AirAsia X drops 16% as Middle East conflict escalates

 Malaysian carrier tumbles in tandem with global selldown in airline stocks.

Since the US and Israel attacked Iran last weekend, AirAsia X has fallen nearly 29% over four trading days. (AirAsia X pic)

PETALING JAYA:

 AirAsia X Bhd (AAX) tumbled as much as 16% today in tandem with a global selldown in airline stocks as Middle East tensions escalate.

Shares of the low-cost carrier dropped as much as 27 sen or 16.1% to RM1.41 as the US-Israel attacks on Iran show no sign of ending anytime soon.

The stock closed at RM1.42, valuing the company at RM4.77 billion. It was the most traded stock on Bursa Malaysia today with 90.3 million shares changing hands.

Since the conflict erupted over the weekend, AAX has fallen nearly 29% over four trading days.

The carrier has given up most of the gains made since the start of the year from optimism over a stronger ringgit and Visit Malaysia Year 2026. Year to date, the stock has fallen 20.7%.

The steep drop in its share price triggered an automatic suspension in intra-day short-selling of the stock. Intra-day short-selling of the shares will resume at 8.30am tomorrow.

Airline stocks, especially those in Asia, have been hard hit in recent days by the Middle East turmoil, which caused fuel costs to rise and thousands of flights to be cancelled or rerouted.

However, shares of some Asian airlines rebounded today as more flights took off from the Middle East. This gave the carriers some reprieve after the strikes on Iran wiped billions of dollars off their market value earlier in ‌the week.

Shares in Hong Kong’s Cathay Pacific Airways closed up 2.2%, Qantas Airways rose 1% and Korean Air jumped 5.6%. Japan Airlines closed down 1%, paring the week’s losses.

Major Chinese carriers such as Air China, China Eastern Airlines and China Southern Airlines fell between 1% and 4%.

“Asian airlines are highly sensitive to Iran’s situation due to exposure through routes and energy in both revenue and costs. Any news on shortening the duration of the war can easily turn sentiment,” Gary Ng, a senior economist at Natixis, told Reuters.

Analysts have warned of mounting pressure on AAX’s earnings, highlighting the strong price correlation between crude oil and jet fuel.

Jet fuel prices have soared globally since the strikes on Iran, hitting an all-time high in ⁠Singapore on concerns of supply disruption, S&P Global Platts said today.

Every US$1 increase in jet fuel costs could shave off RM80 million or 5.3% from AAX’s bottom line, according to Hong Leong Investment Bank estimates. - FMT