Malaysian budget carrier AirAsia X is closer to resuming flights after shareholders overwhelmingly endorsed the company’s debt restructuring last week.
But the airline has hit a potential road bump in its plan after Malaysia’s aviation regulator warned it should reimburse passengers who bought tickets.
Some 99% of creditors across the company’s three share classes voted in favor of the restructuring proposal which AAX said would be presented for court endorsement in the coming weeks.
The restructuring, which has attracted criticism from some quarters. will see creditors receive just 0.5% of the debt owed and allow the airline to end existing contracts.
It has also seen it renegotiate its deal with Airbus for 108 aircraft to 15 A330neos and 20 A321XLRs.
AAX said it expected the restructure to be completed in the first quarter of 2022 after which it would be “well-poised” to compete effectively in the markets in which it intends to operate.
The company described the scheme as encompassing, comprehensive and covering all creditors.
It said the “wide and deep reset” was required to provide the desired platform to rebuild the business.
“With the completion of this exercise, AAX will be one of very few airlines worldwide that has no gearing and a restructured cost base that is significantly below that of its competitors in the region and will be in an excellent position to capture leisure travel and cargo opportunities post-Covid,” it said.
AirAsia X currently operates four A330 aircraft for regional cargo flights and said another two would be operational by year’s end.
It said an aggressive process of cost containment and seeking alternative sources of revenue such as cargo operations had reduced its monthly cash burn to about US$800,000.
It had begun operating belly cargo flights for several global freight companies with ongoing discussions for combination passenger-cargo flights when borders reopen, it added.
AAX chairman Rafidah Aziz said the sacrifices made by staff were a critical component in containing costs.
“We would like to thank all our furloughed pilots, crew and support staff and assure them that all of them will be further brought back to full employment in the coming months as borders open up,” he said.
“AAX wishes to reiterate that business partners and supporters, particularly passengers, are vital and important to AAX and values this relationship.”
However, the Malaysian Aviation Commission (MAVCOM) has told AirAsia to reassess any proposal to treat passengers as creditors and to pay only 0.5 percent of the value of tickets purchased.
“MAVCOM takes the view that air travel consumers ought not to be classified as ‘creditors’ as the air travel consumers did not, inter alia, sell any products, provide services or make loans to AAX but instead have paid monies for the purchase of tickets in advance of their flights,’’ the regulator said in a statement.
“Accordingly, MAVCOM reiterates its position that AAX should reimburse air travel consumers for the tickets purchased. If AAX fails to reimburse the affected air travel consumers accordingly, MAVCOM will not hesitate to exercise its powers under the Malaysian Aviation Commission Act 2015 [Act 771].”
AAX co-founder and director Tony Fernandes said it was the company’s firm intention to provide passengers with travel credits that could be used to buy flight tickets once borders reopened.
AirAsia repeated that stance in a statement issued today.
“We assure all passengers affected by the restructuring that it is the firm intention of AAX to put in place travelling privileges in the form of travel credits, which can be utilised for future purchases of flight tickets once international borders reopen on top of the 0.5% they will receive and other cash-based entitlements based on annual revenue performance over three years as explained in the Explanatory Statement issued to all creditors recently,” it said.
“Please note that these entitlements and the travel credits can only take place if AAX is successfully restructured pursuant to the terms of the Scheme.
“If the terms of the Scheme are not complied with and the Scheme fails, AAX will go into liquidation and the passengers will not receive anything in return. It is not the intention for AAX to place the passengers in this situation.”