AirAsia Japan files for bankruptcy; group hints India exit

AirAsia Group has cemented its retreat from East Asia as 33%-owned subsidiary AirAsia Japan (DJ, Nagoya Chubu) filed for bankruptcy proceedings on November 17. AirAsia Japan took the decision “due to insolvency resulting from a demand slump in travel induced by lockdown restrictions related to the coronavirus pandemic,” the group said in a stock exchange filing, adding that the “total cost of investment in AAJ has been fully written down.” It concluded: “Further announcements will be made in due course on the particulars of claim and financial impact to the company, if any, under the bankruptcy proceedings.” Having been largely dormant since April, AirAsia Japan confirmed in early October that it would terminate all operations from October 5. The budget carrier, which operated three A320-200s, making it by far the group’s smallest carrier, said at the time that the impact of Covid-19 had “severely curtailed” demand for its flights out of Nagoya Chubu. AirAsia Japan filed for bankruptcy at Tokyo District Court with debts of about JPY21.7 billion yen (USD209 million), local media reported. Around 23,000 unpaid ticket refunds amount to JPY520 million (USD5 million), which the carrier pledged to repay by November 30. AirAsia Japan had 280 employees as of October 5, but all but 50 were dismissed on November 4. In an expansive separate statement issued on the same day, AirAsia Group hinted that it may also exit its AirAsia India (I5, Bangalore Int’l) joint venture with Tata Sons, in which it holds a 49% stake. “Our businesses in Japan and India have been draining cash, causing the group much financial stress. Cost containment and reducing cash burns remain key priorities evident by the recent closure of AirAsia Japan and an ongoing review of our investment in AirAsia India,” it admitted. “A detailed network and fleet optimisation strategy has been implemented across the network, putting the right foundations in place for a sustainable and viable future. We continually review our network to ensure we fly the most popular and profitable routes.” As previously reported, sources told the Times of India in early October that Tata Sons, which holds 51%, was in talks to buy AirAsia Group’s stake, the latter having been reluctant to inject fresh capital into the carrier.