GEORGE TOWN: Malaysia Airports Holdings Bhd (MAHB) said

AirAsia Bhd’s RM409 million demand for losses the low-cost carrier suffered in klia2, is unlikely to have any financial impact on the airport operator.

In an announcement to Bursa Malaysia, MAHB noted the amount represented less than 5% of its net assets as at June 30, 2015. “The group is presently obtaining legal advice on the validity of AirAsia demand, its legal rights and remedies, including its right to set-off and/or counterclaim against AirAsia. Accordingly, the group will update Bursa in this regard,” it said.

MAHB said that the group did not foresee any material impact on its operations, as a result of the demand.

“Subject to the legal advice from the group’s solicitors concerning the validity of AirAsia’s demand and its right to set-off and/or counterclaim, the estimated liability is the sum of RM409,438,603.94, excluding interest and legal costs,” it said of any expected losses arising from the letter of demand. It added that AirAsia has not expressly claimed any interest in the letter of demand.

On July 31, AirAsia served a letter of demand to MAHB and Malaysia Airports (Sepang) Sdn Bhd for losses and damages arising from the budget airline’s operations at klia2 and the former low-cost carrier terminal (LCCT) in Sepang, Selangor.

AirAsia was also quoted as saying the airport operator had “failed and/or breached its contractual duties and duty of care, which has caused AirAsia to suffer and continue to suffer losses as a result of MAHB’s breach”. It also claimed MAHB’s breaches have damaged its brand and reputation, as the failings of the facilities are perceived to be within the control of AirAsia, with the airline being the single largest operator of klia2.

When asked to list the breaches identified by AirAsia, MAHB said the carrier alleged it had failed to address the overcapacity problem in LCCT, provide sufficient aircraft parking bays in LCCT, consult airline operators in klia2 development and expansion. AirAsia also alleged MAHB failed to maintain and operate secure, safe and efficient airport, keep klia2 in good repair and condition, effect repairs and/or maintenance at klia2, consult the airline on prices charged before changes in charging system introduced, and promote interest of users in respect of prices charged for.

MAHB also pointed out that AirAsia alleged the former breached its duty of care and negligence, by failing to consult with the airline on klia2’s operational issue and plan, ensure safety, and to keep klia2 in good repair and condition.

This article first appeared in digitaledge Daily, on August 5, 2015.