-$5.9 Billion: AirAsia X’s Losses Increase Eightfold Year On Year

AirAsia X has booked a massive US$5.9 billion loss for the three months ending June 30, 2021. It…

-$5.9 Billion: AirAsia X’s Losses Increase Eightfold Year On Year

AirAsia X has booked a massive US$5.9 billion loss for the three months ending June 30, 2021. It is an eight-fold increase on the loss in the same quarter last year and the airline’s biggest quarterly loss to date.

AirAsia X has booked a US$5.9 billion loss over the three months to June 30. Photo: AirAsia

Provision to cover debt turbocharges the quarterly AirAsia X loss

Part of the AirAsia Group, AirAsia X is a low-cost long-haul airline based in Kuala Lumpur. The airline says in the stock exchange filing they’ve suffered extensively from the  COVID-19 fallout. AirAsia X has suspended the bulk of its scheduled flight operations since April 2020 and parked the majority of its fleet. In the three months to June 30, 2021, the airline recorded revenues of US$17.25 million.

An accounting provision to cover debt previously defaulted on turbo-charged AirAsia X’s quarterly loss.

“The Company has made a provision of RM23.8bil in the current quarter though it should be highlighted that the contractual liabilities for which the provision is made will be waived upon a successful completion of the proposed debt restructuring exercise,” AirAsia X said in a Bursa Malaysia stock exchange filing on Monday.

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AirAsia X has a fleet of Airbus A330 aircraft, with almost all grounded. Photo: AirAsia

AirAsia X talks with creditors continue

The loss comes as the beleaguered airline attempts to negotiate with creditors in a long-running court-supervised restructuring program. Nearly 12 months ago, AirAsia X said it wanted to restructure $15.5 billion worth of debt, including a $5 billion-plus aircraft order with Airbus.

Creditors holding a minimum of 75% of the unsecured debts must approve any debt restructuring proposal for it to pass.

Recently, Malaysia’s AirAsia X Bhd, the listed company behind AirAsia X, said talks with creditors were progressing well and that it hopes to conclude them by the end of October. The airline has reached an agreement with several large creditors, including Honeywell International, Bridgestone Aircraft Tire Company, and Sky High I Leasing Company.

But AirAsia X is asking its many creditors to take a big haircut. Under the terms of the restructuring proposal, the airline wants to end up paying around only about 2% of its $15.5 billion debt – and that 2% repayment would get spread over five years at 2% interest.

If that sounds like a dud deal for creditors, 2% is better than nothing. With AirAsia X on the brink of going out of business, many think creditors will take what they can get.

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AirAsia X has 78 A330s on order with Airbus. Photo: Airbus

Reality bites says AirAsia boss

When AirAsia X first proposed the deal, many creditors strenuously objected, including the largest creditor, Airbus. But 12 months down the track, many creditors are coming around.

“Reality bites,” said AirAsia Chief Executive Officer Tony Fernandes last year. “We are in unprecedented times. Should the airline wind up and you get 30 planes, what are you going to do with them? We can all put our heads together and try to save the situation.”

“Creditors, including lessors and Airbus, understandably don’t want to see the airline fall as they stand to lose a lot. The decision to work with AirAsia X to restructure is to salvage whatever they can,” Malaysia-based aviation consultant Shukor Yusof told Reuters.

AirAsia X confirms most creditors wanted the airline to proceed with its restructuring plans. Under the terms of the restructuring plan, talks with creditors must be finalized by next March when orders preventing creditors from suing AirAsia X expire.

Source : Simple Flying More   

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Qantas Eyes Rebooting The Sydney – Melbourne Route In November

As Australia’s biggest states start to chart their way out of lockdown paralysis, Qantas is responding by rebooting…

Qantas Eyes Rebooting The Sydney – Melbourne Route In November

As Australia’s biggest states start to chart their way out of lockdown paralysis, Qantas is responding by rebooting some sectors of its domestic network. This includes the all-important flight corridor between Sydney and Melbourne.

Qantas is planning to increase some parts of its domestic network in early November. Photo: Qantas

Qantas keen to reboot flying in New South Wales

On Monday, the New South Wales Government outlined its path out of lockdowns and movement restrictions. By the end of October, the New South Wales Government will allow fully vaccinated people to freely move around the state, including its capital, Sydney.

As a result, Qantas will significantly increase its regional flying within New South Wales from October 25, 2021. Much of that flying will use QantasLink planes, but key intrastate routes such as Sydney – Coffs Harbour and Sydney – Ballina are set to enjoy a sudden resurgence.

Further south, Victoria is also beginning to work its way out of lockdown after its capital Melbourne became the world’s most locked-down city. Consequently, based on Victoria’s reopening plan, Qantas is bringing forward the reopening date for travel between Victoria and New South Wales from December 1 to November 5, 2021.

The Sydney – Melbourne flight corridor is usually the world’s second busiest. But lately, just a handful of flights operate on the route every day. While a relaxation in interstate travel rules between NSW and Victoria will see traffic significantly increase, it will be some time before this route is restored to its former status, if ever.

“It’s great to see plans firming up for some domestic borders opening given the success of the national vaccine rollout,” said Qantas CEO Alan Joyce on Monday.

“We’re now planning to ramp up flying between Melbourne and Sydney, which is usually the second busiest air route in the world, almost a month earlier than expected. There are also a lot of regional destinations that will open up for the first time since June.”

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QantasLink Dash 8s will get a workout around NSW this summer. Photo: Qantas

Stay informed:  for our daily and weekly aviation news digests.

Western Australia locked in the Qantas coolroom

Left out in the cold is Western Australia. Not only has Qantas temporarily ditched its capital city, Perth, as the jumping-off point for the nonstop flights between Australia and Japan, but the airline is also in no mood to step up domestic flights there.

Qantas says it will continue to operate five return flights a week between Perth and both Sydney and Melbourne. This will maintain minimum connections for those with permits to travel.

“Based on our discussions with Western Australia, we know their borders won’t be open to New South Wales and Victoria until early next year, so we’ve sadly had to cancel the flying we had planned on those routes in the lead-up to Christmas,” added Mr Joyce. “We will maintain a minimum service for people with permits to travel, though, as we have throughout the pandemic.”

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Qantas CEO Alan Joyce. Photo: Getty Images

While Qantas says it stands ready to adjust its schedules in response to changes by states as various restrictions ease in the weeks ahead, it isn’t yet prepared to increase flights from either Sydney or Melbourne to Western Australia, Tasmania, Northern Territory, and South Australia.

Alan Joyce didn’t specifically address the issue of Queensland – another state run by isolationist politicians. But there are growing signs Queensland won’t open up to travelers from either Sydney or Melbourne until 2022. That will wipe out a busy southern summer of flying there for Qantas.

In the coming days, competitors Virgin Australia and Rex should announce the upsizing of flight schedules on the Sydney – Melbourne corridor. On Monday, Rex extended its Boeing 737 grounding until October 31. That will give the airline a week to wash the dust off the planes before they resume flying between Australia’s two biggest cities.

Source : Simple Flying More   

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