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Stakes high for Asia's air industry

Monday, December 29, 2014 - 02:26

AirAsia shares have fallen almost 8% - the biggest drop in three years - after a jet carrying 162 people is presumed to have crashed off the Indonesian coast. As Joel Flynn reports the incident has also knocked shares in Germany's Allianz, a lead insurer in all three Asian air disasters this year.

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As the search for the missing AirAsia flight near Indonesia continues, markets are worrying about the airline. An early fall in the share price of the group in Kuala Lumpur a predictable result of losing an aircraft with 162 people on board. The latest suggestion - that flight QZ8501 could be at the bottom of the sea - puts the safety of Asian flights under scrutiny. AirAsia CEO Tony Fernandes. SOUNDBITE: AirAsia CEO, Tony Fernandes, saying (English): "No one can guarantee that their airline is 100 percent safe, but I think in 13 years, we have carried 220 million people and, until today, we have never lost a life." This is the first major accident for AirAsia since its budget operations began in 2002. In that time the airline has rapidly expanded - starting with just two aircraft and now counting around 80 in its fleet. It's also the latest in a disastrous year for Malaysia-affiliated airlines. Malaysia Airlines Flight MH370 went missing in March carrying 239 passengers - it still hasn't been found. Then in July, the same airline's Flight MH17 was shot down over Ukraine, killing all 298 people on board. Questions too now about Indonesia's safety reputation. That's in a market projected to be one of the ten biggest by 2020. IG's Chris Beauchamp. SOUNDBITE: IG Market Analyst, Chris Beauchamp, saying (English): "One is unfortunate, two is even worse, and then a third one makes life even more difficult for Asian airlines, and the read across investors will be "are there other issues coming across in the industry that we need to be aware of?" so that will make life a lot more difficult for airlines operating in that part of the world." Germany's Allianz has said it was the aircraft's lead re-insurer. It was also the main insurer for flight MH370 and flight MH17. SOUNDBITE: IG Market Analyst, Chris Beauchamp, saying (English): "The cost of three airline disasters in such a short space of time will make life very difficult for Allianz to look forward into 2015 and they will spend the year counting the cost of that and trying to reassure investors in the firm that actually they have this under control." The Airbus A320 is known as one of the safest passenger planes - more than 6,000 are used by around 300 airline operators. Aircraft operators and manufacturers will be closely following developments in this latest tragedy.

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Stakes high for Asia's air industry

Monday, December 29, 2014 - 02:26