AirAsia Group’s low-cost long-haul subsidiary, AirAsia X (AAX), is reportedly proposing to repay 0.5% of its 33.65 billion Malaysian ringgit ($8.1 billion) debt owed to its creditors.
According to a document seen by Reuters on October 18, 2021, the cash-strapped airline stated that “to avoid liquidation and to allow the airline to fly again, the only option is for AAX to undertake the proposed debt restructuring”.
The airline has set a date of November 12, 2021 for creditor meetings to discuss the proposed terms of debt repayment and vote on restructuring plan.
On July 1, 2021, AirAsia X shareholders had approved the airline’s restructuring plan, marking a major milestone in the airline’s attempt to survive. However, in order to be approved, the plan needs approval from creditors holding at least 75% of the total value of the debt.
The airline’s latest financial results for April-June 2021 show a record quarterly net loss of 24.6 billion Malaysian ringgit ($5.9 billion) compared to a 305 million Malaysian ringgit ($73 million) loss during the same period in 2020.
The loss, which amounts to eight times higher, was attributed to an accounting provision of 23.8 billion Malaysian ringgit ($5.7 billion) to creditors.
“The contractual liabilities for which the provision is made will be waived upon a successful completion of the proposed debt restructuring exercise,” the airline outlined in a statement dated September 2021.