Capital A, AirAsia shares plunge on government contingency plan report

KUALA LUMPUR: Shares of Capital A Bhd and AirAsia Group Bhd plunged on Thursday after reports that the government is considering contingency plans for AirAsia's domestic operations.

At the midday break, Capital A was down 14.55 per cent, or four sen, at 23.5 sen, with 88.75 million shares traded, while AirAsia fell 17.19 per cent, or 11 sen, to 53 sen, on 95.81 million shares.

The stocks were the second and third most actively traded counters on Bursa Malaysia, respectively. Capital A is AirAsia Group's single largest shareholder, with a 19.5 per cent stake.

At current prices, Capital A's market capitalisation stood at RM1.03 billion, while AirAsia's was RM1.73 billion.

The sell-off followed a Reuters report on Sept 16 that the government had asked Malaysia Airlines and Batik Air whether they could absorb AirAsia's domestic market share.

The discussions are part of scenario planning as authorities monitor the financial health of the low-cost airline.

Reuters reported that talks between the government, Malaysia Airlines and Batik Air had intensified in recent weeks amid growing concerns over AirAsia's financial pressures.

The discussions also involve the Finance Ministry and Malaysia Airports Holdings Bhd (MAHB).

According to the report, Malaysia Airlines and Batik Air had indicated they were willing to expand organically to take on AirAsia's routes and passengers rather than acquire the airline's entire business.

However, the two airlines would only consider taking over AirAsia's operations on a large scale if they could also assume its aircraft leases, as absorbing the routes and passenger volumes without the aircraft would be considerably more difficult.

The development comes after the Finance Ministry appointed Alton Aviation Consultancy earlier this month to assess AirAsia's funding requirements as the government considers options to support the airline.

AirAsia is pursuing fundraising of up to US$1 billion in international debt markets and RM700 million in local credit facilities, primarily for debt restructuring, refinancing and balance sheet consolidation.

The group said earlier this month that the fundraising was aimed at optimising its capital structure rather than solely addressing operational funding shortfalls.

The carrier also said it had raised about US$300 million in March 2026 to extend debt maturities and reduce principal obligations.