AirAsia, Southeast Asia’s biggest budget airline, saw its stock sacrifice almost 8 percent in Kuala Lumpur trading yesterday after one of its jetliners disappeared with 162 people on board.
The firm slumped 12 percent to 2.60 ringgit at the open, but recovered slightly to sit at 2.71 ringgit — still down 7.82 percent — at 2pm Singapore time.
The Airbus A320-200 disappeared en route to Singapore from Surabaya in Indonesia’s East Java Province after the crew requested a change of flight plan due to stormy weather.
Indonesia’s National Search and Rescue Agency said the aircraft is likely at the bottom of the sea.
A local broker told reporters that investors were continuing to sell AirAsia shares. However, selling pressure appeared to be abating as they digested news that the missing plane belonged to the Malaysian firm’s Indonesian unit.
Shukor Yusof, founder of aviation research firm Endau Analytics, said investors and creditors would remain firmly behind AirAsia and chief executive Tony Fernandes, who transformed a floundering carrier into Asia’s most successful budget airline.
“The market reaction is quite natural. I am not surprised,” he said. “I think investor confidence will return quickly, since the airline has a solid business model.”
Indonesia resumed a sea and aerial search at dawn yesterday for the aircraft, which went missing on Sunday morning.
Yeah Kim Leng (姚金龍), dean of the Malaysia University of Science and Technology School of Business, said any impact on the share price would be short-lived.
“This incident will not dampen air travel on AirAsia because it is a budget carrier which appeals to the mass market amid growing affluence in the region,” he said.
AirAsia, which has never suffered a fatal accident, said the missing jet last underwent maintenance on Nov. 16.
AllianceDBS Research Sdn Bhd downgraded the carrier’s shares from “buy” to “hold” for reasons not related to the disappearance, saying that AirAsia’s debt burden would be heavier next year as the US dollar strengthens.
AllianceDBS analyst Tan Kee Hoong said that with most of the firms loans denominated in US dollars, the weaker ringgit would lead to more expensive repayments.
In addition, AirAsia might not fully benefit from lower oil prices because management had indicated that some of the fuel savings are to be passed back to consumers via lower fuel surcharges, he said.
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