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KUALA LUMPUR: The long-range arm of Malaysia’s flagship low-cost airline AirAsia X Bhd (AAX) has proposed to restructure its debt and reduce its issued share capital to avoid liquidation, it said today in a late exchange filing. .
The group seeks to restructure approximately RM63.5 billion ($ 15.3 billion) of debt and eliminate any balances, according to the statement.
The group, heavily affected by the Covid-19 pandemic due to closed borders keeping most of its planes on the ground for months, also proposed reducing its issued share capital by 90% and consolidating every 10 existing common shares into a single share. .
AAX said it faces severe liquidity constraints in meeting its debt and other financial commitments despite efforts to control costs, including suspension of all scheduled flights, pay cuts and group-wide cuts.
“Based on its current financial position and the industry outlook, the group will not be able to meet its immediate debt and other financial commitments,” he said.
“To avoid a liquidation and allow the airline to fly again, the only option is for AAX to undertake a corporate and debt restructuring of the entire group and update its business model to survive and prosper in the long term,” he added.
AAX said the proper size of the group’s operations and its financial obligations are prerequisites for raising fresh capital, comprising both equity and debt, to support the group’s revised business plan.
