Now Everyone can fly! Airasia boleh!

MALAYSIAN budget carrier AirAsia today scrapped administrative charges to boost passenger numbers but said it has not been hurt by the downturn that has affected most airlines worldwide.

After hitting a peak on 2 Jun 2009, Airasia Bhd started to drop since then. These 2 days, Airasia share price is stabilizing and it is showing sign of rebounding. There is a solid support at RM1.08 for Airasia, thus i don't expect it to be broken. It is hard to buy a stock exactly at its support, I think we should start accumulating it when it is nearing its support. Airasia has dropped 20% and Airasia-ce has drop 67% since 2 June 2009. Airasia-ce still has another 71 days before it expires, that has to be taken in consideration if we were to open position on the call warrant.

I think there is a positive chance that we manage to gain a profit of 100% or even more 100% if we open position on the call warrant. If Airasia-ce manages to return to its 2 June price (RM0.175) , then the profit would be around 200% if we manage to buy Airasia-ce at RM0.06. The main risk that would keep on holding Airasia back is swine flu dragging for months and becomes out of control. In my humble opinion, I don't think swine flu would hold airasia back for months. After all, swine flue is not as serious as SARS.

Please bear in mind, warrant is a risky financial instrument and not everyone is suitable to invest in warrant.

Even though the world’s airlines are expected to lose US$9 billion this year, industry body IATA said early this month in a drastic reassessment of the worst slump the industry has ever face, I am still confident Airasia will remain profitable in the coming quarter.

“I have been in the business for the last seven years. There has been perpetual headwinds such as the outbreak of SARS (Severe Acute Respiratory Syndrome in Asia in 2003) and tsunami. We will continue to grow,” Tony Fernandes