KUALA LUMPUR - AirAsia Group will cut third-quarter capacity by 20% to 25% year on year after reporting a quarterly loss, as the Malaysian budget airline moves to protect profitability.

Reuters reported on Aug. 13 that the group plans to reduce capacity during the third quarter before gradually rebuilding toward what it described as “pre-war levels” in the final three months of 2026.

The latest capacity plan follows months of adjustments to AirAsia’s network as the group sought to balance flying with operating costs and returns. In a June 22 update, AirAsia said it was progressively restoring aircraft frequencies and capacity across its network and expected full capacity by August.

Capacity discipline had already become part of the group’s strategy earlier in the year. In its first-quarter financial results, AirAsia said it had temporarily suspended 21 routes and strategically reduced second-quarter capacity by 10% from a year earlier.

Management said aircraft would be deployed only to markets meeting its minimum return thresholds.

The group has also been reshaping its fleet as part of efforts to improve operating efficiency. AirAsia said in June that it was progressively returning older, less-efficient aircraft while deploying Airbus A321LR aircraft, which it said can reduce fuel burn per seat by up to 20%.

The latest announcement comes shortly after a change in the listed airline company’s corporate identity. AirAsia X Berhad formally became AirAsia Group Berhad effective July 2, following shareholder approval and registration of the new name with the Companies Commission of Malaysia.

AirAsia now expects the third-quarter capacity reduction to be followed by a gradual rebuild during the fourth quarter.

For the near term, the group said the lower capacity is intended to safeguard profitability before operations move back toward “pre-war levels.”