Capital A CEO and AirAsia co-founder Tony Fernandes has revealed that he is preparing to launch a new airline, even as the aviation industry continues to grapple with elevated fuel prices and geopolitical uncertainty. Speaking to Bloomberg in Montreal, he said the new airline venture is expected to be announced within the next one or two months.
“Why waste a crisis? There are opportunities in a crisis,” Fernandes told Bloomberg. The Capital A CEO added that the group is taking the view that the current instability surrounding oil prices and the Middle East will not persist long term.
Preparations Already Underway
Fernandes said that some aircraft are already being repositioned for the upcoming operation, although he stopped short of disclosing further details regarding the airline’s branding, market focus, or operating region. The move comes shortly after AirAsia signed a major aircraft agreement involving 150 Airbus A220 jets. The order was described by Canadian Prime Minister Mark Carney as the largest-ever purchase of Canadian-made commercial aircraft.
For the uninitiated, the Airbus A220 is a narrow-body aircraft family originally developed by Bombardier before Airbus acquired the programme. Depending on configuration, the aircraft typically seats between 100 and 160 passengers and offers a range of up to around 6,700km.
Compared to larger narrow-body jets, the A220 is generally positioned as a more fuel-efficient option for thinner regional and medium-haul routes. Fernandes said the aircraft will play an important role in AirAsia’s expansion plans, particularly in reaching destinations across Asia that may not be viable using larger aircraft.
To support its ongoing expansion efforts, Fernandes said AirAsia is preparing to raise up to US$600 million (~RM2.35 billion) through bond sales. The group is also reportedly in discussions with Malaysian banks regarding a sizeable refinancing facility aimed at lowering borrowing costs. In addition, Fernandes said he plans to meet Canadian pension funds in hopes of attracting new investors into the business.
An Unexpected Development
This development, which is surprising to say the least, arrived weeks after AirAsia indicated that airfare prices could rise by as much as 40% due to surging jet fuel costs. At the time, the airline reportedly warned that prolonged increases in fuel prices would inevitably impact ticket pricing across the industry.
Despite that, Fernandes appeared unconcerned about the company’s exposure to fuel volatility, reiterating his long-held stance against fuel hedging. According to him, while airlines that hedge fuel prices may benefit in the short term during price spikes, the strategy tends to be less effective over longer periods. Fernandes also said he expects oil prices to eventually trend downward, adding that AirAsia remains bearish on oil in the long run.
On a related note, Capital A completed the disposal of its aviation business to AirAsia X Berhad earlier this year, a restructuring exercise that effectively consolidated AirAsia’s aviation operations under AirAsia X. The move was widely seen as part of Capital A’s efforts to streamline operations, improve its financial position, and prepare for future expansion initiatives.
(Source: Bloomberg, via The Edge Malaysia)
