Malaysia’s budget airline AirAsia X proposes debt restructuring for survival

FILE PHOTO: Tail of AirAsia X plane as seen at the Garuda Maintenance Facility AeroAsia in Tangerang, Indonesia, September 20, 2017. REUTERS/Beawiharta

The long-haul arm of Malaysia’s flagship budget airline, AirAsia X Bhd (AAX), has proposed restructuring its debt and reducing its issued share capital to avoid liquidation, it said in a late bourse filing on Tuesday.

The group is seeking to restructure approximately 63.5 billion ringgit ($15.30 billion) of debt and for any balance to be waived, the statement said.

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% and consolidating every 10 existing ordinary shares into one share.

AAX said it is facing severe liquidity constraints in meeting its debt and other financial commitments despite efforts to control costs, including grounding all scheduled flights, salary cuts and retrenchment across the group.

“Based on its current financial position and the industry outlook, the Group will not be able to meet its immediate debt and other financial commitments,” it said.

“To avoid a liquidation and to allow the airline to fly again, the only option is for AAX to undertake a group-wide debt and corporate restructuring and update its business model to survive and thrive in the long term,” it added.

AAX said that the right-sizing the group’s operations and its financial obligations are pre-requisites for the raising of any fresh capital, comprising both equity and debt, to support the group’s revised business plan.

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.