LONG-HAUL budget airline AirAsia X may re-start its popular Kuala Lumpur-London route in the near future, its founder, Tan Sri Tony Fernandes said in a tweet, following falling global oil prices.

Fernandes said he will discuss re-starting the flight with London Mayor Boris Johnson who will be in Malaysia next week to deliver a lecture organised by sovereign wealth fund Khazanah Nasional Berhad.

“I am pleased to announce that the reopening of Kl London is definitely on the cards. Will be discussion with Boris Johnson next week,” Fernandes tweeted.

AirAsia X, which touts itself as the world’s most successful long-haul budget carrier, was recently reported to be suffering from cash flow problems which led to Fernandes taking a more direct and active role in reviving the airline’s fortune.

The airline, which was listed on the main Bursa Malaysia bourse in July last year, has reported losses for the last three quarters.

Sources said initially, high fuel prices were a drain on resources, but the crunch came following the tragic MH370 and MH17 incidents when passenger loads dropped dramatically.

Malaysia Airlines, which was worst hit, dropped its fares in numerous promotions to fill its planes, forcing AirAsia X to cut its own fares to compete for a shrinking market.

However, since then, loads have been picking up in the last quarter which, in the airline industry, is the best quarter.

AirAsia, which is profitable, and AirAsia X, have received a boost in the past three months because of falling oil prices. Fuel constitutes the largest component in airline expenses.

Oil has fallen by 30% in the last three months and is not likely to go higher in the near term, analysts say, citing the cut throat competition between oil producing countries in OPEC and the American shale oil industry.

Today, Fernandes tweeted: “Woke up this morning in Hong Kong and saw oil dropped another 6 dollars. Massive for Airasia and Airasia X.”

Sources said both AirAsia and AirAsia X’s budgets are precipitated on an oil price of US$130 (RM437) per barrel. However, at current oil price of below US$75 (RM252) for Brent, jet fuel will cost only US$90 (RM302).

It is understood that both AirAsia and AirAsia X are signing in the next few days to buy half their requirement at current levels, thus shaving US$20-25 off their budgeted costs.

“For every dollar less that we pay, it is an additional US$12 million (RM40 million) which goes straight to the bottomline.

"If we manage our costs carefully and with the deferment of planes due for delivery in 2015 by a year, we are likely to see AirAsia X turn around and register profits of between RM300 million to RM500 million next year,” said a source familiar with the running of the budget airlines, citing the launch of AirAsia X Thailand a few months ago and AirAsia X Indonesia next month as engines of growth.

“AirAsia will do just as well as they have matured routes and the savings on fuel alone will add RM600 million to RM800 million to their bottomline,” he added. – The Malaysian Insider