Malaysia plans for possible AirAsia route handover as carrier's losses deepen

Malaysia's government is considering what would happen if AirAsia's finances worsen, and has discussed with two rival carriers the possibility of taking over some of the airline's Malaysian routes if it is forced to shut them down. The talks involved Malaysia Airlines and Batik Air. They were described as scenario planning driven by the airline's weakening position, not by any single event at the company.

Fuel is the main source of the pressure. Jet fuel prices in Asia have roughly doubled since March 2026, rising from about US$90 a barrel to more than US$180, with some spikes above US$220. AirAsia returned to a loss of 830.5 million Ringgit, or roughly US$202 million, in its second-quarter 2026 results, even though EBITDA remained positive at 442.6 million Ringgit, about US$109 million. Foreign exchange losses, higher oil prices and losses at subsidiaries outside Malaysia and Cambodia were cited as the main factors.

The setback follows a long recovery. The pandemic hit the carrier hard in 2020, and it spent years under PN17 financial supervision by the Malaysian stock market regulator, a status lifted in January 2026. AirAsia had recently set out growth plans, including an order for as many as 150 Airbus A220 aircraft and a proposed base in Bahrain.