AirAsia X announces more modest $28mn rights issue

AirAsia X has opted to downsize its planned rights issue and will now seek to raise MYR116 million ringgit (USD27.75 million) to bolster its balance sheet in a one-for-one issue of 414 million shares to existing shareholders, plus an additional MYR50 million (USD12 million) through a share subscription from new investors.

It had earlier obtained shareholder approval, and then in December court approval, to raise up to MYR300 million (USD72 million) and a special issue of MYR200 million (USD48 million) as part of its radical restructuring scheme.

However, in a Bursa Malaysia filing on February 21, the Capital A-owned low-cost long-haul carrier, which resumed scheduled flight operations last week, said that substantial fundraising now could ultimately harm shareholders.

“At the beginning of 2021 we had MYR95 million [USD23 million] in cash. Our average cash burn for the last 14 months averaged MYR3 million [USD720,000] a month. We will be able to sit through any eventualities in the next couple of years even if borders do not open, which however will not be the case,” explained Andrew Littledale, AirAsia X’s chief financial officer.

“A larger fund raise is now not only unnecessary but will also be punitively dilutive particularly to existing retail shareholders who may not be able to fund a bigger rights issue at this difficult time.”

The airline has fixed the new shares at MYR0.28 (USD0.067) each to raise the sum, which is about 33% less than the five-day volume-weighted average price on the morning of February 21. All approvals have been obtained for the fundraising, and the proceeds will be used for working capital requirements.

According to the ch-aviation fleets advanced module, AirAsia X currently has five of its fleet of eighteen A330-300s active, and chief executive Benyamin Ismail said in the disclosure that “we expect to have seven planes fully operational by the end of this quarter” and eleven by the end of October.