Putrajaya sounds out airlines on taking over AirAsia routes

Putrajaya is exploring options with airlines to take over AirAsia's domestic routes amid the low-cost carrier's deteriorating financial situation. The Finance Ministry and Malaysia Airports Holdings Bhd (MAHB) are monitoring AirAsia's financial position, with two sources revealing that talks have intensified between the government and Malaysia Airlines and Batik Air.

These airlines have expressed willingness to expand organically by absorbing AirAsia's routes and passengers, but acquiring the aircraft would complicate the process. AirAsia, which holds about 40% of Malaysia's aviation market, is grappling with rising fuel costs, with a 66% increase in the second quarter. The airline posted a net loss of RM831 million for the three months ended June 30, and its current liabilities stood at RM18.4 billion.

AirAsia has been seeking fresh capital, including RM1 billion from international debt markets and RM700 million through local credit facilities. However, the airline's estimated requirement of US$3 billion in fresh capital remains a concern.

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