Speaking at a media briefing last week, Fernandes said AirAsia was adept at managing cash and expected to raise more than USD 1 billion, mostly to refinance existing debt, by December or January.

“COVID was far, far worse than what we are dealing with now. We couldn’t fly then, but we can fly now, and our demand is robust,” he said.

AirAsia, like its industry peers, has suffered from a spike in jet fuel prices stemming from the Iran war.

The same phenomenon has contributed to the collapse of debt-laden US carrier Spirit Airlines in May and a Chapter 11 bankruptcy filing by Latvia’s airBaltic this month.

AirAsia’s current liabilities stood at 18.4 billion ringgit (USD 4.52 billion) as of June 30, against cash and bank balances of 954 million ringgit.

As per Fernandes, the second quarter marked the toughest period for the airline that controls about 60% of Malaysia’s domestic market.

The low-cost carrier’s CEO also forecast improving conditions as AirAsia adjusts fares to reflect higher fuel costs.

AirAsia’s fuel costs have surged 66% in the second quarter from the prior quarter to an average of USD 183 a barrel, and it has no hedging in place.

Since September 16, AirAsia’s shares have fallen about 24%, hitting the lowest level since December 2022. The stock has lost more than 70% of its value so far in 2026.

As per Reuters, Malaysia’s finance ministry has hired Alton Aviation Consultancy to assess AirAsia’s funding needs as it ‌weighs what ⁠support, if any, it could extend to the airline given its importance to the local economy.

“We’ve never received any government support in the past 25 years. And as of today, we haven’t got any, and that’s it,” Fernandes said, refuting the media reports.

He said there had been no discussions with the government, and “we do not need rescue, bailouts, or whatever.”

For Fernandes, no one can replace AirAsia’s 100 planes in the country overnight.

“You have to have our cost structure, our brand, our market, and our network,” the CEO noted.

AirAsia will be advancing discussions with financial institutions, ⁠targeting up to USD 1 billion from international debt markets plus 700 million ringgit in local credit facilities, primarily to restructure its debt.

“The refinancing is…not raising fresh capital. It’s about bringing down costs,” Fernandes added.

AirAsia also is in talks with a major global bank on a bond transaction.

Furthermore, the loss-making low-cost carrier has received an offer from a Middle Eastern investor for USD 1 billion in funding ⁠with a term sheet signed pending due diligence.

The group’s load factor, which measures an airline’s ability to fill available seats, stood at 80% in Q3, and Fernandes predicted strong bookings for the fourth quarter, with operations in Indonesia, the Philippines, and Thailand emerging as positive developments.

The carrier has been restructuring aggressively, cutting underperforming routes, returning 25 older aircraft to lessors, and renegotiating contracts with vendors to reduce costs.

Last but not least, AirAsia is also accelerating its A321LR and XLR strategy to phase out fuel-inefficient A330s, and Fernandes said the airline expects “a pretty exciting announcement” with Airbus within the next month regarding its growth and strategy.

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As per Reuters, discussions between the government and Malaysia Airlines and Batik Air have increased recently, with AirAsia’s growing financial pressures emerging as the key topic.

The airline has been hit by soaring jet fuel costs, with the latter surging 66% in the second quarter from the prior quarter to an average of USD 183 a barrel.

The talks, which involve the Southeast Asian country’s finance ministry and state-linked airport operator Malaysia Airports Holdings Berhad (MAHB), are part of broader scenario planning around AirAsia’s financial strains.

The stakeholders are also mulling options like the government providing some form of endorsement to bolster the airline’s plan to raise fresh capital from external investors.

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The company also claimed to have received a commitment from a Japanese private equity firm to put immediate funds into the aviation group through an equity deal.

GSV chief executive officer Shahril Lamin told the media, “We have secured in excess of $2.5bn from the bank. We will take about three to four months to get long-term financing.”

However, Malaysian sovereign wealth fund Khazanah Nasional Bhd, the sole owner of Malaysia Airlines, is skeptical about the deal.

Recently, Japan Airlines, AirAsia Group and Malindo Air have shown their interest in the flag carrier.

Currently, airlines across the globe are battling severe revenue loss due to the coronavirus pandemic, which has pushed the world to the state of a lockdown.

A report by IATA published last month revealed that carriers in Southeast Asia could lose revenue of around $29 billion due to the coronavirus pandemic. However, since then the virus has spread to Europe, Africa and the Americas.

With travel demand down by more than 90 percent, many airlines are facing bankruptcy. Recently, European carrier Flybe entered into administration as the already struggling carrier failed to cope with the coronavirus.

So far, Malaysia Airlines has cancelled over 4000 flights due to the travel restrictions put in place to curb the spread of the coronavirus.

The airline has cancelled some of its operations till June 30, 2020.

