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KUALA LUMPUR (Dec 22): Aircraft maker Airbus SE has said it could lose more than $ 5 billion in aircraft orders if AirAsia X Bhd’s (AAX) debt restructuring plan is approved, court documents showed, joining a dozen creditors who have defied the Malaysian low-budget airline’s plan.
Airbus’ challenge comes as AAX defended its scheme against allegations by key lessor BOC Aviation Ltd (BOCA) that it favored Airbus and lacked a debt-for-equity swap offer for creditors.
In an affidavit filed on December 16 in Kuala Lumpur High Court, Asia Pacific head Anand Emmanuel Stanley said there was a strong possibility that Airbus would “suffer substantial loss and damage” from the termination of purchase agreements.
“AAX has ordered and Airbus has already built, or substantially built, seven A330neo aircraft that are currently in inventory,” he said, adding that there are 71 other orders that may affect Airbus profitability if canceled.
AAX disclosed in a December 17 affidavit seen by Reuters that it owes Airbus RM48.71 billion, including pre-delivery payments for the promised purchase of 118 aircraft.
BOCA has said AAX’s debt calculations should not include future debts, which are primarily due to Airbus. Airbus alone owns around 75% of the total value of the debt required to approve the restructuring, which gives lessors relatively little say.
AAX Senior Counsel Shereen Ee denied that the calculations were unfair as they also consider termination compensation for BOCA until the end of their lease term.
Regarding BOCA’s proposed debt-to-equity conversion, Ee said it would “go against the goal of restructuring AAX to ensure it can raise fresh funds to continue as a going concern.”
He said that either party can have an equity stake in AAX if they inject fresh funds in return.
BOCA became a major Norwegian Air shareholder in May after the lessors agreed to convert the debt into equity.
The airline did not get further state support last month and sought bankruptcy protection. He got shareholders’ vote last week for his rescue plan.
BOCA is AAX’s largest lessor, AAX’s lawsuit showed.
AAX would continue to engage with all creditors, a company spokeswoman said.
“We are working with all stakeholders to accelerate the completion of this recapitalization so that we can start flying again,” he said.
The airline said the alternative was a liquidation with nothing for creditors and shareholders.
Airbus and BOCA declined to comment while legal proceedings and discussions are ongoing.
AAX, the long-haul unit of low-cost airline AirAsia Group, has total debts and liabilities of about RM64.15 billion, according to the lawsuit. It had previously proposed to reconstitute its debts in a principal amount of 200 million ringgit.
Posting losses since June 2019, AAX is now seeking court approval to convene a meeting with creditors to vote on the scheme.
Legal adviser Ee said the plan “would at least offer creditors a chance for survival.”
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