Kuala lumpur: AirAsia has decided against pursuing fuel hedging strategies amid the ongoing surge in oil prices, which has complicated the airline's efforts to manage costs effectively. Despite initial plans to hedge fuel expenditures earlier in the year, the airline has opted to forgo these strategies due to timing issues and financial limitations.

According to BERNAMA News Agency, AirAsia X group chief executive officer Bo Lingam revealed that the airline had been in discussions regarding hedging strategies as early as January. However, these plans were disrupted by the geopolitical conflict and the subsequent rise in oil prices. Lingam explained, "We were working on this and preparing for hedging, but this happened before we could execute. It is just bad timing."

Lingam further noted that the airline currently lacks the financial flexibility required to hedge fuel, as the prices have effectively doubled, posing significant pressure on the airline's operating costs. Hedging at current price levels, he stated, would not be feasible, adding, "It makes no sense to hedge now. We do not have the money to hedge at these levels."

In response to these challenges, AirAsia is focusing on operational adjustments and cost management. The airline is optimizing capacity deployment and accelerating aircraft maintenance schedules, temporarily grounding some planes for servicing rather than expanding operations in a high-cost environment. Lingam said, "We have the aircraft, but with fuel being expensive, we are using this period to carry out maintenance earlier than planned."

Additionally, government policy measures such as visa exemptions have bolstered inbound travel, supporting passenger demand. AirAsia X has also removed certain fees, including transfer charges, to stimulate traffic and improve connectivity. Despite these efforts, the carrier has had to increase its fares by 30 to 40 percent due to rising jet fuel prices, which have seen fuel prices surge from US$90 per barrel before the conflict in West Asia to US$200 per barrel currently.

Meanwhile, Tan Sri Jamaludin, the newly appointed AirAsia X independent non-executive chairman, reassured stakeholders of the airline's solid fundamentals. He emphasized the airline's lean and disciplined cost structure, resilient Asean-focused network, and robust connectivity, which enable it to respond swiftly to market changes.