AirAsia clears up financial crisis reports
AirAsia on Friday, Sept. 18, denied reports that the low-cost airline is in financial trouble.
In an online press briefing, AirAsia co-founder and AirAsia Group Berhad advisor Tony Fernandes alluded to a news article that made several claims about the Malaysia-based airline's financial standing. The claims included that the airline needed at least $3 billion (around P188 billion) of fresh capital and that AirAsia requested a government bailout.
Fernandes acknowledged that the Southeast Asian airline had been through many crises in their 25-year journey as a low-cost airline, but it was the COVID-19 pandemic that has been the most challenging, so far. The current Middle East conflict has been difficult, but according to AirAsia officials, it is manageable.
"Given the current environment, we are taking a disciplined approach to managing the business—adjusting capacity, controlling costs, having active discussions with key stakeholders, and strengthening our resilience," wrote Bo Lingam, group CEO of AirAsia Group, in a press statement.
"While there has been much speculation in the media, much of it inaccurate, there is no question about our commitment to business continuity and continuing to serve our guests," Lingam continued.
'Myths'
Fernandes said he "wanted to clear [up ] some myths" adding the airline prides itself in its practice of full transparency. For one thing, according to him, the report that AirAsia required a $3-billion (about P188 billion) capital was unfounded.
"Where did this $3 billion come from? I asked Fareh [Mazputra, AirAsia Malaysia general manager], 'Where are they getting these numbers? Are they seeing different accounts from us?'" Fernandes said.
"Another figure that's been thrown around is $18.7 billion (about P1.18 trillion) of liabilities," he continued, saying about $13 billion (about P815 billion) of that amount lies in leases for their planes.
"You capitalize the lease for the next 12 years. So it's just future liabilities. They're not due tomorrow... That's why we feel we have to correct some of this misinformation," Fernandes said, confirming that AirAsia's liquidity is over one billion.
He added he will be flying to Philippines in the coming week, confirming AirAsia is "looking at raising share capital in Indonesia and the Philippines."
"We're very committed to Philippines and Indonesia. We're bringing new capital and we're going to start growing it," Fernandes said.
He emphasized that the funds AirAsia is seeking is targeted largely towards refinancing to lower interest costs and improve loan terms.
"And it's $1 billion (about P62.7 billion), not $3 billion," Fernandes said.
Some reports also mentioned the airline asked for government intervention supposedly to ease their financial situation.
"No government bailout," Fernandes confirmed. "I don't know where these stories have come from. I ignore them but they just go bigger and bigger... We've never received any government support in 25 years."
He also sought to clarify: "No aircraft have been grounded due to non-payment."
"Every month, there will be planes [in] maintenance," Fernandes said, adding that by October, he hopes all that's left to do on the planes is sea check maintenance.
"That's why I'm looking forward to the fourth quarter; we'll have all our planes back, minus the monthly maintenance planes," Fernandes said.
Solutions
The Middle East crisis has affected AirAsia's costs and ticket prices, though according to Lingam, the airline recovered around 70% of fuel price increases in the second quarter. According to him, this was due to applying "dynamic fares and lower non-fuel operating costs."
"The Group also tactically reduced capacity by 20–25% in the third quarter, traditionally a weaker travel period in the [ASEAN] region," Lingam said.
AirAsia, he added, is bringing capacity back up to pre-Middle East war levels in the fourth quarter, which is typically the region's peak travel season.
The airline is also optimizing its fleet.
"As part of its long-term fleet optimization program, the Group has returned 25 older, less fuel-efficient aircraft on favorable commercial terms, reducing its fixed lease burden, while accelerating the transition towards more efficient narrowbody aircraft," Lingam said.
This move is geared toward "route profitability and sustainable returns," said Lingam.
This comes after reports emerged that Malaysia's government has asked Malaysia Airlines and Batik Air whether they could absorb AirAsia's AIRG.KL domestic market share, said two people with knowledge of the matter, as part of what they described as scenario planning while authorities monitor the financial health of Southeast Asia's largest low-cost airline.
AirAsia's strategic moves also came just before the airline was named the World's Best Low-Cost Airline for the 17th consecutive year at the 2026 Skytrax World Airline Awards, which was held in Londond on Sept. 18.
