KUALA LUMPUR: Malaysian long-haul budget airline AirAsia X Bhd (AAX) has proposed a separate restructuring programme for its aircraft lessors that aims to tackle their concerns, citing a chance to recover rental losses, a document seen by Reuters shows.
The airline, an affiliate of AirAsia Group, has been trying for months to reconstitute RM64.15 billion (US$15.9bil) of debt into RM200 million of debt. More than a dozen creditors, mostly lessors, had intervened in court to challenge a proposal that would have meant a haircut for them of 99.7%.
The new proposal for lessors is a key step as the airline looks to win creditors’ approval for its restructuring. The proposal seeks to address lessors’ concerns about their forward commercial agreements and the viability of the airline’s business after recapitalisation, according to the document, which comprises slides describing the plan.
Under the revised proposal, AAX said lessors are expected to recover at least 60% of what they are owed. A person familiar with the matter said the airline deemed the earlier description of the debt haircut inaccurate as they “excluded returns from ongoing leases”, referring to recovery of rental losses and outstanding debt.
AAX urged lessors to agree to a “pre-packaged lock-up” deal to expedite the restructuring process.
The person, who declined to be named because of the sensitivity of the matter, said the airline wanted to lock in terms of the deal with lessors before convening a creditors meeting to vote on the restructuring.
“(It) balances the needs of creditors and new investors without compromising the financial viability of the business plan, ” AAX said in the slides.
AAX did not immediately respond to a request seeking confirmation of the proposal.
Lessors ICBC Leasing, Kayan Aviation, Aviator Capital, Castlelake, Aircastle and Minsheng Financial Leasing did not immediately respond to Reuters’ requests for comment. Macquarie AirFinance, BOC Aviation Ltd and AerCap declined to comment.
Meanwhile, Malaysia’s high court has ordered AAX to convene separate meetings with its different groups of creditors within 180 days from the date of order.
The meetings are for the purpose of “considering and, if thought fit, approving with or without modification the Proposed Debt Restructuring to be proposed by AAX and the creditors”, AAX said said in a bourse filing on yesterday. It did not state the date of the order.
The Kuala Lumpur High Court ruled that aircraft lessors and planemaker Airbus SE were to be treated as unsecured creditors, but that Airbus would be placed in a separate class from other unsecured creditors. — Reuters