The government has reportedly asked Malaysia Airlines and Batik Air if they could absorb AirAsia’s domestic market share. According to Reuters, these talks are part of scenario planning involving the Finance Ministry and state-linked airport operator Malaysia Airports Holdings Bhd (MAHB). At the same time, authorities are monitoring the financial status of AirAsia. In recent weeks, discussions have increased amid growing concerns over the economic pressures faced by the low-cost carrier.
Citing sources familiar with the matter, the publication revealed that both Malaysia Airlines and Batik Air have explained that they will only take over AirAsia’s operations on a large scale if they could also assume its aircraft leases. This is because it would be far more difficult to absorb routes and passenger volumes without the aircraft. Furthermore, the airlines have expressed their willingness to expand organically to take over the routes and passengers, rather than acquiring AirAsia’s entire business.
Beyond that, the government is also looking into other alternatives. These include providing some form of endorsement to support the airline’s plan to raise fresh capital from external investors.
Previously, AirAsia stated that it accounts for about 40% of Malaysia’s overall aviation market and 60% of domestic flying, so its financial health is of importance to the government. Although the report could not establish the full picture of the carrier’s finances, it highlighted the fact that the airline has been affected by the soaring jet fuel costs caused by the Middle East conflicts. Prices saw a 66% increase in the second quarter of 2026 to an average of US$183 (~RM750) per barrel.
Beyond that, AirAsia has reported a net loss of RM831 million for the quarter ending on 30 June 2026, including RM331 million in foreign-exchange losses. Furthermore, the airline’s liabilities stood at RM18.4 billion as of that date. It also reportedly owes MAHB RM500 million for services including landing and parking fees. The airport operator has apparently granted repayment extensions.
Currently, the carrier is advancing discussions with financial institutions to raise up to US$1 billion (~RM4.2 billion) from international debt markets and RM700 million in local credit facilities, mainly to restructure its debt. Meanwhile, Reuters’ sources estimated that the airline needs roughly US$3 billion (~RM12 billion).
That said, AirAsia has asserted that its financing targets are adequate to meet its requirements, and that as of 30 June 2026, it had RM954 million in cash and bank balances. Furthermore, the airline has been aggressively restructuring and implementing other cost-cutting measures. These include cutting underperforming routes, returning 25 older aircraft to lessors, and renegotiating vendor contracts. Not too long ago, the carrier dropped its KL-Sydney route, citing cost pressures as the reason for this decision.
(Source: Reuters)