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Penang will be Emirates’ second destination in Malaysia. The carrier flies three flights daily to, Kuala Lumpur, the capital city of Malaysia.

Emirates will fly its Boeing 777-300ER aircraft to Penang. The flight will include eight private suites in First Class, 42 lie-flat seats in Business Class and 304 spacious seats in Economy Class.

Adnan Kazim, Chief Commercial Officer at Emirates told the media, “Penang is a major centre for tourism, business travel, as well as medical tourism and the increased levels of inbound travel is consistent with the growth in numbers of visitors to the country. “

“The introduction of flights to Penang will help us meet growing demand from leisure and business travellers, both to and from Malaysia. We are also pleased that the fifth freedom flights between Penang and Singapore will connect two sister cities and increase connectivity for passengers in South East Asia.”

The new flight route also provides an opportunity for Malaysian businesses to increase their exports through Emirates SkyCargo.

Emirates has been flying to Malaysia since 1996.

On January 25, Emirates completed 20 years of service between Dubai and Bahrain. Reportedly, more than 6.7 million passengers from Bahrain have flown with Emirates on the route to Dubai during the period.

Last year, Emirates signed an agreement with Boeing to purchase 30 Boeing 787 Dreamliner for $8.8 billion. The aircraft will be the smaller variant of Boeing 787-9 Dreamliner.

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Five prospective buyers are in the fray, said Malaysian Prime Minister Mahathir Mohammed, although he did not disclose their identities.

According to sources, among those are Air France-KLM that is expected to bid for a 49 percent stake while Japan Airlines is eyeing a stake of 25 percent.

Apart from these prospective foreign investors, there are also indigenous airline carriers that aspire to purchase a stake in Malaysia’s national airline. One is AirAsia Group and the other is Malindo Air, which is a subsidiary of Indonesia’s Lion Air in Malaysia.

Although the proposals from overseas airline carriers are indeed pretty lucrative, the government of Malaysia has discovered that the sovereign wealth fund that runs Malaysia Airlines prefers a transaction with AirAsia.

The source went on to say that the proposals from foreign investors are more all-inclusive as they seek to leverage the geographical advantage that Malaysia Airlines offers their services.

Following the double setbacks it suffered in 2014 – the strange vanishing of the airplane MH370 and the airplane MH17 being shot down over eastern Ukraine, Malaysia Airlines has been struggling to stay afloat.

And ever since, the Malaysian government is endeavouring to get a strategic alliance for its national airline. The same year, sovereign wealth fund Khazanah Nasional Bhd acquired the airline by paying RM1.4 billion ($345 million) for the 30 percent of shares which did not belong to it.

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Both the airlines will begin joint operations from April 2020 for flights between Japan and Malaysia.

After receiving approval from the Malaysian Aviation Commission (MAVCOM) and Japan’s Ministry of Land, Infrastructure, Transport, and Tourism, both Japan Airlines and Malaysia Airlines said in a statement, “The agreement for joint business will allow the two carriers to cooperate commercially on flights between Malaysia and Japan and aims to deliver customers with more benefits by providing additional flight choices, a larger network, better connections, and an enhanced frequent flyer programme.”

It is understood that Malaysia Airlines has been looking for a partner to help the carrier run its business for quite some time. According to media reports, Japan Airlines was among four other carriers that made the final list.

In October, Malaysia Airlines also signed a wide-ranging commercial agreement with Singapore Airlines to further strengthen the partnership between the two carriers. The carriers signed a memorandum of understanding (MoU) in the month of June.

Last month, the Japanese carrier announced the expansion of its global network between Japan and the US, Finland, Russia, Australia, India, and China. As a result, the carrier will feature 34 international routes at Tokyo-Haneda airport, starting March 29, 2020.

Japan Airlines is also planning to target additional markets in the US. Next year, the airline will start new services from Haneda to Chicago, Fort Worth and Los Angeles as well as an additional flight to New York’s John F. Kennedy International Airport.

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AirAsia’s market share in its domestic market in Malaysia has increased by 3 percent year-on-year to reach 60 percent.

With regard to the increase in market share, AirAsia Group’s president Bo Lingam told the media, “This was in spite of intense competition in the domestic market, as we saw irrational fare dumping as well as baggage unbundling by competitors. We nonetheless expect to see a reversal of this behaviour in the fourth quarter of 2019, with our average fares seen higher year-on-year in the upcoming quarter.”

He also added, “We are also determined to bring all Asean AOCs (Air Operator Certificate) into profitability this year, with particular focus on reshaping AirAsia Thailand, by realigning routes and enhancing efficiency while additionally exploring new routes to India as well as Cambodia, Laos, Myanmar, and Vietnam markets.”

