Thai AirAsia X is committing to paying a refund in full to all 6,500 paid bookings during the two years of the pandemic, even as the airline is undergoing bankruptcy.
Tassapon Bijleveld, director at Thai AirAsia X, said after a Thai bankruptcy court accepted its petition on May 17, the court will hear from creditors in case there are any objections.
The airline reportedly has accumulated debt of around 25 billion baht, with the major proportion attributed to aircraft leasing contracts.
The airline previously had 15 jets in the pre-pandemic years, but downsized to five aircraft this year.
If creditors vote in favour of the bankruptcy petition, the airline could continue with its rehabilitation plan, which it hopes will be completed by the third quarter next year, said Mr Tassapon.
The 6,500 bookings made prior to the bankruptcy process and new bookings from May 17 will not be affected by the court's process. He said these bookings will be entitled to a cash or credit refund.
"Under bankruptcy protection, we can negotiate for debt reconciliation, which could help relieve our financial burden and allow us to focus on flight expansion as planned," said Mr Tassapon. "If revenue from operations is strong enough, we may not have to seek new investors or partnerships to increase capital."
He said while dealing with the bankruptcy court, the airline can continue to operate overseas flights as usual. The airline plans to resume all destinations in South Korea and Japan within this year, aiming to carry 300,000 passengers, down from 2 million in 2019.
Though international airfare has increased 20-22% because of surging fuel costs, the airline still sees strong pent-up demand from both Thai and Korean passengers this month.
Challenging factors this year include fuel costs, which now account for almost 50% of total costs, up from 30% after jet fuel prices doubled from US$75-85 per barrel last year to $170 per barrel at the moment.
Mr Tassapon said the airline could not immediately pass that cost burden to passengers, though the average airfare hike tallied 20-22%.
This situation means Thai AirAsia X has to carry monthly operational losses forward as the airline has only resumed its routes to South Korea, he said.
The flights restarted last month, but the airline has to wait until next month to restart its route to Japan.
Patima Jeerapaet, chief executive at Thai AirAsia X, said there is strong pent-up demand for South Korea, as its route to Incheon has a load factor of more than 97% this month and forward booking of around 60% in July.
The airline expects the load factor in the final quarter will average 80-90%.
"The proportion of Thai and South Korean guests are the same at 50%. We'll run daily flights in October to respond to growing demand," said Mr Patima.
"During that period, we plan to resume flights to Osaka and Sapporo in Japan."
He said the airline continues to save on operational costs during the bankruptcy process, such as by relocating its hub to Suvarnabhumi airport to decrease space usage and cut costs by 50%.
