AirAsia X has formulated a restructuring plan to inject fresh equity into the company to allow it to resume flying, the Malaysian low-cost, long-haul carrier said Tuesday. The airline grounded its fleet in March due to the near-collapse of international air travel resulting from Covid-19.
Facing what it called severe liquidity constraints, AirAsia X predicted “no imminent return to normalcy” in a statement warning of the potential liquidation of the airline due to imminent default of contractual commitments. As a result, it said, the airline requires a major debt restructuring and a renegotiation of its financial obligations to raise the equity needed to restart operations.
AirAsia X has appointed board member Dato’ Lim Kian Onn as the deputy chairman to lead the restructuring. In the last two months the company has held “extensive” discussions with all major creditors, it said. The airline reported that creditors have expressed varying degrees of support for the restructuring plan and that all voiced strong support for a continuation of the business.
Carrying a fleet of 24 Airbus A330-300s, AirAsia X has delayed delivery of the first of 78 A330-900neos due to the Covid crisis. It also had placed firm orders for 30 A321XLRs and 10 A350-900s.
“It has been extremely difficult for the airline during this period as we had to ground all scheduled flights and implement salary cuts and retrenchment for the first time in the company’s history as a consequence of the pandemic,” said AirAsia X CEO Benyamin Ismail. “Similar exercises are likely to continue during the restructuring process, but our focus is to ensure a successful restructuring to keep as many jobs as possible. Our immediate focus is to obtain all necessary approvals and execute the proposed restructuring plan over the next few months.”