'Most ludicrous statement I've seen in 25 years': Tony Fernandes

KUALA LUMPUR: AirAsia Group Bhd founder and advisor Tan Sri Tony Fernandes brushed aside a news report suggesting the government is looking at a contingency plan in case of the low-cost airline's collapse by asking other local airlines to step in and absorb its network.

Speaking to reporters during a media briefing on the group's business updates today, Fernandes confirmed that the government had not said such a thing and called the news reports, which quoted sources, ludicrous.

"How do you replace 100 airplanes in Malaysia? You can't. First of all you have to have our cost structure, our brands, our markets, networks and interlining.

"I'm amazed that was the headline," said Fernandes, explaining that the funding the airline group is seeking is intended to reduce the cost structure, rather than being a symptom of the group going bust.

The comments followed a Reuters report recently that the government had asked Malaysia Airlines and Batik Air whether they could absorb AirAsia's domestic routes and passengers as part of scenario planning while authorities monitored the airline's financial position.

It also reported that the discussions did not result in any decision to take over AirAsia's operations.

Fernandes said AirAsia Group had a tough second quarter of the year, due to the US-Iran conflict in the Middle East, which sent jet fuel prices soaring past US$200 a barrel, while it had sold tickets based on a US$85 per barrel fuel price.

However, he urged the public to see AirAsia Group's third-quarter numbers, as he said it will show the amount of cash the group has, indicating that it is far from being an airline facing a liquidity crunch.

Fernandes said the group is on track to carry 60 million passengers this year, and is targeting to carry 80 million passengers next year.

The group carried 43 million passengers as of the second quarter of the year.

"We just have to adjust our cost structure and fares and by the end of the third quarter, the liquidity is catching up. This is an adjustment. If oil prices stay at this level, all airlines will have to adjust," he added.