The Malaysian government is in discussions with Malaysia Airlines and Batik Air as part of contingency planning to potentially take over AirAsia's domestic market share should the airline face serious financial trouble, according to a Reuters report.
This planning comes as AirAsia grapples with significant financial difficulties, amidst speculation earlier this month that it might be taken over by the government. The low-cost carrier owes at least RM500 million to Malaysia Airports Holdings Berhad (MAHB).
In the second quarter, the airline recorded a net loss of RM831 million due to soaring fuel costs and foreign exchange losses. Yesterday, AirAsia reportedly sought to amend the terms of a US$200 million (RM814.98 million) private credit loan from Ares Management Corp and Indies Capital Partners. These changes aim to ensure more flexible and stable management of the company's cash flow.
AirAsia controls approximately 40% of Malaysia's aviation market and 60% of the domestic market, making this issue critical to the nation's air travel infrastructure. Malaysia Airlines and Batik Air have informed the government that they would only take over AirAsia's operations if they could also assume its aircraft leases; absorbing AirAsia's routes and passenger volume without the accompanying aircraft would be difficult for both carriers using only their existing fleets.
AirAsia's current situation stands in stark contrast to the state of affairs 15 years ago, when the company—founded by Tony Fernandes—had expressed interest in taking over Malaysia Airlines, which was then struggling with its own financial woes.
