by ANIS HAZIM / pic by BLOOMBERG
AIRASIA X Bhd (AAX) is standing by its decision to treat ticket holders as creditors under its business reorganisation scheme despite the Malaysia Aviation Commission (MAVCOM) clearly and unequivocally urging AAX to not address passengers as creditors.
MAVCOM in a statement on 12 Nov stated that air travel consumers ought not to be classified as creditors as 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.
In a statement yesterday, AAX responded by stating from its financial statement perspective, besides being a shareholder, there are only two categories – that a party is either a debtor if they are owing money to the company or a creditor if the company owes them money.
“It is clear that the company owes the passengers who have outstanding amounts owed to them, and hence the classification as creditors,” AAX said.
The low cost carrier however assured all passengers that its the airlines firm intention to put in place passengers’ travelling privileges in the form of travel credits, which can be used for future purchases of flight tickets once international borders reopen when the Covid-19 pandemic subsides.
Former Mavcom chairman Dr Nungsari Ahmad Radhi opined that AAX should have clarified that upfront when they announced the restructuring proposal for creditors a week ago and not after the creditors accepted their proposal.
“I thought it is not totally transparent not to put this passenger refund obligation upfront in the settlement with creditors,” he told The Malaysian Reserve.
AAX added it also plans to offer passengers cash-based entitlements based on the company’s annual revenue performance over three years, however, said the entitlements and travel credits can only take place if AAX is successfully restructured pursuant to the terms of the scheme of arrangement for the group’s proposed debt restructuring.
“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,” it said in the statement yesterday.
AAX added its policies are in line with many operators in the travel industry worldwide and are fully compliant with all regulatory requirements in each of the regions we operate in.
The airline has ongoing dialogue with all consumer regulators across the region to ensure compliance and is ISO certified for customer complaint management, which is a global benchmark for maintaining the highest standards.
“Our priority is to comprehensively restructure and recapitalise the airline so that it can operate again as one of the world’s leading low cost medium haul operators.
Our focus to raise new capital is necessary because the airline has not received any external financial support during this pandemic or any such time before.
As such, the airline must reset and rebuild a solid platform for a sustainable and viable future so that new investors will be prepared to inject new capital into,” the airline said.
AAX further said its creditors (passengers) despite many being owed vast sums, voted overwhelmingly on Nov 12, to give the airline the opportunity to survive and recover stronger.
“Similarly, it is in the best interest of our passengers to allow us to fly again so that we are in a position to honour their travel credits with us.
“Put simply, the alternative is that everyone loses without any chance of recovery of what is owed if we are not successful in this restructuring,” said AAX,
AAX shares closed unchanged at 7.5 sen, valuing the cash strapped low cost carrier at RM311 million.