After more than two years without passenger flights, Thai AirAsia X (TAAX) filed for bankruptcy protection, with the case accepted by a Thai bankruptcy court on Wednesday.
The airline insisted all seats that were pre-booked will be honoured, including international routes to Japan and South Korea starting from June.
TAAX, the long-haul low-cost carrier under the AirAsia group, became the third airline in Thailand to file for bankruptcy, following Thai Airways and Nok Air, during the Covid-19 pandemic.
"It was hard to raise funds as the airline shouldered a large amount of debt. A rehabilitation plan approved by the court in the next stage will be a viable solution to maintain business in the long run," said Tassapon Bijleveld, director of TAAX.
He said the airline had been considering this option for a long time, but as the long-haul carrier has grounded its entire fleet for more than two years without any international flights, it was impractical to start the rehabilitation process properly.
However, after many countries lifted border controls and loosened travel restrictions, TAAX can implement the business plan, particularly flight expansion.
Mr Tassapon, who is also the biggest shareholder of TAAX, said prior to the pandemic the airline had 12 wide-body aircraft, but because it couldn't operate flights for two years, it had to reduce operational costs by downsizing its fleet to eight jets.
He said more than 1,000 employees at TAAX won't be affected immediately as the company has to wait and see how the rehabilitation plan develops in the next stage.
If the restructuring process requires the airline to cut those expenses, it has to follow orders, said Mr Tassapon.
"We hope the rehabilitation process will be finished within 8-12 months and have a minimal impact during the transition period. During this time, all flight expansion remains the same as announced," he said.
TAAX filed the petition with the court on May 17 and it was accepted on May 18.
Once the court grants its order for TAAX to enter into the rehabilitation process, it will prepare a rehabilitation plan to strengthen its financial status and ensure services at full capacity, said Mr Tassapon.
In the company statement, it said the rehabilitation plan will have no impact on Thai AirAsia and Asia Aviation Plc, which are separate entities with discrete operations and routes.
He said the rehabilitation process of TAAX follows Malaysia's Airasia X, which completed its debt restructuring process in March.
