AirAsia X Eyes $600m Debt Restructuring After Capital A Deal

AirAsia X is exploring refinancing options to restructure between USD500 million and USD600 million in debt as it absorbs the aviation assets acquired from Capital A and consolidates the AirAsia airline group under a single corporate structure.

The refinancing effort follows the completion on January 16 of AirAsia X’s acquisition of Capital A’s aviation business, a transaction that brought all AirAsia-branded airlines under one entity. The move marked a major step in simplifying the group’s structure after years of financial strain and restructuring triggered by the COVID-19 pandemic.

Deputy group chief executive Farouk Kamal told Reuters that AirAsia X is evaluating several initiatives aimed at improving the group’s debt profile. These include extending loan tenures and reducing interest costs to ease near-term cash flow pressure. A key element of the plan involves consolidating multiple debt facilities into one or two larger loan instruments, which management believes would improve transparency and provide greater financial flexibility.

The airline group’s leadership said the refinancing is designed to support operational growth following the completion of the group’s internal consolidation. Chief financial officer Low Kar Chuan said the enlarged AirAsia X entity is targeting near-term annual revenue of around USD6 billion, an EBITDA margin of approximately 20%, and passenger load factors above 80%. These targets reflect expectations of stronger demand, network optimisation, and improved cost efficiency across the combined airline platform.

Low added that the group aims to fully repay bank loans taken on during the pandemic within the next two to three years, a goal that would mark a significant milestone in restoring balance sheet strength. AirAsia X has previously highlighted deleveraging as a priority as it seeks to rebuild investor confidence and regain access to more favourable financing.

The financial reorganisation is also intended to underpin the group’s expansion plans. AirAsia X has previously disclosed its intention to place an order for up to 150 aircraft, a move that would support both medium- and long-haul growth across the AirAsia network. In parallel, the airline is planning to establish a new hub at Bahrain International Airport, positioning the Middle East as a strategic connecting point between Asia, Europe, and Africa.

In addition, the carrier has said it aims to resume flights to London Gatwick Airport as early as mid-2026, restoring a high-profile long-haul route that was suspended during earlier restructuring phases. The London service would mark a symbolic return to key intercontinental markets as the group scales up operations.

Industry observers say the success of AirAsia X’s refinancing efforts will be critical in determining how quickly the airline can execute its ambitious growth plans. By stabilising its debt structure and lowering financing costs, the group hopes to create a more resilient platform capable of supporting fleet expansion and sustained profitability in an increasingly competitive long-haul low-cost market.

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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com