AIRASIA X has asked its creditors for a debt haircut that would shave its liabilities of RM63.5 billion to RM200 million.

As part of its restructuring plan, the carrier also proposes to reduce share capital by 90%.

“All existing contracts, agreements and/or arrangements previously entered into with the relevant creditors will be deemed terminated following their approval of the Proposed Debt Restructuring and the High Court’s sanction,” it said 

According to FlightGlobal, the airline’s unsecured debt stands at RM10 billion. The rest of what it owes are for items not carried on the balance sheet, namely purchase commitments and termination penalties for its Airbus orders.

“Assuming 75% of creditors go along with AirAsia X’s proposal and other approvals are obtained, AirAsia X basically aims to start afresh in 2021, initially operating a pair of A330s, and (hopefully) working up to a full network by the end of next year,” the report said.

“In essence, creditors are being asked to forgo a huge amount of capital to support a start-up during an extremely challenging period. While it is hoped that increased Covid-19 testing and eventually a vaccine will reboot air travel, the outlook for 2021 is far from certain. Moreover, AirAsia X was loss making long before coronavirus reared its head in Wuhan earlier this year.” 

Creditors’ other option is to say no to AirAsia X’s plan and see the airline liquidated. Lessors would receive their aircraft, but little more, it said. 

BOC Aviation has filed a claim in a London court against AirAsia X for nearly US$23 million (RM95 million) related to the lease of four aircraft.

AirAsia X and its other lessors declined FlightGlobal’s request for comment on the company’s debt relief proposal. Airbus said: “We are in discussions with our customer to find possible solutions during this challenging time.” – October 10, 2020.