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KUALA LUMPUR: AirAsia X Bhd
(AAX) has announced a group-wide corporate and debt restructuring plan as the cash-hungry budget airline looks to avoid liquidation and restart some flight operations early next year.
“To avoid a liquidation and allow the airline to fly again, the only option is for AAX to undertake a group-wide debt and corporate restructuring and upgrade its business model to survive and prosper in the long term,” AAX said in a document. with Bursa Malaysia today.
“The appropriate size of the Group’s level of operations and its financial obligations are prerequisites for obtaining any fresh capital, comprising both equity and debt, to be used to support the implementation of the Group’s revised business plan,” he added. He said.
At the end of June, the Group had an unaudited deficit in shareholders’ equity of RM960,000 and its unaudited current liabilities of RM3.38bil exceeded the unaudited current assets of RM1.39bil by RM1.99bil.
“Based on its current financial position and the outlook for the industry, the Group will not be able to meet its immediate debt and other financial commitments,” he said.
AAX said that prior to this announcement, the Group embarked on a cost containment exercise that included suspension of all scheduled flights, pay cuts, and downsizing across the group.
The restructuring, he said, will provide new opportunities for the Group to transform and realign its business.
“In the future, AAX will strive to recover as a low-cost medium-haul airline with a lower and more sustainable cost base while focusing on building business sustainability, increasing performance rather than market share, and competing in a more rational pricing environment, “he said.
It expects to restart operations with 2 aircraft in selected markets in the first quarter of 2021 and gradually resume flights to all destinations by the end of 2021.
The proposed debt restructuring plan with unsecured creditors of the Group in accordance with article 366 of the Companies Law of 2016 implies the following: –
(a) a restructuring of approximately RM63.50 billion of debts to be reconstituted into a debt recognition by AAX for a principal amount up to RM200.0 million; Y
(b) any balance in excess of the aforementioned reconstituted amount and all other amounts after the cut-off date of June 30, 2020 arising from these debts (including interest, penalty interest, etc.) will be waived.
AirAsia X has also proposed a corporate restructuring involving a capital reduction and share consolidation as follows: –
(a) a proposed reduction of 90% of AAX’s issued share capital pursuant to Section 116 of the Companies Act 2016
(b) a proposed consolidation of every 10 existing AAX shares into 1 AAX share.
“Completion of the Proposals is key to the Group’s survival, as well as its ability to remain a going concern,” he said.
“To implement the revised business plan of the Group, AAX will require significant concessions from its suppliers, creditors and financiers. The Group will also require fresh debt and equity capital, but without correctly dimensioning the Group’s financial obligations and its financial position. It will not be possible raise the new funds needed to restart the airline, “he added.
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