A third Thailand-based airline in just two years has applied for bankruptcy protection. Thai AirAsia X had its application for bankruptcy protection accepted by Thailand's Central Bankruptcy Court this week, following the same path as Thai Airways and Nok Air. After two years of not flying, the airline's application was almost inevitable but came just ahead of services resuming to Japan and South Korea.

Thai AirAsia X bankruptcy protection almost inevitable

Patima Jeerapaet, Chief Executive Officer of Thai AirAsia X, says entering bankruptcy protection will not impact those planned flights, and all tickets will be honored. He said the decision to seek protection was in the airline's best interests, especially in terms of managing the airline's debt. The CEO added bankruptcy protection was a pathway the airline had actively considered for some time. Also safe, at least for the time being, are the 1,000 odd Thai AirAsia X employees.

"Thai AirAsia X has entered into rehabilitation at an appropriate time with tourism recovering and the nation reopening. We assure passengers that this process will have no impact on our services of passengers or flight plans during this process. Passengers who have already booked or are looking to book our flights will be able to fly to South Korea and Japan starting this June 2022," Mr Jeerapaet said. "Thai AirAsia X also has further plans for expansion and will be adding flight frequencies and new routes in line with demand."

Flights grounded for two years

Thai AirAsia X is a Thai AirAsia's medium and long-haul airline based at Bangkok's Suvarnabhumi Airport (BKK). While many passengers think of the AirAsia brand as one airline, it is not. Rather, it is a rich tapestry of different airlines operating under the AirAsia brand - like a franchise operation. Thai AirAsia X is 51% owned by Asia Aviation (the parent company of Thai AirAsia) and 49% owned by AirAsia. The bankruptcy protection order does not impact Thai AirAsia.

Before the pandemic stopped Thai AirAsia X flights, the airline operated 12 Airbus A330s and flew to destinations around Asia, Australia, the Middle East, and as far west as Croatia. However, the airline grounded its entire fleet after the COVID-19 outbreak and downsized its fleet to eight jets. But flights to Seoul (ICN) and Tokyo Narita (NRT) are set to restart in early June, with flights to Osaka Kansai (KIX) and Sapporo Chitose (CTS) slated to follow in October.

"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," The Bangkok Post reports a Director of Thai AirAsia X, Tassapon Bijleveld, saying. "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."

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A long and winding road ahead for Thai AirAsia X

In July 2020, Thailand's Central Bankruptcy Court approved low-cost carrier Nok Air to enter into bankruptcy protection. In September of the same year, flag carrier Thai Airways also went down the same path. Thai Airways holds a 13% stake in Nok Air. Neither airline has yet exited the process.

But Thai AirAsia X sibling airline Kuala Lumpur-based AirAsia X successfully exited Malaysia's bankruptcy protection process in March. Thai AirAsia X says it will now draft a rehabilitation plan and bolster its liquidity to ensure it operates at full capacity. The Central Bankruptcy Court will hold the first hearing dealing with the restructuring plan on August 22.

Source: Bangkok Post