Fernandes said in Montreal the carrier will be announced within one or two months, with AirAsia already moving some aircraft for the venture.
The AirAsia X co-founder is pressing ahead despite industry turbulence from high oil prices, arguing expansion during the downturn should deliver longer-term gains.
The move keeps AirAsia committed to growth and its fuel-hedging strategy as airlines grapple with elevated energy costs and pressure on profitability.