Malaysia has made no commitment to provide financing support to AirAsia, says ministry

[KUALA LUMPUR] Malaysia has made no agreement or commitment to provide financial assistance to budget airline operator AirAsia, the finance ministry said, though it acknowledged concerns over the carrier’s financial health following a jump in jet fuel prices.

Reuters reported in October, citing sources, that AirAsia was in talks with the government over potential support. The airline’s co-founder Tony Fernandes said the talks focused on aviation-related costs such as airport charges and fuel, not financial assistance.

In a written parliamentary reply on Monday (Oct 19), the finance ministry said it was monitoring developments in Malaysia’s aviation sector, including recent quarterly losses reported by AirAsia that were attributed to rising fuel costs stemming from the US-Israeli war with Iran.

The government was regularly engaging with aviation players and seeking views from industry and technical experts, as was the case for other economic sectors affected by the Middle East crisis, it said.

Any request for support from companies in any sector “will be considered based on the interests of the country and the people, the fiscal sustainability of the government and the protection of public funds, in accordance with applicable laws and procedures”, the ministry said.

“To date, the government has not made any agreement or commitment to provide financing support to AirAsia, whether in the form of guarantees, loans or public fund injections,” it said.

The ministry said AirAsia was a significant player in the aviation sector, accounting for around 41 per cent of the 104.5 million passenger movements recorded at airports operated by Malaysia Airports Holdings in 2025 and almost 60 per cent of domestic passenger movements.

The carrier also played a significant role in maintaining air connectivity in Malaysia’s Sabah and Sarawak states on Borneo island, it said.

Shares in the budget carrier dropped as much as 5.5 per cent to their lowest intraday level since November 2022. The stock has slumped 75 per cent this year, making it the worst performer in the Bloomberg World Airlines Index.

SEE ALSO

South-east Asia’s budget airlines eye recovery but fuel scars linger

AirAsia’s funding woes test how far Malaysia will go to protect its budget champion

‘We do not need rescue’: AirAsia's Fernandes denies reports on Malaysian government seeking rivals’ help

Cash-strapped AirAsia takes unusual step of unloading new planes

AirAsia’s hunt for cheaper debt won’t be easy with US$100 oil

More

The Iran war has hit AirAsia hard, with the low-cost airline — which doesn’t hedge its fuel costs — posting two straight quarterly losses as jet fuel prices surged. That’s sparked growing scrutiny of the airline, which has said it’s seeking US$1 billion in debt refinancing. 

Bloomberg News has previously reported that AirAsia had sold six newly-delivered aircraft, a unit of AirAsia had fallen behind on payments to suppliers, and AirAsia Group was seeking to change the terms of a US$200 million private credit loan. 

Last month, the co-founder Tony Fernandes sought to ease concerns about AirAsia’s financial health, pushing back against the notion of a bailout and the idea that rivals could absorb some of its assets. The airline would emerge from its current crises stronger than before, he said, liquidity was solid, and no aircraft had been repossessed. REUTERS/ BLOOMBERG