AirAsia co-founder Tony Fernandes met Malaysian finance ministry officials about two weeks ago, in talks that three people familiar with the matter said touched on whether the government might back the budget airline’s fundraising. Fernandes, who now advises the carrier, denies that state aid was discussed and says the meetings focused on costs after jet fuel prices spiked, Reuters reported.
Two of the sources said any government support would depend on AirAsia accepting certain conditions, which were still being negotiated; Reuters could not establish what they were. Alton Aviation Consultancy, which the finance ministry hired to assess AirAsia’s funding needs, attended the meeting, according to two people. The finance ministry declined to comment, and the transport ministry and Alton did not reply to requests.
In an interview with Reuters on Friday, Fernandes said he asked for meetings with the finance and transport ministries in the week starting 28 September and that the talks covered airport charges and fuel. “There have been no discussions on financial assistance with the government,” he said. He added that he was fully confident AirAsia could get through without state help, as it did during the pandemic, though it would accept support from any government where it flies, including Malaysia, Thailand and Indonesia. “We will never say no to it,” he said. He has asked the government to help the airline borrow from Malaysian banks in local currency rather than overseas.
The pressure on the loss-making carrier is clear in the numbers. Jet fuel rose 66% in the second quarter from the previous three months to an average of $183 a barrel, a jump attributed to the US-Israeli war on Iran. As of 30 June, AirAsia held cash and bank balances of 954 million ringgit ($233.65 million) against current liabilities of 18.4 billion ringgit. Last month Reuters reported that the government had asked Malaysia Airlines and Batik Air whether they could take over AirAsia’s domestic share as part of scenario planning, and AirAsia shares fell as much as 21% the next day to near four-year lows.
Two sources said officials worry that a weaker AirAsia would hurt air links, tourism and related businesses, including state-linked Malaysia Airports Holdings Berhad. Fernandes says the airline controls about 60% of Malaysia’s domestic aviation market and employs 26,000 people, which gives the government a large stake in whatever AirAsia decides next on funding.
