KUALA LUMPUR: AirAsia co-founder Tan Sri Tony Fernandes has rubbished claims that the low-cost carrier is relying on government assistance to weather its financial difficulties, insisting that there have been no discussions with Putrajaya on a rescue or bailout.

Fernandes said AirAsia remained confident in its liquidity position and was instead pursuing commercial financing, including debt refinancing, as it navigates sharply higher jet fuel prices and geopolitical uncertainty.

“We're not getting anything from the government. I don't know where their story comes from,” Fernandes said at a media briefing in Bangkok on Friday.

“So officially I'm saying to you there is nothing from the government of Malaysia.”

His comments came after reports that the Malaysian government had approached rival airlines about potentially absorbing AirAsia’s domestic market share should the budget carrier face further financial stress. The reports triggered renewed concerns over AirAsia’s financial position and sent its shares tumbling.

AirAsia’s stock fell 21% on Thursday to a four-year low, bringing its decline since the outbreak of the Middle East conflict to around 75%.

Fernandes dismissed the suggestion that AirAsia required a government rescue, saying the group had sufficient liquidity and was focused on refinancing rather than seeking a bailout.

“We have over RM1bil of cash, which I can confirm,” he said, adding that the group was “very comfortable” with its liquidity position.

“One, no discussions with the government. Two, we do not need rescue, bailout, whatever.”

AirAsia had RM954mil in cash and cash equivalents as at end-June, although Fernandes said the group’s liquidity had since exceeded RM1bil.

The group is seeking about US$1bil in debt financing internationally and RM700mil from local financial institutions, with Fernandes saying discussions with banks and investors had remained strong despite the recent media reports.

He said the group had received a signed term sheet from a Middle Eastern investor for US$1bil in funding, with the financing guaranteed to be funded, but was holding off while it sought the best possible terms.

“We have many choices. I'm trying to get the cheapest choice,” Fernandes said.

The financing is expected to be finalised around December or January, with the group also considering share capital raisings in Indonesia and the Philippines.

Fernandes stressed that the funding exercise was not about plugging an immediate liquidity hole but lowering the group’s cost of financing.

“When you see the refinancing, it's about cost. It's not about fresh capital. It's about bringing down cost. That's all I'm focused on,” he said.

The group’s financial pressures have intensified following the surge in jet fuel prices amid the Middle East conflict.

AirAsia reported a net loss of RM830.5mil for the second quarter ended June 30, including RM331mil in foreign exchange losses, while higher fuel prices significantly increased operating costs.

Fernandes, however, said the current crisis was fundamentally different from the Covid-19 pandemic, when airlines were grounded and demand collapsed.

“Covid was far, far worse than what we are dealing with now,” he said.

He said AirAsia was still seeing strong demand, with load factors at about 80% and above, while the group had begun restoring capacity after cutting about 60 routes during the third and fourth quarters.

“We're adding back 25 routes because we've stabilised,” Fernandes said, adding that more routes would return in the fourth quarter and next year.

He also rejected suggestions that other airlines could simply step in and replace AirAsia’s domestic operations.

“How do you replace 100 planes in Malaysia? You can't. First of all, you have to have our cost structure, our brand, our market, our network, our interlining,” he said.

Fernandes said AirAsia’s strategy remained centred on maintaining its low-cost structure, improving efficiency and expanding its network across Asean and Asia.

He said the group had carried 43 million passengers so far this year and was targeting 65 million to 70 million passengers for the full year, with a longer-term target of 80 million passengers next year.

“We're not running away,” Fernandes said. “We are very confident we're going to come back stronger.”

The comments echo Fernandes’ broader defence of AirAsia’s financial resilience, with the executive pointing to the group’s ability to restructure its cost base, adjust fares and bring capacity back as fuel prices stabilise.