Bursa Malaysia Rejects AirAsia X’s Bid to Exit PN17 Status Despite Positive Financial Performance

In a surprising development, Bursa Malaysia has rejected AirAsia X’s application to exit PN17 status, despite the low-cost carrier’s reported net profit of MYR5.5 million ringgit (USD1.2 million) for the three months ending June 30, 2023. The stock exchange issued a letter to AmInvestment Bank Bhd on October 18, conveying the rejection and extending the deadline for AirAsia X to submit its regularisation plan until January 17, 2024.

The PN17 status is assigned to listed entities facing financial distress, mandating them to rectify their financial affairs and submit a regularisation plan within 12 months of entering PN17 status. AirAsia X’s trigger for the PN17 notice stemmed from a disclaimer of opinion by auditors Ernst and Young in the October 2021 audited financial statements.

Despite securing extensions from Bursa Malaysia to finalize the regularisation plan, AirAsia X’s recent application for exit based on improved financial performance was met with rejection. The airline had reported a substantial net profit and quadrupled revenues for the three-month period compared to the same period in 2022.

In July, AirAsia X expressed optimism about leaving PN17 status, with Capital A founder and CEO Tony Fernandes describing the process as nearly as significant as restarting the airline company. The rejection, however, raises questions about the regulatory environment, especially considering the recent collapse of MYAirline in Malaysia.

While the specific reasons for rejection remain undisclosed, speculation in local media suggests that Malaysian authorities might be adopting a stricter stance on the financial activities of airlines, given the recent challenges in the industry. AirAsia X, which operates flights to 23 destinations in 12 countries with a fleet of seventeen A330-300s, now faces a crucial decision-making period. AmInvestment Bank, assisting in formulating the regularisation plan, has stated that AirAsia X will explore all available options, including the possibility of an appeal, and will announce the next course of action in due course. The rejection introduces an element of uncertainty for AirAsia X’s future plans and highlights the evolving landscape of the Malaysian airline industry.