AirAsia X seeks to stave off liquidation with RM63b debt restructuring

 

Malaysia's AirAsia X Bhd, the long-haul arm of AirAsia Group Bhd, said it wants to restructure US$15.3 billion of debt and slash its share capital by 90 percent to continue as a going concern.

Hard hit by the Covid-19 pandemic as closed borders have left most of its planes grounded, the budget airline said it has severe liquidity constraints and, with no return to normalcy in sight, "imminent default of contractual commitments will precipitate a potential liquidation."

Its statement late on Tuesday came just days after Malaysia Airlines, the country's other major carrier, said it was very low on cash and had reached out to lessors, creditors and suppliers for urgent restructuring.

AirAsia X is seeking to reconstitute RM63.5 billion (US$15.3 billion) of debt into a principal amount of RM200 million and for the balance to be waived.

That debt restructuring, as well as a revamp of its business model would be needed to raise fresh equity and debt, which in turn would be required to restart the airline, it said.

The statement did not break down the liabilities or name the airline's creditors.

The hefty debt figure could include aircraft orders, potentially spelling cancellations, said an aviation analyst who declined to be identified as he no longer covers the company.

"A lot of that may be aircraft orders. The real haircut may not be that huge if it's purely on actual debt and lease commitments," he said.

AirAsia X last year finalised orders with Airbus for 78 A330 Neo and 30 A321 XLR planes but said in February this year it would defer delivery of the A330 Neo planes and consider other changes to reduce its fleet. The airline is Airbus' biggest customer for the A330 Neo.

It also proposed reducing its issued share capital by 90 percent and consolidating every 10 existing ordinary shares into one share. Long a penny stock, its shares fell 10 percent to 4.5 sen on Wednesday.

The airline, which reported a record net loss of RM650.3 million in the 2019 financial year, said unaudited records as of June 30 showed it had a shareholder equity deficit of RM960 million.

Liabilities of RM3.38 billion exceeded assets of RM1.39 billion.

It has appointed board member Lim Kian Onn, a chartered accountant and former banker, as deputy chairperson to lead the restructuring which will involve overhauling its route network, fleet size, cost base and workforce. - Mkini