The tremendous impact of the coronavirus pandemic on the global aviation industry has led to many cases of airline financial distress and bankruptcy. The Asia–Pacific region (APAC) contains more than half of the world’s population, and its airlines had the highest profit margin of any region. In this study, we investigate whether corporate sustainability practice can reduce the financial distress risk of air carriers, and, if so, what would the effect be in APAC? We first examine the relationship between environmental, social, and governance disclosure and the likelihood of financial distress of airlines as measured by the Altman Z″-score. Second, we analyze the moderating role of being an APAC airline in this relationship. The findings support the claim that implementing environmental actions may increase financial distress risk, and by improving social and governance activities, airlines can mitigate the risk of financial distress. The negative influence of the environmental pillar and the positive influence of the social pillar can be smaller for APAC airlines. Our study provides empirical evidence of the influence of environmental, social, and governance (ESG) on the likelihood of financial distress in the airline industry. Moreover, we analyze the moderating role of being an APAC airline in the relationship between sustainability and financial distress. This study has significant implications for executives, managers, and policymakers in the aviation industry on ESG strategy decisions and the general issue of sustainability.