AirAsia’s share price in decline again amid massive oil price rout

Shares of the Malaysian low-cost carrier fell 8% as US crude oil price went under zero for the first time in history.

Share price of Malaysian low-cost carrier AirAsia Group are down over 8% this week.

As at 14:00 SGT on Wednesday 22 April 2020, the airline company’s shares are trading at MYR0.80 apiece, down from Monday’s opening level of MYR0.87 per share.

Tuesday’s historic oil price collapse

AirAsia’s share price decline had coincided with oil’s historic price collapse on Tuesday 21 April, which saw US crude move into negative territory for the first time.

IG’s oil futures prices also reflected the price rout, with WTI crude and Brent crude futures each plummeting as much as 55.83% and 20.05% to as low as US$7.26 and US$20.11 per barrel respectively as at 05:00 GMT on 22 April 2020.

The oil price drops came as oil producers ran out of storage space in the face of the current demand wipe-out caused by the coronavirus pandemic, forcing suppliers to have to pay traders to buy the oil from them, rather than pay heftier storage charges.

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Airbus puts up AirAsia’s aircraft orders for sale

AirAsia’s share value had also reportedly fallen after aircraft manufacturer Airbus decided to put up for sale six planes (four A320neo and two A321neo) that AirAsia had initially ordered. According to Reuters, successful buyers can collect the jets from France or Germany in June, complete with optional onboard equipment ordered by AirAsia.

The rumoured ‘fire-sale’ listing was posted as AirAsia earlier revealed that it does not require further additions to its fleet this year, amid ongoing coronavirus pandemic travel restrictions that have greatly impacted the aviation industry.

Both AirAsia and Airbus have declined to comment.

AirAsia Group CEO: ‘we have no revenue coming in’

AirAsia’s share price is down by over 50% since 22 January 2020, when news of the coronavirus outbreak first emerged. Since then, the airline’s stocks have plunged as much as 68% as the contagion worsened globally, forcing countries to impose border closures and lockdowns.

During a press conference on 12 April 2020, Group CEO Tony Fernandes had stated that this was possibly ‘the biggest challenge’ that the company has ever faced, with ‘no revenue coming in’. He added that 96% of the airline’s fleet is currently grounded.

As the number of coronavirus infections in the country grew exponentially, Malaysia had on 18 March 2020 imposed a nationwide “movement control order”, which prohibited all Malaysian citizens from travelling abroad. The sanctions are due to be lifted on 28 April 2020.

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