AirAsia: We don't speculate on fuel prices

AIRASIA Bhd yesterday clarified that it has never speculated on fuel prices in the past and will not speculate on fuel prices going forward.Responding to reports that AirAsia adopts a fuel hedging strategy that is excessively speculative, chief executive officer Datuk Tony Fernandes said the airline's strategy has always been to hedge fuel requirements whenever an attractively priced structure is available. "Fuel hedging is an important component of our strategy as it provides us with clarity over our cost structure; this will allow us to manage our seat inventory better and aids route development. "We are averse to risks and therefore believe in mitigating those risks by removing variability and uncertainties from our business whenever suitable opportunities arise," he said in a statement. Fernandes said at the time the earlier hedge was taken in July 2007, the company's view was that oil prices of above US$90 (RM293) per barrel will be a result of excessive speculative market action in that commodity.Fuel price volatility intensified in the later part of the second half of last year due to higher fuel consumption projections, supply disruptions, geopolitical risk concerns, and the weakening of the US dollar. Fernandes said AirAsia approaches fuel hedging carefully and has always maintained a conservative stance which resulted in positive contributions from its past fuel hedges. This has benefited the company in reducing the total fuel bill and enable the airline to enhance its ability to offer low fares to its passengers, he said.On the sell-down of its shares, he pointed out that foreign funds have been reducing their exposure in airline stocks over the past two months and that all the prominent low-cost carriers around the world experienced heavy sell-downs. "It would be inappropriate to lay the blame on our fuel hedges as the reason for the decline in the company's share price. We believe that the recent sell-down of AirAsia shares is overdone."-www.btimes.com.my