AirAsia Group is seeking to amend the terms of a $200 million private credit loan from Ares Management Corp. and Indies Capital Partners in an effort to secure payments for aircraft lessors, according to individuals familiar with the matter. The Malaysian airline, which has recorded two consecutive quarterly losses, has requested that the loan lenders allow it to share revenue from certain flight routes with the lessors, who are also owed money. Currently, that revenue is pledged exclusively to the private credit lenders for loan repayment.

The proposed change would provide lessors with increased certainty regarding their revenue disbursements, though approval from both Ares and Indies is required, and discussions have not yet resulted in an agreement. Neither AirAsia nor the financing parties have commented on the negotiations.

AirAsia's financial challenges have been exacerbated this year by rising energy prices linked to the US-Iran conflict, compounded by the carrier’s lack of fuel hedging strategies. This combination has led the airline to request deferments on rental payments from some aircraft lessors.

In parallel with seeking loan modifications, AirAsia is aiming to raise up to $1 billion in international debt and 700 million ringgit ($172 million) in local credit. The company has stated it intends to consolidate its debt into a more manageable structure with extended maturities and improved terms.

The $200 million loan under review is part of a broader $443 million dual-tranche financing package arranged in 2024. That financing was initially used to refurbish aircraft that were grounded during the pandemic and to refinance lease liabilities. This arrangement was secured against the sale of future airline tickets for key routes. Since then, AirAsia has repaid the majority of $243 million in lease liabilities included in that earlier borrowing.

If the current proposal is approved, the restructured debt facility could increase by approximately $200 million, reflecting lease liabilities accumulated more recently. The airline is pursuing these financial adjustments amid efforts to stabilize its operations following the pandemic and market pressures.