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KUALA LUMPUR: Malaysia’s AirAsia X Bhd, the long-range arm of AirAsia Group Bhd, said it wants to restructure $ 15.3 billion of debt and cut 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 low-cost carrier said it has severe liquidity constraints and, with no return to normality in sight, “The imminent breach of contractual commitments will precipitate a possible liquidation.” .
His statement late on Tuesday (October 6) came just days after Malaysia Airlines, the country’s other major airline, said it was very low on cash and had approached lessors, creditors and suppliers for an urgent restructuring.
READ: In a bid to survive and restart, Malaysia’s AirAsia X proposes a major restructuring plan
AirAsia X is seeking to reconstitute RM 63.5 billion (US $ 15.3 billion) of debt into a principal amount of RM 200 million and have the balance waived.
That debt restructuring, as well as a revamp of its business model, would be necessary to raise new capital and debt, which in turn would be necessary to restart the airline, he said.
The statement did not break down the responsibilities or name the airline’s creditors.
AirAsia X declined to respond to a Reuters inquiry about its debt.
The high debt figure could include aircraft orders, which could mean cancellations, said an aviation analyst who declined to be named because it no longer covers the company.
“A lot of that can be aircraft orders. The actual cut may not be that big if it is purely on actual debt and lease commitments,” he said.
Last year, AirAsia X finalized orders with Airbus SE for 78 A330neo and 30 A321XLR aircraft, but said in February this year it would postpone delivery of the A330neo aircraft and consider other changes to reduce its fleet. The airline is Airbus’ largest customer for the A330neo.
It also proposed reducing its issued share capital by 90 percent and consolidating every 10 existing ordinary shares into one share. A penny share, its shares fell 10 percent to 4.5 sen on Wednesday.
The airline, which reported a record net loss of RM650.3 million in fiscal 2019, said unaudited records as of June 30 showed it had a stockholders’ equity deficit of RM960 million.
Liabilities of RM 3.38 billion exceeded assets of RM 1.39 billion.
It has appointed board member Lim Kian Onn, a certified public accountant and former banker, as vice president to lead the restructuring that will involve overhauling its route network, fleet size, cost base and workforce.
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