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.
($1 = 4.1510 ringgit)