Malaysia’s AirAsia X suggests paying 0.5% of $ 8.1 billion debt
AirAsia X (D7, Kuala Lumpur Int’l) called on its creditors to meet on November 12 to consider a restructuring proposal in which the low-cost long-haul carrier would pay just 0.5% of the debt owed to each of them and would terminate all existing contracts before any resumption of operations.
Having gained more time to organize the meetings, the airline revealed in a Bursa Malaysia file on October 18 that three virtual meetings would be held on November 12 for its 15 supplier and lessor creditors “for the purpose of reviewing and, if it was considered appropriate to approve, with or without modifications, the debt restructuring project according to the modalities detailed in the explanatory memorandum of the AAAX dated 18 October. These 15 creditors are:
- BOC Aviation;
- Airports in Malaysia;
- Macquarie AirFinance;
- Sky High leasing;
- KDAC Aircraft Holding 4;
- Jerdons Baza Leasing 1048 Designated activity;
- Jerdons Baza Leasing 1066 Designated activity;
- Jerdons Baza Leasing 1075 Designated activity;
- Lavender Leasing One;
- Lavender Leasing Two;
- BNP Paribas Singapore;
- AWAS 1533;
- AWAS 1549; and
In the 127-page explanatory memorandum, the AirAsia group subsidiary proposes a restructuring of 33.65 billion ringgits ($ 8.07 billion) in liabilities. “To avoid a liquidation and allow the airline to fly again, the only option is for AAX to undertake the proposed debt restructuring,” the airline said in the document, as seen by Reuters.
Half of the total liability is the cost of terminating aircraft orders from its main creditor, Airbus, for seventy-eight A330neo widebody and thirty A321neo widebody, according to the document. According to the advanced module of ch-aviation fleets, these are seventy-eight A330-900N and thirty A321-200NX (XLR). Its current fleet of twenty-two A330-300s, of which only three are owned and the rest leased to ten lessors, remains largely on the ground.
The carrier further committed to achieve annual profit in excess of MYR 300 million (USD 71.9 million) in its fiscal years 2023-2026 (before interest, taxes, depreciation and amortization (EBITDA) and rental charges and restructuring), then all creditors – with the exception of Airbus – would be entitled to 20% of those gains.
The 0.5% of the debt owed to each of the creditors would be paid out of operating income one year after the agreement to restructure the debt, says the explanatory memorandum.
Reuters reported a month ago that sources claimed that Airbus had agreed to reschedule delivery or cut prices for hundreds of planes ordered by AirAsia group airlines, a restructuring that restores relations between the two. companies.
AirAsia X remains in talks with lessors and other creditors on the business terms of the ongoing or future business relationship, according to the explanatory memorandum. To the lessors, he offered to continue to lease planes to him on new conditions or to accept the termination of the lease. Two lessors have indicated that they want to end the leases, according to the document.
On November 12, AirAsia X will need the agreement of creditors holding at least 75% of the total debt value in each of the three categories of creditors – one category per meeting on the day – to gain blanket approval for its proposal. restructuring. The three categories relate to suppliers, lessors and, third, Airbus, the largest creditor of all in terms of value. The carrier said several creditors have indicated they are in favor of the proposal. Airbus declined to comment on the process.
Following the debt restructuring, AirAsia X – of which AirAsia Group and its founders own approximately 43% – intends to raise MYR 500 million (USD 120 million) through a rights issue and subscription to ‘actions.