KUALA LUMPUR (Oct 10): With no signs of travel normalising soon, AirAsia X Bhd (AAX) and Malaysia Airlines Bhd want creditors to share the pain, as the two airlines make a last-ditch attempt to convince their creditors to agree to take haircuts on their debt.

The next few weeks will be crucial for the two airlines — whether or not they stay in the air will depend on them getting their creditors holding 75% of the total debt to say yes — the threshold that is required by the Companies Act.

On Oct 2, Malaysia Airlines, with AAX following suit on Oct 6, announced plans to restructure their outstanding debt to avoid liquidation.

AAX is asking its unsecured creditors to take a whopping 99.7% haircut on its RM63.49 billion debt or get nothing at all.

Malaysia Airlines, meanwhile, is going to the negotiation table with its creditors to restructure RM16 billion worth of debt against a backdrop that there would be no federal bail-out. Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz has repeatedly said that the government will not inject any more funds into Malaysia Airlines and that it is up to the national carrier's sole shareholder Khazanah Nasional Bhd to sort it out.

The airlines have warned that without majority support from their creditors, they could be forced to default on their debt and consider liquidation.

Will the creditors cave in?

In the latest issue of The Edge, we also spoke to Malaysia Airlines group CEO Captain Izham Ismail on its proposed restructuring theme and what its Plan B entails.

Read more about it in The Edge weekly’s Oct 12 edition.

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