AirAsia Group posts positive operating profit in Q1 despite fuel cost pressures

AirAsia Group has posted a positive net operating profit for the first quarter of 2026, though rising fuel costs and currency swings weighed on the bottom line.

The company reported its results on May 14, 2026, marking the first full quarter since consolidating its regional airlines under a single platform.

A steady start, then fuel prices hit

AirAsia Group recorded EBITDA of RM1,009 million (US $224 million) and a net operating profit of RM199 million (US $44 million) for the quarter, resulting in EBITDA and NOP margins of 17% and 3% respectively.

The group reported a net loss of RM129 million (US $29 million), driven largely by a non-cash foreign exchange loss of RM232 million (US $52 million). Excluding the forex impact, profit after tax came in at RM103 million (US $23 million).

January and February 2026 showed strong momentum, with NOP margins nearing 9%. In late March 2026, though, fuel prices surged past US $200 per barrel, hitting Malaysian operations particularly hard due to weekly fuel price adjustments. In March alone, the company absorbed an additional fuel bill of around RM200 million (US $44 million).

To stay ahead of the cost curve, AirAsia moved quickly. On March 6, 2026, it implemented a fuel surcharge and fare increase across nearly its entire network, becoming one of the first in the industry to respond to the volatility.

Passenger demand holds up

Despite the headwinds, travel demand remained strong. The group carried 18.9 million passengers during the quarter, up 9% year-on-year. Capacity grew 10% over the same period, with load factor holding steady at 85%.

March 2026 was particularly robust, with passengers up 19% year-on-year, outpacing the 15% capacity growth for the month. The increase was driven by high demand during the festive travel period.

Shifting strategy for the second quarter

Looking ahead, AirAsia Group insists that it is taking a more cautious approach. According to CEO Bo Lingam, the company is prioritizing yield and margin protection over volume in the face of continued fuel price volatility and geopolitical uncertainty.

The group has temporarily suspended 21 routes and reduced capacity by 10% for the second quarter as compared to the prior year. Lingam said that capacity will only be deployed to markets that meet minimum profitability thresholds, though the company remains ready to restore routes quickly if fuel prices continue to soften.

On the balance sheet, AirAsia secured US $300 million in financing during the quarter at improved terms, helping to refinance debt and reduce principal obligations for the year. The company is also targeting bond offerings in the second and third quarters, as well as working with financial institutions on further refinancing and working capital needs.

A record aircraft order

Even as it navigates near-term challenges, AirAsia is betting on the future.

On May 6, 2026, the company placed a firm order for 150 Airbus A220-300 aircraft, the largest single order in the A220 program’s history and the deal that pushed the program past 1,000 total firm orders. The agreement, valued at around US $19 billion at list prices, was signed at Airbus’ A220 assembly site in Mirabel, Quebec, with Canadian Prime Minister Mark Carney in attendance.

The A220-300 is smaller than the A320 family that forms the backbone of AirAsia’s current fleet, but it offers enough range for regional and medium-haul routes. AirAsia will become the launch customer for a new 160-seat cabin configuration, suited to its low-cost model. The aircraft has a range of around seven hours.

The jets will be powered by Pratt & Whitney GTF engines, with deliveries scheduled to begin in 2028. AirAsia also signed a 12-year engine maintenance agreement with Pratt & Whitney.

Lingam described the A220 order as central to the company’s ambition of building the world’s first truly low-cost network carrier, offering the flexibility to right-size capacity to demand while improving fuel efficiency and trip costs.

In April 2026, the group also took delivery of its first A321LR, adding longer-range capability to its fleet.

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