AirAsia X facing trouble paying staff salaries: report

KUALA LUMPUR (Reuters) - AirAsia X Bhd, the long-haul, low-cost affiliate of AirAsia Bhd, appears to be encountering greater turbulence. It is said to be facing payment problems relating to staff salaries and their fixed and variable allowances, sources close to the company told The Edge Financial Daily.

In view of the financial problems, according to the sources, AirAsia co-founder and group chief executive Tony Fernandes will take on a "more prominent role" in the management of AirAsia X to revive the airline.

In a circular seen by The Edge Financial Daily, AirAsia X staff were informed that payment of their wages and allowances would be on a staggered basis for the month of October.

Describing the unprecedented payment issue as a "temporary setback", the management of AirAsia X blamed the payment delay to the "late arrival of incoming funds".

A source told The Edge Financial Daily that apart from the staff payment issue, AirAsia X is also having difficulty seeking aircraft loans from financial institutions due to its current financial position.

"Operating costs of AirAsia X are high and yet, it hasn't done anything to review its operations and look for ways to cut its costs. It is still taking delivery of new aircraft and maintaining its route network," said the source.

In December 2013, AirAsia X placed the largest single "airline" firm order for 25 more A330-300s with Airbus. This was reportedly the world's largest single order in a single purchase agreement valued at US$6 billion by an airline for the A330-300. AirAsia X currently operates a fleet of 20 A330-300s.

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