GEORGE TOWN (Aug 4): Malaysia Airports Holdings Bhd (MAHB) says the impact of AirAsia Bhd’s RM409 million demand for the losses the low cost carrier suffered in klia2, is unlikely to have any financial impact to 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 AAB’s demand, its legal rights and remedies, including its right to set-off and/or counterclaim against AAB. Accordingly, the group will update Bursa in this regard,” it said.

MAHB (valuation: 1.4; fundamental: 0.8) added that the group did not foresee any material impact to its operations, as a result of the demand.

“Subject to the legal advice from the group’s solicitors concerning the validity of AAB’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 (valuation: 1.4; fundamental: 0.2) has not expressly claimed for any interest in the letter of demand.

On July 31, AAB 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 failed to address 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 the airline on klia2 operational issue and plan, ensure safety, and to keep klia2 in good repair and condition.

MAHB closed seven sen or 1.23% lower at RM5.63 today, which gave it a market capitalisation of RM9.46 billion.

AAB rose one sen or 0.74% to close at RM1.37, with a market capitalisation of RM3.78 billion.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)