Malaysia’s AirAsia X proposes life-saving debt restructuring

AirAsia X (D7, Kuala Lumpur Int’l) announced in a stock market filing on October 6 that it plans to restructure its debt with the aim of attracting an injection of fresh equity while avoiding liquidation. The still-grounded long-haul wing of Malaysian budget carrier holding AirAsia Group will seek to restructure about MYR63.5 billion ringgit (USD15.3 billion) worth of debt and reduce 90% of its capital by consolidating every ten existing ordinary shares into one share, the filing said. The plan includes a proposed debt settlement and waiver of debts involving unsecured creditors, route network rationalisation and fleet right-sizing “aimed at ensuring a leaner and more sustainable business”, and reworking contracts with long-term business partners. The company, which includes subsidiary Thai AirAsia X (XJ, Bangkok Don Mueang), is “facing severe liquidity constraints” in meeting its debt and other financial commitments despite efforts to control costs. “To avoid liquidation and to allow the airline to fly again, the only option is for AirAsia X to undertake a group-wide debt and corporate restructuring and update its business model to survive and thrive in the long term,” AirAsia X said. “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.” AirAsia X currently operates twenty-four A330-300s, while Thai AirAsia X has thirteen A330-300s and two A330-900N, according to the ch-aviation fleets advanced module. All are currently inactive except one AirAsia X A330, 9M-XXP (msn 1481), which performed ad-hoc flights from Kuala Lumpur Int’l to Chongqing, Delhi Int’l, Hangzhou, Melbourne Avalon, and Shanghai Pudong during August and September, ch-aviation analysis of Flightradar24 ADS-B data shows. AirAsia X said it had appointed Lim Kian Onn, an accountant, former investment banker, and AirAsia X board member since 2012, as deputy chairman to lead the restructuring.