KUALA LUMPUR (Nov 12): AirAsia X Bhd (AAX), which held three separate meetings with its scheme creditors on Friday (Nov 12) to vote on its plan to restructure RM33.65 billion of debts, received 99% support from creditors who voted in favour of the scheme.
Upon the completion of the exercise, AAX will be among the few airlines worldwide that have no gearing and a restructured cost base that is significantly below that of its competitors.
AAX had to get support from creditors holding at least 75% of the total debt value in each of three classes. The total amount owing to the three classes of creditors stood at RM33.65 billion.
Class A creditors (which include airport operator Malaysia Airports Holdings Bhd and financial institutions) and Class C creditor (namely Airbus Group) creditors gave 100% support to the scheme, while Class B creditors that include those with unsecured claims against AAX such as engine suppliers and aircraft lessors, gave 97.6% support.
Shares in AAX were up 1.5 sen or 25% at 7.5 sen, valuing the long-haul carrier of cash-strapped AirAsia Group Bhd at RM285.19 million, and it will be in an excellent position to capture leisure travel and cargo opportunities post Covid-19 pandemic.
In a statement on Friday, AAX said the overwhelming and near-unanimous support from its creditors will be presented for a court sanction in the coming weeks.
“Once approved, the airline will embark on its recapitalisation, which was approved by its shareholders in June 2021. Completion is expected in the first quarter of 2022, after which the airline will be well poised to compete very effectively in the markets where it will operate. AAX wishes to thank all its creditors for their strong support for its future in these very difficult times,” it said.
In October last year, the carrier proposed to reconstitute RM63.5 billion of its debts into an acknowledgement of indebtedness for a principal amount of up to RM200 million by shaving off 99.9% of its issued share capital, as well as a proposed share consolidation of every 10 existing shares in AAX into one share. The RM63.5 billion figure was reduced to RM33.65 billion after a proof of debt exercise conducted by AAX to determine and finalise the list of scheme creditors and the value of their scheme amount.
Following the debt restructuring, it is also proposing a renounceable rights issue of new shares to raise gross proceeds of up to RM300 million from its existing shareholders, as well as a proposed issuance and allotment of new AAX shares to raise another RM200 million.
For the 18-month financial period ended June 30, 2021, AAX had negative shareholders’ funds of RM31.53 billion and its current liabilities of RM32.65 billion exceeded current assets of RM390 million by RM32.26 billion. Its accumulated losses stood at RM33.06 billion.
“When the scheme was initially announced in October 2021, it was comprehensively rejected and widely derided as being wholly inadequate and unreasonable,” AAX noted.
“However, through a process of many transparent discussions on our business plan and alignment of common business interests, all major creditors have agreed that the combined interests of the various groups of stakeholders are best served by allowing the airline to proceed with the scheme intact and without substantial changes to what was initially presented.
“Through an aggressive process of cost containment and seeking of alternative sources of revenue, the cash burn in the 10 months year to date to October 2021 was a total of RM34 million, which worked out to a monthly cash burn of only RM3.4 million or US$800,000,” the airline said.
AAX co-founder and director Tan Sri Tony Fernandes added: “We wish to assure all passengers affected by the restructuring that it is the firm intention of AAX to put in place travelling privileges in the form of travel credits, which can be utilised for future purchases of flight tickets once international borders reopen."