Malaysian research house suspends AirAsia X call as jet fuel prices surge
BIMB Research, a Malaysian research house that publishes equity and sector reports, has suspended its call on AirAsia X Bhd (AAX), just two weeks after initiating coverage, citing growing concerns in the aviation sector linked to sharp fuel price moves.
The firm said major jet kerosene benchmarks have risen 53% to 54% since last Friday’s close, shortly before the US–Israel war with Iran, and that volatility has been extreme.
It added that Singapore jet kerosene has surged 54% from last Friday’s close to US$145.80 per barrel and reached an intraday high of US$193.80 per barrel, which it described as a historical high.
“The speed and magnitude of this move are unprecedented in recent aviation history. The developments in the oil market are extraordinary, even compared with the 2008 global financial crisis, the European debt crisis and the Covid-19 crisis.”
It noted that AirAsia X carries no fuel hedges, meaning it absorbs any fuel cost surge in full.
BIMB Research said its financial year 2026 (FY26) forecast assumed jet fuel at US$96 per barrel, with every US$1 per barrel increase reducing earnings by roughly 7%, all else being equal.
“With jet fuel rising by roughly US$45 per barrel in four days, the entire cost equation has shifted dramatically. In practical terms, it is difficult to see airlines making money this week, except for the minority that entered this period with meaningful fuel hedges.”
The research house said a fuel surcharge is expected to be announced imminently, in line with management’s indication.
“Our estimates suggest that every RM1 increase in FY26 unit revenue per passenger boosts earnings by roughly 13%. But offsetting the recent fuel spike would require fares to rise by about RM24 per passenger, equivalent to roughly 7.5% above FY25’s average fare, which we view as difficult to achieve immediately.”
BIMB Research said airlines can manage high fuel prices, but that extreme fuel price volatility is harder to absorb. It added that seats being flown were largely sold weeks or months ago when fuel prices were far lower.
“Airlines, therefore, face a mismatch where revenues are fixed while fuel costs surge, leaving little scope to recover losses on already-sold inventory,” it said.
The firm cautioned that if elevated fuel prices persist, AirAsia X is likely to face material earnings pressure in the coming quarters.
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