AirAsia X 'out of money'
Indonesian unit to be liquidated but fresh shareholder equity essential for survival
KUALA LUMPUR: The long-haul budget carrier AirAsia X Bhd has run out of money and needs to raise up to 500 million ringgit (US$120 million) to restart the airline, according to deputy chairman Lim Kian Onn.
The Malaysia-based affiliate of AirAsia Group said this month it wanted to restructure 63.5 billion ringgit ($15.3 billion) worth of debt and slash its share capital by 90% to continue as a going concern.
“We have run out of money,” Lim said in an interview with The Star newspaper of Malaysia. “Obviously, banks will not finance the company without shareholders, both old and new, putting in fresh equity. So, a prerequisite is fresh equity.”
He said the airline had actual liabilities of 2 billion ringgit, with the larger figure of 63.5 billion ringgit including all lease payments for the next eight to 10 years and its large order for Airbus planes and contracted engine maintenance with Rolls-Royce.
“If we find 300 million ringgit in new equity, then the shareholder funds are 300 million at the restart of business and if we are able to borrow 200 million ringgit, we feel that we will have a good platform to start all over again,” Lim told The Star.
He said AirAsia X also needed to convince its lessors of its business plan, adding that an unnamed lessor recently took back one of the airline’s planes to convert it to a freighter.
The airline plans to liquidate its small Indonesia-based carrier and has completely written down its stake in Thai AirAsia X, with the Thai carrier not part of the restructuring scheme, Lim told the newspaper.
Rival Malaysia Airlines is also in financial trouble, but Lim said there would be “no good outcome” from seeking to merge two airlines in dire straits.
AirAsia X declined to comment beyond the details published in the newspaper article.
Initial negotiations with creditors have been tough as they are understandably upset, Lim said in the interview. They had asked for better terms, including free equity for forgiven debt — something that would be impossible for the airline to fulfill, he added.
Still, Lim said all of them genuinely wanted to find a common ground to take the airline forward. “No one has anything to gain from our demise,” he told the newspaper.
The airline is planning to resume flights in the first quarter of 2021, though the process remains “dynamic”, said Lim. Should the rescue plan get approval, the company will have to renegotiate every single contract and will do its best to look after all stakeholders’ interests, he said.