AirAsia in talks with Malaysian government over potential funding support, sources say

Business Recorder reported that AirAsia co-founder Tony Fernandes met Malaysian finance ministry officials two weeks before the story ran to discuss possible state support for the Southeast Asian low-cost carrier. Citing three sources, the report linked these talks to rising official worry about the airline's finances following a jump in jet fuel costs. Any backing would reportedly depend on conditions still under negotiation, and those terms could not be confirmed.

Fernandes, speaking as the airline's adviser, told Reuters that his late-September meetings with finance and transport officials concerned expenses like airport fees and fuel rather than aid. He stated he had never sought government help, but added that AirAsia would accept assistance from any nation where it operates. He also noted that he had earlier asked for Malaysian bank loans, as he favours local-currency borrowing on better rates. Malaysia's finance ministry withheld comment, while neither the transport ministry nor Alton Aviation Consultancy replied to queries.

AirAsia's second-quarter net loss was 831 million ringgit, driven by higher fuel costs and 331 million ringgit of foreign-exchange losses. The carrier is looking to raise as much as $1 billion through overseas bonds, plus 700 million ringgit of domestic credit lines. Fernandes expects that fundraising to close between December and February, with about half earmarked for costly loans. Shares have dropped more than 70 per cent this year.