Malaysia has not committed to providing financial assistance to budget airline operator AirAsia, the finance ministry said, while acknowledging concerns about the carrier’s financial health following a jump in jet fuel prices.
In a written parliamentary reply on Monday (19th October), the 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. 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.
Reuters reported this month, 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. He has described meetings with government officials as routine exchanges on industry-wide cost issues rather than a request for public money.
The ministry said the government regularly engaged with aviation players and sought views from industry and technical experts, as it did for other economic sectors affected by the Middle East crisis. Prime Minister Anwar Ibrahim, who also serves as finance minister, has stressed that any requests for assistance from private companies would be assessed against national priorities and the need to safeguard taxpayers’ money. Officials are also assessing how elevated fuel prices and currency fluctuations affect air connectivity and economic activity.
If a formal request is made, the ministry said it would follow established legal processes and prioritise fiscal responsibility. Any potential support would be assessed against criteria centred on the public interest and the protection of public funds.
The ministry said AirAsia accounted for around 41% of the 104.5 million passenger movements recorded at airports operated by Malaysia Airports Holdings in 2025, and almost 60% of domestic passenger movements. The carrier also plays a significant role in maintaining air connectivity in Malaysia’s Sabah and Sarawak states on Borneo island, with implications for travel between Peninsular Malaysia and East Malaysia.
The Iran war has hit AirAsia hard. The airline does not hedge its fuel costs, leaving it more exposed than some peers to the rapid rise in prices. It has posted two consecutive quarterly losses as jet fuel prices surged. Its shares fell as much as 5.5% to their lowest intraday level since November 2022, and the stock has slumped 75% this year, making it the worst performer in the Bloomberg World Airlines Index.
The losses have drawn greater scrutiny of the airline, which has said it is seeking US$1 billion in debt refinancing. Bloomberg News has previously reported that AirAsia sold six newly delivered aircraft, that an AirAsia unit fell behind on supplier payments, and that AirAsia Group was seeking to change the terms of a US$200 million private credit loan.
Last month, Fernandes sought to ease concerns about AirAsia’s financial health. He rejected the notion of a bailout and the idea that rivals could absorb some of its assets, saying the airline would emerge from its current crises stronger than before, liquidity was solid, and no aircraft had been repossessed. He has also said the group can manage the pressures through operational adjustments and refinancing without relying on state funding.
About the Author
