AirAsia has moved to dispel speculation about its financial position after reports suggested the low-cost carrier may require government support.
Responding to the reports, AirAsia co-founder Tan Sri Tony Fernandes firmly rejected claims that the airline was seeking a bailout from the Malaysian government. He also dismissed reports that the government had approached other airlines about taking over AirAsia's domestic routes and passengers, describing such claims as unfounded.
“There have not been any discussions with the government,” said Fernandes, according to Malaysian media reports.
Fernandes acknowledged that the second quarter of 2026 had been AirAsia's most challenging period this year, largely due to a sharp rise in jet fuel prices and foreign exchange losses. However, he said conditions were expected to improve as the airline adjusted fares and implemented measures to protect profitability.
The surge in fuel costs, linked to escalating geopolitical tensions in the Middle East, has weighed on airline margins globally. In response, AirAsia recovered about 70% of higher fuel expenses through dynamic pricing and lower non-fuel operating costs during the second quarter.
The group also reduced capacity by 20% to 25% during the third quarter, traditionally one of Asia's weaker travel periods, and plans to restore capacity closer to previous levels in the fourth quarter to capture year-end holiday demand.
Despite the pressure on costs, Bo Lingam, group CEO of AirAsia Group, said the current environment remained far less severe than the Covid-19 crisis.
“We are taking a disciplined approach to managing the business - adjusting capacity, controlling costs, having active discussions with key stakeholders and strengthening our resilience,” he added.