PETALING JAYA: Standing on the brink of bankruptcy, debt-laden AirAsia X Bhd has proposed a major restructuring plan as the last resort to rescue the long-haul low cost carrier.
Former investment banker and AirAsia X director Datuk Lim Kian Onn, who was appointed the deputy chairman yesterday, will take the lead in ensuring the struggling airline will be able to 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 secure the airline’s continued ability to stay afloat.
“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, ” it said in a filing with Bursa Malaysia yesterday.
The proposed restructuring of AirAsia X comprised two areas, namely debt and corporate restructuring.
Under the debt restructuring, the group proposed that RM63.5bil of debts owed to unsecured creditors be reconstituted into an acknowledgement of indebtedness by AirAsia X for a principal amount of up to RM200mil.
AirAsia X described the RM200mil as an amount which “the group’s future operational cash flows may accommodate”.
The amount will be paid annually over a period of up to five years via three equal payments from the third to the fifth anniversaries of the implementation of the debt restructuring.
“The debt settlement amount shall be unsecured and carry an interest rate of 2% per annum payable in arrears, commencing on 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, ” it said in the filing.
Meanwhile, the corporate restructuring will entail two components, namely share capital reduction as well as share consolidation.
AirAsia X planned to reduce its share capital by 90% from RM1.53bil to just RM150mil, a reduction of RM1.38bil.
“The credit arising from the proposed share capital reduction of RM1.38bil will be used to offset the accumulated losses of the company, ” said AirAsia X.
In addition, the low cost airline has proposed to consolidate every 10 existing ordinary shares to one AirAsia X share.
“The proposed corporate restructuring is subject to the approval of the shareholders of AirAsia X at an EGM and the confirmation of the High Court for the proposed share capital reduction, ” it 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 salary cuts and retrench staff for the first time in the company’s history as a consequence of the pandemic.
“Similar exercises are likely to continue during the restructuring process, but our focus is to ensure a successful restructuring to keep as many jobs as possible, ” he said.
Benyamin pointed out that AirAsia has a robust recovery strategy in place 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 zones which are likely to reopen first.
“Our immediate focus is to obtain all necessary approvals and execute the proposed restructuring plan over the next few months, ” he said.
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