Malaysia talks to rival airlines as it monitors AirAsia's financial health, sources say

Malaysia is consulting rival airlines, Malaysia Airlines and Batik Air, regarding the financial health of AirAsia, the country's largest low-cost carrier. The proposed scenario involves these airlines absorbing AirAsia's domestic market share as Malaysia's government monitors the airline's financial situation. Owing at least 500 million ringgit to Malaysia Airports Holdings Berhad for services like landing and parking fees, AirAsia has been facing soaring jet fuel costs due to the US-Israeli war on Iran, which surged by 66% in the second quarter.

Discussions among the government, Malaysia Airlines, Batik Air, and the finance ministry are part of broader planning to address AirAsia's financial pressures. The airline currently commands 40% of Malaysia's aviation market and 60% of domestic flying, making its financial struggles a significant concern for authorities. AirAsia has explored raising capital from external investors, targeting up to US$1 billion in international debt markets and 700 million ringgit in local credit facilities.

However, the airline requires at least US$3 billion in fresh capital to address its financial position.