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KUALA LUMPUR: The US $ 22.98 million (RM95 million) lawsuit filed in the UK for alleged breach of contract against AirAsia X Berhad (AAX) will further increase the risk on the long haul carrier’s ability to outperform the Covid-19 pandemic safe. says a research house.
In an investigative note, MIDF Amanah Investment Bank Bhd said that the financial impact on AAX was limited to the amount of the litigation with no operational impact.
“This case will result in additional pressure on AAX’s earnings as the company is still recovering from losses caused by the pandemic,” the research firm said.
“Group cash balances and cash equivalents stood at RM252.03 million in the second quarter of 2020 against a demand size of RM95 million.”
Last Friday, AAX announced that the company and its wholly owned indirect subsidiary, AAX Leasing Two Ltd, had received a letter on August 25 detailing a legal claim from BOC Aviation Ltd (BOCA), alleging that AAX Leasing Two had breached their obligations. under lease agreements.
AAX had leased four planes from BOCA.
“According to our observation, the timing and intent of the lawsuit remains questionable given that the infringement took place in December 2018,” the investigative firm said.
“In addition, the lawsuit was notified to AAX amid the renegotiation of aircraft leases with lessors, including BOCA.”
It said that despite the current operating environment that is severely affecting the airline industry, the lawsuit noted that BOCA was unwilling to negotiate with AAX as it requested to re-evaluate current leases.
It could take some time for both parties to reach an amicable settlement on the case, the investigative firm added.
At 10:45 a.m. M., AAX’s share price in Bursa Malaysia remained stable at 6.5 sen with 1.8 million shares changing hands, while its sister company AirAsia Group Berhad fell half a sen to 66 sen with 1.73 million shares traded.
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