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Asia300

Shares tumble 11% as search continues for missing jet

KUALA LUMPUR -- Share prices of budget carrier AirAsia and its associate AirAsia X took a beating Monday as the search for its missing jet resumed. Shortly after trading began, AirAsia's stock declined 10.89% from Friday's closing price to 2.62 ringgit ($0.75), while AirAsia X fell 10.22% to 0.615 ringgit.

     Market observers had expected this kind of a "knee-jerk reaction" as the airline struggles to locate Flight 8501, which disappeared yesterday halfway through its flight from Surabaya, Indonesia, to Singapore. Sharifah Farah, an aviation analyst at Affin Hwang Capital, maintained that AirAsia's fundamentals remain intact despite the "unfortunate tragedy."

     Search operations resumed at daybreak in the area of Belintung Island, Sumatra, where the plane lost contact with air traffic control after deviating from the prescribed route to avoid bad weather. The captain had requested permission to climb from 32,000 feet to 38,000 feet some 40 minutes into the 2 hour, 10 minute flight. The Indonesian air force has deployed five aircraft for the search, focusing on the eastern part of Belintung Island in the Java Sea, according to Antara, the state news agency. The Indonesian meteorological agency reported yesterday that the plane was flying under very thick clouds when it went missing.

     "This is a massive shock for us and unbelievable," AirAsia Group CEO Tony Fernandes said in a press conference late Sunday in Surabaya. The budget carrier has had no major accident in its 13 years of operation. The missing jet marked the third major incidents involving a Malaysia-based airline this year. The search is ongoing for Malaysia Airlines Flight 370, which disappeared in March with 239 people aboard. Another of the airline's planes was shot down in July in Ukraine, killing all 298 aboard.

Nikkei staff writer Linda Silaen in Jakarta contributed to this article.

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