KUALA LUMPUR (Sept 26): Shares of AirAsia Bhd fell as much as 13 sen or 3.8% to as low as RM3.40 in early trading today, dragged lower by an oil price recovery.

This was despite the low-cost carrier announcing the progress of its China low cost airline plans.

Yesterday, AirAsia announced that two other parties, Singapore-listed Plato Capital Ltd and private equity firm Oxley Capital Ltd, have expressed interest in partnering with AirAsia to set up a low-cost airline in China.

On May 15, AirAsia had signed a memorandum of understanding with China Everbright Group, along with the Henan provincial government, to jointly explore the planned establishment of the budget airline known as AirAsia (China).

AirAsia also signed a non-binding term sheet with China Everbright, Plato and Oxley yesterday.

An analyst with a local investment bank opined that the drop in AirAsia's share price today was not in relation to its announcement yesterday.

"I think the drop in share prices today is more related to macro factors, for example Brent crude oil prices have been picking up," he told theedgemarkets.com.

The movement in crude oil prices has an impact on costs for airlines, though most airlines hedge oil prices to lock in cost savings.

At 4.17pm, AirAsia shares were down 12 sen at RM3.41, with 7.03 million shares changing hands. Its market capitalisation stood at RM11.43 billion.