BackAirAsia drops most since 2011 after flight to Singapore vanishes
The stock slides as much as 13% to 2.56 ringgit, while AirAsia X, the long-haul arm of AirAsia, falls 6.6%
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Kuala Lumpur/Singapore: AirAsia Bhd shares headed for the biggest tumble in three years after the Malaysian budget carrier’s flight QZ8501 disappeared en route from Indonesia to Singapore on Sunday.
The stock slid as much as 13% to 2.56 ringgit and was trading 8.2% lower at 9:38am local time. Shares were cut to a trading sell from buy at Hong Leong Investment Bank Bhd, which lowered its price target to 2.64 ringgit from 3.15 ringgit. AirAsia X Bhd, the long-haul arm of AirAsia, fell 6.6%. The FTSE Bursa Malaysia KLCI Index lost 0.6%.
Searchers from Indonesia and other Southeast Asian nations resumed the hunt for the Airbus Group NV A320 single-aisle plane that went missing off the coast of Borneo with 155 passengers and seven crew on board. The disappearance evoked fresh memories of the unresolved disappearance of Malaysian Airline System Bhd’s Flight MH370 in March.
“The AirAsia incident is worrying," Alan Richardson, an investment manager at Samsung Asset Management Co. in Hong Kong, said by phone. “Investor sentiment toward Malaysian aviation has been hurt by the unfortunate incidents" in a short span of time, he said.
Longest search
Malaysian Airlines MH370 vanished from radar screens en route to Beijing from Kuala Lumpur on 8 March in what authorities called a deliberate act. No debris has been found in what’s become the world’s longest search for a missing passenger jet. The stock fell as much as 18% to a record low in its first day of trading after the flight went missing.
For AirAsia, Sunday’s plane disappearance is likely to have a “deep impact on regional air travel sentiment," Hong Leong Investment Bank said in a report. “Our expectation of a potential air travel demand recovery in 2015 is now hampered by the latest air incident."
AirAsia QZ8501 was flying at 32,000 feet when the pilots requested to go higher to avoid clouds, Indonesia’s acting Air Transport Director Djoko Murjatmodjo said in Jakarta.
There were storms along AirAsia’s flight path, Accuweather.com said on its website, citing its meteorologist Dave Samuhel. Storms are very active this time of year, Samuhel was quoted as saying, with December and January the wettest period of the year in Indonesia.
Sales outlook
AirAsia, the region’s biggest budget airline, had no fatal crashes in its history of more than a decade of operations, according to AviationSafetyNetwork, which tracks accident data. It is one of only five Indonesian carriers that are allowed to fly into European Union nations. More than 60 others are banned by the EU from flying for safety reasons.
Of the 155 passengers, 138 were adults, 16 children and one an infant. The plane was carrying one Singaporean, a Malaysian, a person from France, one from the UK, three from South Korea and 155 Indonesians, according to the latest AirAsia press release.
The incident is likely to “cause some pressure on the stock and demand will likely fall," said Abdul Jalil Abdul Rasheed, a Singapore-based investment director at Invesco Asset Management. Bloomberg
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