In an electronic vote ahead of Friday’s meeting, more than 90% of the creditors have supported AirAsia X Bhd’s proposal for debt restructuring as per informed sources as the company tries to stay afloat.
As per Bloomberg news, creditors in three different categories, including BOC Aviation Ltd., Airbus SE, and Rolls-Royce Holdings Plc, have agreed to vote for the debt-laden Malaysian airline. AirAsia x needs the approval of 75% in each class of creditors to proceed with the debt restructuring exercise as per sources who did not wish to be identified as the matter is still confidential.
Airbus has agreed to reduce the aircraft orders from AirAsia as a part of this deal. The Malaysian airline is the biggest customer for the A330neo wide-bodied aircraft. According to the website of the French aircraft manufacturer, AirAsia had placed orders for 78 aircraft and 30aircraft for A330neo and narrow-bodied A321neos.
A spokesperson for AirAsia X and Airbus declined to comment on the matter, saying they were not in a position to comment on an ongoing debt restructuring exercise.
AirAsia X, belonging to AirAsia Group Bhd, is Southeast Asia’s second-largest low-cost carrier. The Covid-19 restructuring wiped out the travel demand, and thousand of planes were grounded, which forced AirAsia to start the debt restructuring process. The new agreement with the creditors will have zero debt, and the company starts with a clean slate with hopes to improve its financials as borders reopen for travel.
AirAsia is offering 0.5% extra on the $ 8 billion it owes to the creditors and terminating all existing contracts. This will help the company avoid delisting from the Malaysian stock exchange as it was officially classified as a financially sick company.
AirAsia X was declared financially distressed after auditor Ernst & Young issued a disclaimer in the financial results for 18 months ending June 2021. Last month, the audit firm cited concerns about AirAsia continuing as a profitable company with significant doubts. AirAsia X clarified that it had a year to recast its financial position.
AirAsia struggled even before the pandemic, with losses in six out of seven quarters until December 2019. It reported a net loss of $ 5,9 billion (24.6 billion ringgit) and ales of 72.3 million ringgit for the quarter ending June 30.
