AirAsia X, a long-haul subsidiary of AirAsia Group, announced its $15.3 billion debt restructuring scheme as a measure to escape liquidation following unsuccessful attempts to meet its financial obligations.

Malaysian airline proposed a restructuring plan after its obligations exceeded assets by $480 million, the air carrier announced on October 6, 2020.

AirAsia X stated that in order to stabilize liquidity, it sought to restructure $15.3 billion of its debt, which is owed to creditors and passengers who had made payments for flights in advance. The airline stated that the restructuring scheme involved debt reducing as well as overhauling the route network, cost base, employees, and the fleet size.

“To avoid 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,’’ announced AirAsia X in the statement.

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AirAsia X considered converting a part of its debt into advance payments as well as deposits for tickets into travel credits for future travel. The airline seeks to review its network and shift focus only on sustainable routes while dropping or suspending the operations to unprofitable destinations.

The Malaysian carrier expects that the debt restructuring would help to raise fresh equity and debt that is required in order to restart operations.

As an additional measure, the air carrier also proposed to reduce its issued share capital by 90%. The airline decided to consolidate every 10 existing ordinary shares into one share.