KUALA LUMPUR (Nov 12): The Malaysian Aviation Commission (Mavcom) has urged AirAsia X Bhd (AAX) to reimburse the tickets for customers whose flights were cancelled, in response to the airline’s action of treating its customers as creditors and repay them only 0.5 sen for every ringgit paid.
The Nov 12 statement came soon after all three groups of AAX creditors passed AAX’s restructuring plan, which will see AAX pay just 0.5% of some RM33.65 billion in liabilities, as well as terminate all of the airline’s existing contracts.
AAX’s liabilities categorised as tickets sold to passengers and travel agents amounted to just under RM600 million, according to details of the airline’s restructuring proposal. AAX’s proposal would see only under RM3 million paid back from the initial amount.
In a statement, Mavcom said it will not hesitate to exercise its powers under the Malaysian Aviation Commission Act 2015 (Act 711), if AAX fails to reimburse the affected travel consumers accordingly.
The commission has issued a follow-up letter to AAX on Nov 11 in response to the latter’s debt restructuring exercise.
“In this letter, Mavcom has clearly and unequivocally urged AAX to reassess its proposal to treat air travel consumers as creditors and to pay only 0.5% of the value of tickets purchased as announced on Oct 18, 2021,” the commission said.
Mavcom pointed out in the statement that air travel consumers “ought not to be classified as creditors”.
This is because the customers “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”.
“Accordingly, Mavcom reiterates its position that AAX should reimburse air travel consumers for the tickets purchased,” it said.
“AAX has repeatedly in its correspondence with Mavcom and in their statements made to the public, given the assurance that AAX is committed to reimburse air travel consumers who were not able to fly due to flight cancellations,” Mavcom added.
“Mavcom is committed to discharging its duties under Act 771 and the Malaysian Aviation Consumer Protection Code in ensuring that air travel consumer rights are safeguarded,” it said.
AAX’s RM33.65 billion restructuring plan was passed by 99% of its creditors in three separate meetings on Nov 12 — above its minimum threshold of 75% — more than one year after a restructuring was first proposed by the airline.
The creditors comprise Class A creditors (which include airport operator Malaysia Airports Holdings Bhd and financial institutions), Class B creditors that include those with unsecured claims against AAX such as engine suppliers and aircraft lessors, and a Class C creditor (namely Airbus Group).
"We wish to 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,” said Tan Sri Tony Fernandes, co-founder and director of AAX, in a statement announcing the results of the meetings.
AAX, which had been loss-making since 2018 prior to the Covid-19 pandemic, went into restructuring mode with creditors in August 2020, as the international and interstate border closures slammed the brakes on aviation industry activities.
Sister company AirAsia Group Bhd also had to restructure its outstanding orders of planes with Airbus, with reports saying the two partners have reached a deal in September.
Moving on, the two listed companies have proposed to raise funds via cash calls. AAX is planning to raise RM300 million via right issue of its shares and another RM200 million from private placements.
On Nov 11, AirAsia shareholders approved its RM1 billion rights issue of Islamic debt securities with warrants. Earlier in March, the group had completed private placements of 14.07% of its issued shares to raise RM336.46 million.
Shares of AAX rose 1.5 sen or 25% to close at 7.5 sen on Friday (Nov 12), giving it a market capitalisation of RM285.19 million.
AirAsia shares settled up 2 sen or 1.79% to RM1.14, giving the low-cost carrier a market capitalisation of RM4.44 billion.