The newspaper reported that the High Court has separated the airline's 14 creditors into three classifications -- the first for airport operator Malaysia Airports Holdings Bhd, the second for other creditors, and the third for planemaker Airbus SE.
The airline did not immediately respond to a query seeking confirmation of the court decision.
AAX, an affiliate of AirAsia Group, has posted losses since June 2019 and is proposing to restructure 64.15 billion ringgit of debt.
The airline said the alternative was liquidation with no returns to creditors. It has been seeking for months court approval to meet with creditors and vote on the proposal.
A source with direct knowledge of the matter said the court decision allowed the airline a step forward in its proposed restructuring, and assuages liquidation concerns for now.
"With this ruling, liquidation is not an immediate concern," said the source, who declined to be named because of the sensitivity of the issue.
The airline has faced objections to its restructuring from some of its creditors. Lessor BOC Aviation Ltd and Malaysia Airports have argued that AAX is "hopelessly insolvent", and asked the court to dismiss AAX's proposal.
However, court documents filed last month also showed that most of AAX's lessors support a restructuring plan and wanted to continue talks with the airline. AAX also said it has received interest from potential investors for fundraising after its reorganization.
Domestic rival Malaysia Airlines, also pursuing a restructuring, held a meeting with aircraft lessors last week.
The meeting outcome would be reported to British courts for a sanction hearing on Feb. 22 and the national carrier expects the court process and restructuring to conclude by the end of March.
Both airlines will need approval from creditors at the meetings holding at least 75% of the money owed.
(Reporting by Liz Lee. Editing by Gerry Doyle)