PUTRAJAYA has asked Malaysia Airlines and Batik Air whether they could absorb AirAsia’s domestic market share as the government monitors the low-cost carrier’s financial position, Reuters reported today.
Two people familiar with the matter revealed that talks had intensified in recent weeks as part of contingency planning involving the Finance Ministry and Malaysia Airports Holdings Bhd (MAHB).
The two airlines have indicated they are willing to expand organically by taking on AirAsia’s routes and passengers rather than acquiring the carrier outright, one of the sources said.
But any large-scale move would depend on them being able to take over AirAsia’s aircraft leases, the source added.
Taking on the routes and passenger numbers without the aircraft would be considerably more difficult.
AirAsia has said it accounts for about 40% of Malaysia’s overall aviation market and 60% of domestic flying.
The airline is facing mounting pressure from higher jet fuel costs. It was also reported that fuel costs rose 66% in the second quarter from the previous quarter, averaging US$183 a barrel.
AirAsia posted a net loss of RM831 million for the three months ended June 30, including RM331 million in foreign-exchange losses. Its current liabilities stood at RM18.4 billion at the end of the quarter.
The airline also owes MAHB at least RM500 million for services including landing and parking fees, according to the sources.
Two of the sources then said MAHB had already granted AirAsia extensions to repay some of its outstanding dues.
AirAsia has been working to raise fresh funds.
Earlier this month, it said it was in talks with financial institutions to raise up to US$1 billion from international debt markets and RM700 million through local credit facilities, mainly to restructure its debt.
Two people familiar with the matter said they estimated AirAsia needed at least US$3 billion in fresh capital.
AirAsia said its financing targets were sufficient to meet its requirements and that it had RM954 million in cash and bank balances as of June 30.
The carrier also sought to push back against speculation over its financial position.
Deputy group CEO Farouk Kamal told Reuters that AirAsia did not comment on operational or financial speculation or unannounced corporate arrangements.
He said the airline remained focused on business continuity and stable operations, while continuing to see strong underlying demand across its network.
MAHB said it regularly engaged with airline partners on network and route development, including potential capacity and route opportunities where there were gaps in the market or unmet demand.
The airport operator declined to comment on AirAsia’s financial outlook, while the Finance Ministry, Malaysia Airlines and Batik Air also declined to comment.
Another option being discussed is some form of government endorsement for AirAsia’s efforts to raise fresh capital from external investors, although the nature of any possible support remains unclear.
The airline has meanwhile been cutting costs as part of a broader restructuring, including dropping underperforming routes, returning 25 older aircraft to lessors and renegotiating vendor contracts.
Earlier this month, the Finance Ministry had hired Alton Aviation Consultancy to assess AirAsia’s funding needs as the government weighs whether to provide support.
For now, the discussions with Malaysia Airlines and Batik Air remain part of the government’s scenario planning as it keeps watch on the carriers’ finances. – September 16, 2026
