KUALA LUMPUR: AirAsia X Bhd (AAX) announced a group-wide debt and corporate restructuring plan, as the low-budget airline seeks to avoid liquidation and restart some flight operations at the start of the year next.
“To avoid a liquidation and 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 run, ”AAX said in a filing. with Bursa Malaysia today.
“Correct sizing of the Group’s level of activity and its financial obligations is a prerequisite for raising any new capital, made up of both equity and debt, which will be used to support the implementation of the business plan. revised business of the Group, ”he added. noted.
At the end of June, the Group had an unaudited equity deficit of RM 960 million and its unaudited current liabilities of RM 3.38 billion exceeded unaudited current assets by RM 1.39 billion of RM 1.99 billion.
“Based on its current financial situation and the outlook for the sector, the Group will not be able to meet its immediate debt and other financial commitments,” he declared.
AAX said that prior to the announcement, the group embarked on a cost containment exercise that included grounding all scheduled flights, pay cuts and layoffs across the group.
The restructuring, he said, will provide new opportunities for the Group to transform and reset its activities.
“Going forward, AAX will strive to rebound as a low cost medium-haul airline with a leaner and more sustainable cost base while focusing on business sustainability, increased efficiency. instead of market share and competition in a more rational pricing environment, ”he said. .
It hopes to restart its operations with 2 aircraft in selected markets in the first quarter of 2021 and gradually resume flights to all destinations by the end of 2021.
The proposal for a debt restructuring plan with the Group’s unsecured creditors in accordance with article 366 of the Companies Act of 2016 includes the following elements:
(a) a restructuring of approximately Ringgit 63.50 billion of debt to be reconstituted into an IOU by AAX for a principal amount of up to Ringgit 200.0 million; and
(b) any balance exceeding the reconstituted amount mentioned above and any other sums after the cut-off date of June 30, 2020 resulting from these debts (including interest, default interest, etc.) will be canceled.
AirAsia X also proposed a corporate restructuring involving a capital reduction and a reverse stock split as follows:
(a) a proposal for a 90% reduction of the issued share capital of AAX in accordance with article 116 of the Companies Law of 2016
(b) a proposal to combine 10 existing AAX shares into 1 AAX share.
“Completion of the Proposals is the key to the survival of the Group as well as its ability to remain in business,” he said.
“In order to implement the Group’s revised business plan, AAX will need significant concessions from its suppliers, creditors and financiers. it is not possible to raise the new funds needed to reset the airline, ”he added.