge fuel costs. That stance has contributed to a roughly 35% drop in the company’s shares since the Iran war began, making it the worst performer on the Bloomberg World Airlines index during that period.
Fernandes remained firm on the strategy.
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To fund its expansion plans, AirAsia is preparing a bond sale of up to $600 million and is also in talks with Malaysian banks for what Fernandes described as a “quite a large” refinancing package aimed at lowering borrowing costs. The company is also engaging with Canadian pension funds to attract investment.
In the near term, Fernandes acknowledged financial pressure, saying the airline is unlikely to meet its initial profit target, which will be announced soon. Revenue for the year, however, is expected to remain broadly in line with earlier projections.
AirAsia has also been exploring expansion in Vietnam, as per Bloomberg citing people familiar with the matter. The group currently operates across Malaysia, Thailand and Indonesia, with a fleet of about 250 mostly single-aisle Airbus aircraft. Its latest order will expand its backlog to around 550 jets.
Separately, AirAsia has announced plans to begin flights from Bahrain, with longer-term plans to establish a local unit in the Gulf island nation.
