AirAsia co-founder Tony Fernandes said the airline is not in discussions with the Malaysian government over any rescue plan, as the group focuses instead on securing financing from banks to manage the impact of sharply higher jet fuel costs.
Speaking at a media briefing on Friday, Fernandes said AirAsia’s present challenges were “far, far” less severe than those experienced during the Covid-19 pandemic, with strong passenger demand continuing to underpin the business despite cost pressures.
His comments came two days after Reuters reported that the Malaysian government had approached Malaysia Airlines and Batik Air on whether they could absorb AirAsia’s domestic market share as part of scenario planning while authorities monitored the low-cost carrier’s financial condition. The earlier report did not say that a government bailout had been agreed.
Fernandes said discussions currently taking place are with banks and financial institutions on funding, rather than with Putrajaya on a rescue package.
AirAsia has previously said it was pursuing up to US$1 billion from international debt markets and RM700 million in local credit facilities, mainly for debt restructuring, refinancing and balance-sheet consolidation. It had already raised about US$300 million in March 2026.
The airline’s financial position has come under greater scrutiny following the sharp rise in aviation fuel prices triggered by the Middle East conflict.
AirAsia said average jet fuel prices reached US$183 a barrel in the second quarter, up sharply from the preceding quarter, pushing its fuel expenses 58% higher year-on-year. The group reported a net loss of RM830.5 million for 2Q26, including RM331 million in foreign-exchange losses.
Fernandes described the second quarter as the toughest period for the group and expects conditions to improve as the airline adjusts ticket prices to reflect the higher fuel environment.
AirAsia said average fares had already increased by more than 20% year-on-year in May and June, while underlying travel demand remained resilient despite the higher pricing. The group generated revenue of RM5.1 billion in 2Q26 despite reducing capacity by 11%.
The airline has also been restructuring its operations by reducing underperforming capacity, returning 25 older aircraft to lessors and seeking to lower fixed costs as it navigates the sharp increase in fuel prices.
