AirAsia X Receives Over 90% Support From Creditors for Debt Restructure

(Bloomberg) -- AirAsia X Bhd.’s debt-restructuring proposal received more than 95% support from creditors in meetings Friday as the debt-laden budget carrier tries to stay afloat. 

The airline received full support from two classes of creditors on its proposed debt restructuring and 97.6% from the third group, it said in separate statements to the Malaysian stock exchange. AirAsia X needed at least 75% support from each class of creditors, which include Airbus SE, BOC Aviation Ltd. and Rolls-Royce Holdings Plc. 

As part of the deal, Airbus has agreed to reduce AirAsia X’s orders to 15 A330neos and 20 A321XRLs, an AirAsia X spokesperson said. The airline was the world’s biggest customer for the wide-body A330neo, with 78 on order, according to the French planemaker’s website. It also had an order for 30 of the narrow-body A321XRL jets.

Shares of AirAsia X jumped as much as 33%. Airbus said in a statement that this is “another example of how we have worked with customers to find solutions to adapt to the impact of the pandemic.”

AirAsia X, part of AirAsia Group Bhd., Southeast Asia’s second-biggest low-cost carrier, embarked on the restructuring last year as Covid-19 wiped out travel demand and thousands of planes were grounded globally. With the creditor agreement, which will take the airline’s gearing levels to zero and allow it to start with a clean slate, AirAsia X is betting its financials will improve as countries in Asia start to reopen to travel. 

AirAsia X recently offered to pay creditors 0.5% of the more than $8 billion total debt they’re owed and terminate all existing contracts. That would help it avoid a delisting from the Malaysian stock exchange after being officially categorized as a financially distressed company. 

The carrier was declared financially distressed late last month after its auditor Ernst & Young issued a disclaimer of opinion about its financial results for the 18-month period ended June. The accounting firm cited threats that cast “significant doubt” on AirAsia X continuing as a going concern. AirAsia X said it has a year to recast its finances.

The airline was already struggling before the pandemic, posting losses for six out of seven quarters through December 2019. It reported a net loss of 24.6 billion ringgit ($5.9 billion) for the three months ended June 30, with sales of 72.3 million ringgit.

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