KUALA LUMPUR (Sept 18): AirAsia Group Bhd's (KL:AAGB) operation is sustainable with over RM1 billion cash in hand, group adviser Tan Sri Tony Fernandes said as he dismissed concerns about the airline's finances.

The low-cost airline also did not request for a government bailout, he told a press conference on Friday, noting that earnings are catching up with costs after soaring jet fuel prices badly hit its second-quarter results.

"We are okay, we are sustainable," Fernandes said. "We are good at managing cash and we are strong in liquidity."

Reuters have reported that the Malaysian government has asked national flag carrier Malaysia Airlines and full-service airline Batik Air whether they ‌could absorb AirAsia’s domestic market share. The news sent its shares to a four-year low when trading resumed on Thursday after a holiday.

Shares of AirAsia have lost more than 70% of their value since the year began as the airline grappled with soaring jet fuel prices amid the prolonged Iran war. The stock extended the decline on Friday, down 4% to 48.5 sen, giving the company has a market capitalisation of under RM1.6 billion.

Prices of jet fuel, which could account for one-third of an airline’s total operating costs, will probably persist around US$170 to US$190 per barrel, Fernandes said. That is significantly higher than sub-US$100 before the war broke out in February.

Still, no planes have been grounded due to non-payment and "we are far away" from the point where higher airfares destroy demand, he said, adding that the airline still does not have a hedging strategy due to its high cost.

AirAsia now has a fleet of 250 planes, of which the remaining 10 will be ready to fly by October. The group has earlier returned 25 older aircraft.

Fernandes also believes that the Iran War would not last much longer and the company expects a rebound in year-on-year capacity growth by December this year after trimming some weaker routes. 

Net loss widened to RM527.16 million in the three months ended June 30, 2026, prompting the airline to cut seat capacity by 20% to 25% year-on-year in the subsequent quarter. AirAsia has also suspended underperforming long-haul routes and delayed the launch of its proposed hub in Bahrain.

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