One of the hottest mistery about AirAsia is how will higher USD:MYR exchange rate and higher fuel price will affect the earning of AirAsia. We all know that most probably the fuel price and USD:MYR wouldn't go back to the level we have in early 2016, but what is the level shall we expecting for FY2017 and how would it affect AirAsia? For the first part of question I will leave it to economist or whoever enjoy guessing it, for me I will quote this infamous Peter Lynch quote "If you spend more than 13 minutes analyzing economic and market forecasts, you've wasted 10 minutes.".

For the second part of question, it's actually quite simple, we just have to multiply the exchange rate with the average fuel price to get the fuel price in RM (since QR is reporting in ringgit), then we compare it with all previous quarters to check whether it have go back to the level it was in 2015, which was quite profitable in term of operation, or 2014, which is quite unprofitable.

For the average fuel price for incoming 4 quarters, we know from QR or TF that AA is 70% to 75% hedged at USD59/60 per barrel. For the unhedged portion, i make assumption of it will raise to USD75 (quite conservative for me, since IATA predict it to be USD65/barrel).

For the exchange rate, althougth i expect ringgit to improve, but for this article I assume it as USD:MYR 4.50.

This is what we have:

As you could notice, for incoming 4 quarter, the fuel price will be around RM280/barrel, which is higher than FY2016 average of RM233. However, it will remain cheaper than 2015, which average is RM320/barrel.

Therefore, we could actually say that AirAsia will remain quite profitable in 2017.

How much is the fuel price if USD:MYR raise to 5.00? I leave it to you, as people who really interest in the number will work it out anyway.

Let me end this article with another infamous Peter Lynch's quote: Investing without research is like playing stud poker and never looking at the cards.

btw, operating profit of AirAsia in 2015 is RM 1,578.80 millions.