AirAsia X explains no-refund policy, says if it can’t operate, ‘passengers get nothing’

AirAsia X chief executive officer Benyamin Ismail speaks during an interview with Malay Mail in Petaling Jaya October 31, 2019. ― Picture by Shafwan Zaidon
AirAsia X chief executive officer Benyamin Ismail speaks during an interview with Malay Mail in Petaling Jaya October 31, 2019. ― Picture by Shafwan Zaidon

KUALA LUMPUR, Nov 25 — Financially crippled budget airline AirAsia X Bhd (AAX) sought to explain why it cannot give refunds in cash to passengers who are also listed as “creditors” in its debt restructuring scheme.

AAX CEO Benyamin Ismail told news portal The Vibes in a report published today that the company cannot afford refunds as it does not have enough cash flow, but will be providing flight credits that can be redeemed when international flights resume.

Benyamin also explained AAX’s debt restructuring scheme that was reported on October 18 and approved on November 12, where it had among other things proposed paying off 0.5 per cent of over US$8 billion (RM33 billion) owed to creditors.

AAX’s proposed debt restructuring plan had required approval from its creditors, with the alternative being AAX’s liquidation and with zero recovery of funds expected for creditors.

Out of RM63.5 billion in debt, AAX reportedly owes RM600 million to passengers and travel agents.

Benyamin said that all creditors were seen as those to whom the company owed money when it made the restructuring plan.

“One of them (creditors) is the passengers. We cannot treat anybody differently. If we are to exclude the passengers, the creditors — who are other companies — will complain and ask why we treat passengers differently.

“In the scheme itself, everyone will be affected by the restructuring, but what we did in the court documents was say that the company is flexible in terms of giving back benefits to the passengers.

“But the scheme speaks for itself. We have to be fair to all creditors. Is it better for the passengers if we are alive or dead? If we’re dead, the passengers get nothing. But if we’re alive, they will get all the credits, so which one would passengers prefer?” he was quoted saying.

On the credits to be given to AAX passengers, Benyamin was quoted saying: “We may provide credit value for what they purchased, so if they bought something for RM1,000 (before), we will give it in credits with flexible terms.”

Benyamin was reported saying that the reopening of international borders and the resuming of international flights could be up to a year later, and that AAX will for now look into how customers can use the credits.

“We will do that over time once the flights have resumed. At the end of the day, the passengers are the bread and butter for this airline. If we were to shortchange them, it would have a big impact on the brand and the airline as well,” he was quoted saying.

On November 10, the Malaysian Association of Tour and Travel Agents (Matta) asked for a fairer compensation scheme compared with the suggested 0.5 per cent debt payment under the proposed restructuring scheme that would see travel agents, charter agents and passengers receiving RM3.0 million out of the RM599.8 million owed, asking AAX to either give a full debt settlement rate or to convert all outstanding liabilities into future credit points.

Following Matta’s call, the Malaysian Aviation Commission (Mavcom) on November 11 said it had in a letter on that day to AAX urged the company to reassess the proposal to treat passengers as creditors and to pay only 0.5 per cent of the tickets’ value under the debt restructuring plan announced on October 18, reiterating that passengers should be reimbursed for the tickets bought and also noting that AAX had repeatedly assured it is committed to reimburse passengers would could not fly due to cancelled flights.

Benyamin said that AAX will deal directly with Mavcom.

On November 12 which was also when AAX creditors approved the debt restructuring plan, AAX director Tan Sri Tony Fernandes told passengers affected by the debt restructuring that the company intends to provide travel credits that can be used to buy flight tickets in the future once international borders reopen.

On November 15, AAX was reported saying that affected passengers would be receiving the travel credits, as well as 0.5 per cent payment of what is owed to them and other cash-based entitlements based on its annual revenue performance over three years.

On November 23, AAX was reported to have recorded an RM149.14 million net loss and revenue of RM99.27 million for the first quarter of 2021 ending September 30, 2021.

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