Malaysian low-cost airline AirAsia, helped by an aggressive fuel hedging policy, is confident that it can maintain low fares even with high jet fuel prices.

"We don't like it, but we are comfortable that we can maintain low fares even as jet fuel is at USD$80", Chief Executive Tony Fernandes told reporters on Thursday.

AirAsia, which listed last year, missed its full-year earnings target of MYR160 million ringgit (USD$42.3 million) forecast in its prospectus. The airline earned a pre-tax profit of MYR125.48 million (USD$33.2 million) for the year to June 30, 2005.

It said in its results statement that jet fuel prices remained the principal challenge for the airline, although this had been partly mitigated by hedging and a fuel surcharge in mid-July.

"We take a very aggressive hedging policy", Fernandes told a news conference on the fringes of a meeting of senior executives during the Asia-Pacific Economic Cooperation (APEC) forum in the South Korean port city of Pusan.

"We have hedged 100 percent until the end of our financial year. We have always hedged 100 percent", he added.

The carrier has said it is one of the world's top three most profitable no-frills airlines, despite the Asian tsunami in December last year, losses due to start-up costs at its Indonesian operations and high fuel prices.