Malaysia asks airlines about absorbing AirAsia’s 60% domestic share

  • Malaysia’s government asked Malaysia Airlines and Batik Air about absorbing AirAsia’s domestic operations.
  • AirAsia held about 60% of Malaysia’s domestic aviation market, according to people familiar with the matter.
  • AirAsia reported an 831 million ringgit second-quarter net loss and is seeking fresh financing.

Malaysia’s government has asked Malaysia Airlines and Batik Air whether they could absorb AirAsia’s domestic market share as part of scenario planning around the low-cost carrier’s financial pressures. The discussions have intensified in recent weeks and involve the finance ministry and Malaysia Airports Holdings Berhad (MAHB), the state-linked airport operator. AirAsia has said it holds about 60% of Malaysia’s domestic aviation market and 40% overall. The carrier had 18.4 billion ringgit ($4.51 billion) in current liabilities as of June 30, including at least 500 million ringgit owed to MAHB, according to people familiar with the matter. AirAsia is seeking up to $1 billion from international debt markets and 700 million ringgit in local credit facilities, while two people estimated it needs at least $3 billion in fresh capital. The airline reported an 831 million ringgit second-quarter net loss and is cutting routes, returning aircraft and renegotiating vendor contracts.

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