AirAsia rebounds after closing down for seven consecutive trading days

Thursday 25 Apr 2024

KUALA LUMPUR (Feb 5): AirAsia Group Bhd, Bursa Malaysia's most-active stock today, jumped as much as nine sen or 7.83% to RM1.24 on bargain hunting after the counter closed down for the seventh straight trading day yesterday.

Investors had in recent days sold shares of the budget airline amid China's coronavirus outbreak and as they reacted to AirAsia's corporate governance issues involving aircraft manufacturer Airbus SE.

Today, AirAsia's share price settled at RM1.20 at the 12:30pm afternoon break, with a market capitalisation of RM4.01 billion. The stock saw some 140 million shares traded.

The deferred prosecution agreement entered into by Airbus and the UK Serious Fraud Office (SFO) appears to implicate executives of AirAsia.

AirAsia directors Tan Sri Tony Fernandes and Datuk Kamarudin Meranun said in a statement yesterday (Feb 4) that they categorically deny all allegations of wrongdoing or misconduct on their part as executives and directors of AirAsia, with regard to the deferred prosecution agreement.

"Caterham F1, the company alleged to have been sponsored improperly by Airbus, was at the relevant time, a Formula 1 Racing team that had gone round the globe promoting amongst others, AirAsia, AirAsia X, GE and Airbus. Throughout the period we were shareholders in Caterham, the company made no profits and was eventually disposed [of] for 1 pound sterling in 2014. From start to finish, this was a branding exercise and not a venture to make profits," they said.

On Saturday (Feb 1), it was reported that the Malaysian Anti-Corruption Commission (MACC) had started investigations into corruption allegations implicating Airbus and two executives of AirAsia.

It was reported that MACC chief commissioner Latheefa Koya confirmed that the MACC was in touch with UK authorities on the matter.

Today, an MIDF Amanah Investment Bank Bhd analyst, who wished to remain anonymous, told theedgemarkets.com that in general, share prices are driven by supply and demand besides consumer sentiment.

"It is a bit unfortunate for the group (AirAsia). It was a double whammy [in the form of the Airbus case and coronavirus outbreak). Operations wise, they (AirAsia) are progressing in the non-airline segment.

"It is also uncertain as to how long the MACC will take to carry out the investigation," the analyst said.

Meanwhile, China's coronavirus outbreak, which started in Wuhan, is also seen as a risk to the aviation sector. It was reported that the coronavirus outbreak, which has killed more than 400 people in China, has prompted nations including Singapore and Italy to impose bans or restrictions on travel to and from China.

In Malaysia, Hong Leong Investment Bank Bhd analyst Daniel Wong told theedgemarkets.com that "the share prices of AirAsia are now very much linked to the developments of the coronavirus outbreak".

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