American Airlines Sees More Opportunities In Asia Post-Crisis

International flying to and from Asia remains in the doldrums and lagging other regions, but American Airlines sees…

American Airlines Sees More Opportunities In Asia Post-Crisis

International flying to and from Asia remains in the doldrums and lagging other regions, but American Airlines sees big opportunities there once long-haul travel starts to rebound. In addition to its own flights, American cites partnerships with airlines based in Asia as reasons why they see potential in that part of the world.

American Airlines sees a lot of future opportunities in Asia once travel normalizes. Photo: Vincenzo Pace/Simple Flying

American Airlines admits Asia is a tough market right now

American’s own metal still heads into Hong Kong, Shanghai, Seoul, Beijing Capital, Beijing Daxing, Tokyo Narita, and Tokyo Haneda. However, American Airlines Chief Revenue Officer Vasu Raja said in an exclusive webinar interview with Simple Flying that Asia was a tough market right now.

“We probably have a way to go yet,” Mr Raju said when asked about the region. But he highlighted the role of partners in Asia, including fellow oneworld members Cathay Pacific and Japan Airlines.

“We’re very fortunate that we do have those partners there,” the CCO says. “We can we can figure out how things come together.”

In the second quarter of 2021, flying into Asia and the remainder of the Pacific region constituted only 7.5% of American’s available seat miles across its entire international network. Passenger loads (23.7%) also considerably lagged the average (52.9%) across American’s global international services that quarter.

American Airlines admits it is a tough game flying to Asia during the travel downturn. Photo: Vincenzo Pace/ Simple Flying

American Airlines highlights the value of airline partnerships in Asia

Vasu Raja highlights the new American Airlines flights into Tokyo Haneda as an example of opening up new markets in Japan and North Asia.

“We were all kind of eagerly anticipating the opening of Haneda and, unfortunately, that didn’t happen with nearly the level of fanfare that we all thought for very understandable reasons. 

“At some point in time, when people are able to come back to Japan, that will be an airport in which our partner (Japan Airlines) has a very massive presence in. With our new international jumping-off points in New York, and Seattle, that creates a lot of opportunities to serve Japan, the Asian marketplace we didn’t really have before.”

American Airlines says China partnership matters

The American Airlines executive also highlighted a partnership with China Southern, China’s biggest airline.

“We are really keen to go and rebuild our partnership with China Southern,” Mr Raja says, adding this partnership took the biggest beating throughout the travel downturn. He sees a lot of opportunities in the China Southern partnership.

“The Chinese marketplace, like many markets across the world, is going to boom at a pretty, pretty extraordinary rate.

“As we recover from the pandemic, those (pre-pandemic) growth rates will resume, certainly in the short-haul business in China. And so having a partner like that is a great blessing for us. And we look forward to developing that partnership.”

 Vasu Raja sees a lot of potential in American’s partnership with China Southern Airlines. Photo: Vincenzo Pace/Simple Flying

While Vasu Raja is upbeat about how Asia can fit into American’s overall strategy, he does acknowledge there is a way to go yet. Borders need to reopen, travel restrictions ease, and demand pick up.

‘The first really big critical step is understanding how the restrictions on demand get loosened up in Asia. And once we have a better read on that, it makes it easier for us to figure out how we go and bring back those partnerships and the connectivity they offer.”

Source : Simple Flying More   

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-$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.

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.

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.

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