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PETALING JAYA: On the brink of bankruptcy, AirAsia X Bhd burdened with debt
has proposed a major restructuring plan as a last resort to bail out the low-cost long-haul carrier.
Former investment banker and AirAsia X director Datuk Lim Kian Onn, who was appointed vice president yesterday, will take the lead to ensure the distressed airline can fly again.
With RM10.3bil in total liabilities on its balance sheet, exceeding total assets of RM9.36bil, AirAsia X said the restructuring plan, if approved, would ensure the airline’s continued ability to stay afloat.
“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 yesterday in a presentation to Bursa Malaysia.
AirAsia X’s proposed restructuring comprised two areas, namely debt and corporate restructuring.
As part of the debt restructuring, the group proposed that the debts contracted with unsecured creditors be reconstituted for 63.5 billion ringgit in a debt recognition of AirAsia X for a principal amount of up to 200 thousand.
AirAsia X described RM200 thousand as an amount that “the group’s future operating cash flows can accommodate.”
The amount will be paid annually for a period of up to five years through three equal payments from the third to fifth anniversaries of the implementation of the debt restructuring.
“The amount of the debt settlement will not be guaranteed and will have an interest rate of 2% per year payable in arrears, as of the anniversary of the implementation date of the proposed debt restructuring.
“In the case of airline customers and travel agents, they will receive travel credits with extended validity for future travel or purchase of seat inventory,” he said in the presentation.
Meanwhile, corporate restructuring will involve two components, namely reduction of share capital and consolidation of shares.
AirAsia X planned to reduce its share capital by 90% from RM1.53bil to just RM150 thousand, a reduction of RM1.38bil.
“The credit derived from the proposed capital reduction of RM1.38bil will be used to offset the accumulated losses of the company,” said AirAsia X.
In addition, the low-cost carrier has proposed to consolidate every 10 existing ordinary shares into one AirAsia X share.
“The proposed corporate restructuring is subject to approval by AirAsia X shareholders in an EGM and confirmation by the High Court for the proposed share capital reduction,” he said.
AirAsia X expected to complete the proposals by the end of the first quarter of 2021.
In a separate statement, AirAsia X CEO Benyamin Ismail said the proposed restructuring plan was the group’s only option to ensure the airline’s survival.
“It has been extremely difficult for the airline during this period, as we had to ground all scheduled flights, implement pay cuts and reduce staff for the first time in company history as a result of the pandemic.
“Similar exercises are likely to continue during the restructuring process, but our goal is to ensure a successful restructuring to maintain as many jobs as possible,” he said.
Benyamin noted that AirAsia has a strong recovery strategy that will help the group overcome its challenges once the market recovers.
“We have a low-cost base, we are in the right part of the market and many of our key markets are in green areas that will likely reopen first.
“Our immediate focus is to obtain all necessary approvals and execute the proposed restructuring plan over the next several months,” he said.
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