Key Takeaways
- AirAsia co-founder Tony Fernandes met with Malaysian officials to discuss potential government support.
- Discussions focused on financial assistance and aviation-related costs, with no agreement reached.
- AirAsia remains confident it can navigate the current situation without state assistance.
AirAsia co-founder Tony Fernandes met with officials from Malaysia’s finance ministry two weeks ago to discuss potential government support for the airline, sources say.
The talks, which took place during the week starting September 28, reflect growing government concerns about the financial health of AirAsia, the country’s largest domestic carrier, following a spike in jet fuel prices.
Discussions centered on the prospect of the government backing AirAsia’s fundraising efforts, provided the airline agreed to proposed conditions, which remain under discussion, two sources said.
Fernandes, speaking for the airline, told Reuters in an exclusive interview that he had met with officials from Malaysia’s finance and transport ministries during the week starting September 28 at his request.
He stated that the discussions focused on aviation-related costs such as airport charges and fuel, not financial assistance, and that there have been no discussions on financial assistance with the government.
Fernandes said, “Obviously, like every airline in the world, we are telling government that this is a tough period.” He added, “There have been no discussions on financial assistance with the government.”
The airline has been hit by soaring jet fuel costs that surged 66% in the second quarter from the prior quarter to an average of $183 a barrel, stemming from the US-Israeli war on Iran.
AirAsia’s shares fell as much as 21% to near four-year lows the next day following a Reuters report last month that Malaysia’s government had asked Malaysia Airlines and Batik Air whether they could absorb AirAsia’s domestic market share as part of scenario planning while authorities monitor the carrier’s financial health.
Representatives from Alton Aviation Consultancy, which Reuters previously reported the finance ministry has hired to assess loss-making AirAsia’s funding needs, also attended the meeting, two sources said.
Malaysia’s finance ministry declined to comment, while the transport ministry and Alton did not respond to requests for comment.
Fernandes said he had previously asked the government to help the airline secure loans from Malaysian banks rather than borrowing overseas, and still sought such support as he preferred local-currency loans with better interest rates and terms.
He added, “We will never say no to it. We would be foolish to do so,” and expressed confidence that AirAsia could navigate the situation without state assistance, as it had during the pandemic.
Obviously, like every airline in the world, we are telling government that this is a tough period.
Tony Fernandes, AirAsia co-founder and adviser
We will never say no to it. We would be foolish to do so.
Tony Fernandes, AirAsia co-founder and adviser
