Friday 29 Mar 2024
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KUALA LUMPUR (July 31): AirAsia Bhd has served a letter of demand to Malaysia Airports Holdings Bhd (MAHB) and Malaysia Airports (Sepang) Sdn Bhd seeking RM409 million compensation for losses and damages arising from the budget airline's operations at klia2 and the former low-cost carrier terminal (LCCT) in Sepang, Selangor.

In a statement today, AirAsia said the airport operator has “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 that 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.

In a statement issued later tonight, MAHB confirmed receiving the letter of demand from AirAsia, adding that it considers these claims to be baseless and will vigorously challenge them.

"We are surprised by some of these assertions about klia2 and LCCT after AirAsia has benefited from the facilities provided by MAHB since 2001 to grow into the largest low-cost carrier in Asia.

"We have already instructed our solicitors to look into the matter," said MAHB.

AirAsia has been reported as saying that the new terminal, which was constructed on peat land, was sinking, with cracks appearing in the taxiway, forming water pools that planes must drive through.

The airline had earlier indicated that it wants to move its operations back to the previous LCCT until the issues at klia2 are resolved, as it has incurred significant additional operational costs to mitigate the impact on its operations from the conditions of the new budget terminal.

In response, MAHB had said moving back to the LCCT was not a feasible option as the old terminal cannot cater to the current passenger traffic volume, which has reached 24 million passengers per year, while the maximum capacity for LCCT was 15 million passengers per year.

It had assured that klia2 remains “safe for operations” and that klia2 had acquired the relevant safety certifications.

The airport operator had gone on to say that klia2’s apron and taxiway were undergoing differential settlement, adding that routine patching works, resurfacing and overlay works were carried out and long-term solutions such as the construction of concrete slabs and injection of polyurethane material underground at affected areas were also implemented.

AirAsia (fundamental: 1.4; valuation: 0.2) shares rose 2 sen or 1.49% to close at RM1.36 today, bringing its market capitalisation to RM3.73 billion. MAHB (fundamental: 1; valuation: 1.4) shares, meanwhile, fell 12 sen or 1.98% to settle at RM5.93 for a market cap of RM10.04 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.)

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