KUALA LUMPUR (Oct 14): A week after a fellow backbender urged the federal government to reject any airline bailout requests, Putatan MP Datuk Shahelmey Yahya called on Putrajaya to step in to help address AirAsia Group Bhd's (KL:AAGB) financial woes.

The Umno-BN lawmaker warned in Dewan Rakyat on Wednesday when debating Budget 2027 that any cuts to the airline's operations could reduce competition and raise fares, particularly for travellers from Sabah.

“Putatan urges the Madani government to formulate the best possible mechanism to resolve AirAsia’s financial crisis and maintain a balanced supply of airline services,” Shahelmy said.

He stressed that any further contraction of AirAsia’s domestic network could leave students, civil servants and other travellers with fewer affordable options.

Shahelmey argued that AirAsia is vital for keeping fares competitive and affordable for lower- and middle-income travellers, including Sabahan families sending students to schools and universities outside the state.

The airline's presence has made the aviation market more competitive, he further said, giving passengers a choice between carriers according to their budgets.

Initiatives such as FlySiswa and the expanded Public Service Department scholarship quota for students from Sabah and Sarawak could also be affected if higher ticket prices forced beneficiaries to contribute more of their own money, Shahelmey argued.

His appeal directly countered remarks made last week by Pasir Gudang MP Hassan Abdul Karim (PH-PKR).

Speaking during the debate on the auditor general's report, the outspoken backbencher argued against risking public funds to rescue a private enterprise, saying the private owners and shareholders should tap their own resources instead of shifting their commercial risks to taxpayers.

Without naming the carrier directly, Hassan referenced it by the motto "Everyone can fly", which is associated with AirAsia. “If this company knocks on the Finance Ministry’s door asking for government assistance, I hope the government rejects it because the government is already in debt,” he said.

AirAsia is seeking fresh funding to counter severe headwinds from surging jet fuel prices and foreign exchange losses.

The Edge Malaysia reported on Oct 1, citing sources, that the fundraising effort is backed by the Ministry of Finance (MOF). The ministry is said to be helping Alton Aviation Consultancy, who is advising the group on raising up to US$1 billion, to attract lenders and investors.

Reuters then reported on Oct 12 that potential government backing was under discussion. Co-founder Tan Sri Tony Fernandes disputed that account, saying he had met with MOF officials, but that the meetings concerned operating costs, not financial assistance.

The ministry has yet to issue a statement on the matter.

Meanwhile, Transport Minister Anthony Loke said two days ago that neither he nor his officials had met AirAsia executives over the past three weeks, though he acknowledged that the airline might have had talks with the MOF.

AirAsia Group, which employs about 17,000 people regionally, saw its net loss widen to RM527.16 million for the second quarter ended June 30, 2026 — up from RM154.88 million in the preceding quarter — as revenue fell 14.5% to RM5.09 billion.

As of June 30, the group stood in a net debt position of RM2.27 billion, with cash reserves of RM953.67 million against RM3.13 billion in total borrowings. Of that debt, RM803.2 million is due within 12 months. The carrier also has another RM13.3 billion in lease liabilities.

Its average fuel price rose 66% quarter-on-quarter to US$183 per barrel, while net foreign exchange losses reached about RM331 million.

To slow the cash burn, the group announced plans to reduce seat capacity by 20% to 25% year-on-year in the third quarter, before restoring capacity for the year-end travel season.

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