KUALA LUMPUR: The long-haul arm of Malaysia's flagship budget airline, AirAsia X, has proposed restructuring its debt and reducing its issued share capital to avoid liquidation and pave way for fresh capital, it said in a late bourse filing on Tuesday (Oct 6).
AirAsia X said in a separate statement it is facing severe liquidity constraints to meet debt and other financial commitments and with no return to normalcy in sight, "an imminent default of contractual commitments will precipitate a potential liquidation of the airline".
A major debt restructuring and a renegotiation of its financial obligations, as well as revised level of operations, are prerequisites for any raising of fresh equity and debt which will be required to restart the airline, it said.
The group is seeking to restructure approximately RM63.5 billion (US$15.30 billion) of debt and for any balance to be waived, the affiliate of AirAsia Group said.
AirAsia X said unaudited records as at Jun 30 show it had a deficit in shareholders' equity of RM960 million, and its current liabilities of RM3.38 billion exceeded current assets of RM1.39 billion.
The group, hard hit by the coronavirus pandemic as closed borders kept most of its planes grounded for months, also proposed reducing its issued share capital by 90 per cent and consolidating every 10 existing ordinary shares into one share.
It has appointed board member Lim Kian Onn, a chartered accountant and former banker, as deputy chairman to lead the restructuring.
The airline's restructuring plan comes despite efforts taken to control costs, including grounding all scheduled flights, salary cuts and retrenchment across the group.
"To avoid a 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," it added.
AirAsia X's revised business plan involves route network rationalisation, aircraft fleet right-sizing, cost base overhaul and workforce optimisation to ensure a leaner and more sustainable business.