Reportedly, the loss in the third quarter is attributed to hefty accounting charges on its aircraft and fuel hedge contracts, as well as foreign exchange volatility.

However, revenue for the quarter increased by 17percent to RM3.07 billion from RM2.61 billion during the same period last year.

According to Tan Sri Tony Fernandes, chief executive officer at AirAsia, the carrier is repositioning its business by adapting new accounting treatment and restructuring the ownership and aircraft leasing process.

Interestingly, the carrier’s income for non-ticket sources increased by 26 percent to RM686milion year-on-year.

Recently, the carrier took the delivery of its first Airbus A321neo in Germany. It has also collaborated with Kiwi.com to sell flight tickets of other carriers on its website.

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The proposed partnership would include the airlines’ subsidiaries including SilkAir, Scoot and Firefly. Both the carriers told the media that the proposed agreement to share revenue on flights between Singapore and Malaysia and joint marketing activities was after receiving an approval from the competition authorities 

The two airlines plan to establish a joint business agreement where they coordinate routes, offer joint fares, match corporate programmes, and explore opportunities between their frequent flyer programmes. 

Currently, Malaysia Airlines operates 63 weekly flights to Singapore Changi and seven from Kuching. Malaysia Airlines, Singapore Airlines and their subsidiaries have a combined market share of 53.6 percent by capacity. 

Brendan Sobie, CAPA Centre for Aviation’s Singapore-based chief analyst, told the local media that, “It is not clear how deep these will go, [but] the new partnerships will generally enable MAS to compete more effectively in an extremely challenging environment—both in its home market and regionally within the Asia-Pacific.”

Singapore Airlines plans to have codeshare flights from four to 16 Malaysian destinations. That said, Malaysian Airlines will have code on Singapore flights to Europe, South Africa and other destinations.

Singapore Airlines is a Star Alliance member and Malaysian Airlines is in oneworld. The proposal is in line with Malaysia Airlines long-term vision to engage in deep partnerships to strengthen global presence. Both airlines and the countries are expected to mutually benefit from the partnership. 

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With regard to the merger between Malaysia Airlines and AirAsia X, Ahmad Maghfur Usman, an aviation analyst, wrote in a report that, “The formation of the new company would see less competition, particularly from the mid-haul segment, although competition from Malindo Air, AirAsia Group, and foreign carriers are likely to persist.”

He added, “With regards to Malaysia, we think the viability of operating a long-haul low-cost airline is less
feasible compared to Singapore and Bangkok, where both Singapore Airlines’ Scoot and Thai AirAsia X have seen a financially more sustainable performance than Malaysia AirAsia X, where Kuala Lumpur is its base.”

Keeping in mind AirAsia X’s deal with Airbus to acquire 78 Airbus A330-900s, 30 A321XLRs, and 10 A350-900s, Ahmad Maghfur Usman believes the new company must trim its short-haul business even further and concentrate on boosting its mid-long-haul segment.

It was reported earlier this week that Khazanah Nasional Berhad, which owns Malaysian Airlines is pushing for a merger with AirAsia X. According to the reports, the Malaysian government would inject money to recapitalise the state-owned airline and settle all of its debts prior to the merger.

In the month of June, Khazanah Nasional Berhad hired Morgan Stanley as an adviser to review the Airline’s business model and to explore possible options to turn around the loss-making airline.

This is not the first time both Malaysia Airlines and AirAsia X have held talks for a potential deal. In 2012, a share swapping deal between the airlines was proposed. However, the deal was called off after Malaysian Airlines’ worker’s union objected the deal.

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Malaysian sovereign wealth fund Khazanah is the sole shareholder of Malaysia Airlines. The partnership between both airlines could result in more flights between the two countries.

In June, Japan Airlines President Yuji Akasaka said that the carrier would be interested in an investment in Malaysia Airlines. 

In recent years, Malaysia and Japan have signed deals in the financial sector including bond issuance and asset sales. More recently, the US government imposed a $300,000 fine on Japan Airlines for departure delays that trapped passengers on two planes for several hours.

In 2010, Japan Airlines filed a bankruptcy with a ¥2.32 trillion debt that became the biggest case of insolvency in Japan’s aviation sector. At the time, it was also one of the dominant airlines in Asia. However, it bounced back in 2012 as the world’s most profitable airline with a ¥186.6 billion profit record.

Last month, Malaysia Airlines received $71 million funding from the government, in addition to $119 million capital injected into the airline earlier this year.

Morgan Stanley has been hired to explore strategic options for Malaysia Airlines, including potential stake sale. Last year, the airline said that its loss was less compared to the previous years, with RM2.35 billion between 2015 and 2017. 

It operates a fleet of 81 aircraft and flies to more than 59 destinations — serving Asia, the Southwest Pacific region and the UK. 

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