"When people begin to look at it on a macro scale, then our share price will begin to return to where it should be. We're trading at NTA (net tangible assets) at the moment which is fairly ridiculous, our margins are still up there, our cash [flow] is very strong but we're in a good part of the world so we're optimistic," Tony Fernandes told CNBC Europe's "Squawk Box."

Shares of Asia's largest budget airline by passengers and fleet size have fallen 19 percent over the last 12 months with its units in the Philippines and Indonesia struggling to turn a profit and are not predicted to do so for two years.

(Read more: AirAsia ready to take on India challenge: CEO)

Summing up the airline's problems with increased competition from other low-cost carriers, AirAsia Berhad, the company's full name, reported third-quarter net profits down 78 percent in November 2013 from the previous year on foreign exchange losses on borrowings.

Despite the decline, the AirAsia X – the long-haul unit of AirAsia - placed an order for 25 Airbus jets worth $6 billion last month as it aims to see off competition in the region and increase its routes to Europe.

(Read more: Airbus close to landmark jet order with Japan Airlines)

Fernandes said the company's shares had taken a "battering" over investors' reaction to a perceived problem of overcapacity in the industry. "There have been lots of reports out there that people are buying lots and lots of planes – most of those are coming from two airlines, from us and an airline in Indonesia – but no one has looked at the demand side," he said.

"We're in Asia, probably the best part of the world however way you want to measure it right now. We've got 3 billion people [there] – that's 10 times the size of Europe and there is just so much demand. Just in December, AirAsia had a passenger load factor (the occupancy rate of an aircraft) of 91 percent."

(Read more: Cramer gets messagefrom Spirit world)

Fernandes believed the long-haul unit of the group, AirAsia X, was the key to "connecting Asia" and would be an equivalent of the Dubai-based Emirates airline. "Asia is more than a 4-hour market and I'm very keen on connecting that market. I'm really creating an Emirates within Asia so you can move anywhere within Asia on AirAsia and AirAsia X."

The move could be seen as a risky one with price instability in Asia and increased competition facing the group but Fernandes was confident.

"I started this airline with two planes against Malaysian Airlines' 130 planes. We're now the largest airline…prices are not an issue provided you have a cost structure that can deal with those prices," he said, adding that he had a "very simple strategy" to reduce costs as much as possible.

"Whatever fares are, cost is king," he remarked. "The lowest cost produces the lowest fares and the lowest fares gives us tremendous demand and makes it very hard to compete with us."

"We're the lowest cost airline in the world and we're going to take out another 7.5 percent [of costs this year] and we already took out 5 percent [of costs] out last year...Let's not make no bones about it, you'd invest in AirAsia because we're the lowest cost airline and the lowest cost will always win."

- By CNBC's Holly Ellyatt, follow her on Twitter 

@HollyEllyatt