AS part of its restructuring plan to weather the pandemic-hit tourism industry downturn, AirAsia X Bhd (AAX) will liquidate its Indonesian arm and write down its 49% stake in Thailand AAX. 

The airline’s deputy chairman, Lim Kian Onn told The Star in an interview published today that the cuts are part of its plan to bring down about RM63.5 billion in debt.

“We are liquidating Indonesia. The planes are back with us. We have a 49% stake in Thai AAX. It has been written down completely in our books. They have 15 planes, six of which are subleased from us and as part of the scheme, the lessors will contract directly with them. They are also looking at various options and we will work with them in this exercise but they are not part of our scheme,” Lim was reported as saying.

Lim told the daily the airline has been left with no choice but to make major cuts.

“The starting point is that the company needs fresh capital. We have run out of money. Whether this money comes from existing shareholders or new shareholders or from banks, we need capital.

“We looked at the business plan and calculated that we need up to RM500 million to jumpstart the airline. We had to make certain assumptions on how Covid-19 will pan out. In this case, we made the conservative assumption that it will be a slow recovery to normalcy. We have not made any assumptions on government help,” he said.

Lim said due to its weakened position, AirAsia X has also run into trouble with its creditors, saying the airline will not be able to honour its commitments going forward. 

“These are all the lease payments for the next eight to 10 years and the purchase price of the planes we ordered for the future, the contracted engine maintenance by Rolls Royce for the remaining life of the planes and so on.

“There is Rolls Royce and, of course, there is the giant Airbus. We have been talking to them for two months. All of them are understandably upset. We put our hands up and say we are guilty. We owe you money. I would be aggrieved if I were them.”

Last Tuesday, it was reported AAX’s sister company, AirAsia Bhd, had obtained an extended RM1 billion loan from Putrajaya.

The week prior, both AirAsia and AAX, its long-haul arm, confirmed the retrenchment of 10% of their 24,000 employees last week.

In July, AirAsia Group CEO Tony Fernandes told Nikkei that the airline needed to raise RM2 billion in the next six months to be in a “very comfortable” position. – October 17, 2020.