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AirAsia X Wants to Pay Back a Fraction of Its Debt and Terminate Contracts

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Jamie Freed and Liz Lee, Reuters


AirAsia X Bhd (AAX) is proposing to pay just 0.5 percent of debt owed to each of its creditors and to terminate all existing contracts so that it can restructure $8.1 billion of liabilities, a document seen by Reuters shows.

The Malaysian low-cost long-haul airline, a sister carrier to cash-strapped AirAsia Group Bhd, said in a stock exchange filing on Monday it had set a date of Nov. 12 for creditor meetings to vote on the restructuring proposal.

“To avoid a liquidation and to allow the airline to fly again, the only option is for AAX to undertake the proposed debt restructuring,” the airline said in a 127-page explanatory statement for the creditors meeting seen by Reuters.

Half of the total liability is the cost of terminating airplane orders from its largest creditor Airbus SE for 78 A330neo widebodies and 30 A321neo narrowbodies, the document said.

AAX also proposed that if it were to garner more than $72 million in annual earnings before interest, tax, depreciation and amortisation, lease rentals and restructuring costs during its 2023-2026 financial years, all creditors except Airbus would be entitled to 20 percent of those earnings.

It is one of many carriers in the Asia-Pacific region to have entered a court-overseen debt restructuring process to survive the pandemic. Others include Malaysia Airlines, Virgin Australia, Thai Airways and Philippine Airlines.

The 0.5 percent of debt owed to each creditor will be paid from operating cash flow one year after the debt restructuring goes into effect, the airline said in the document.

AAX also said it is in negotiations with lessors of 29 planes and certain other creditors on commercial terms for continued or future business relationships.

It is giving lessors the option of continuing to lease planes to AAX on new terms or to accept the termination of the lease and have the relevant planes returned. Two lessors have already indicated they want to terminate the leases, AAX said in the document.

The airline added its scheme aims to arrive at a business and debt structure which is sustainable and to strengthen the group’s financial position.

To gain approval for its proposal, AAX needs agreement from creditors holding at least 75 percent of the total debt value in each of three classes of creditors.

Airbus, which on its own forms one creditor class, declined to comment, citing the ongoing restructuring process.

AAX said several other creditors, including suppliers and lessors, had already indicated they were in favour of the proposal. AAX CEO Benyamin Ismail in September told Reuters that all creditors had indicated they want to see the airline proceed with its restructuring.

The airline plans to raise $120 million after its debt restructuring through a rights issue and share subscription.

AirAsia and its founders own some 43 percent of AAX. AirAsia this month reached a deal with Airbus to restructure an order for 362 narrowbody planes. It has also received approval from Malaysia’s only financial guarantee issuer for a loan of up to $120 million with an 80 percent government guarantee.



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1 hour ago, A345_Leadership said:

Pagar 0,5% é melhor fechar a empresa.

A Air Asia X é megalomania de Tony Fernandes, enquanto isso a Air Asia Thailand está propondo vaquinha para levantar capital.

Vão desistir doa 78 A330neo?

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  • 4 weeks later...

AirAsia X creditors agree to take 99.5% haircut
Long-haul carrier wins approval for drastic debt restructuring plan

P PREM KUMAR, Nikkei staff writer
November 12, 2021 19:22 JST

KUALA LUMPUR -- Creditors of budget carrier AirAsia's long-haul sister airline have approved a debt restructuring arrangement that proposes paying 0.5% of the debt owed and disbanding all existing obligations.

The creditors -- airports, aircraft manufacturer Airbus, passengers and travel agents -- approved the restructuring of $8.1 billion in liabilities, AirAsia X said in a statement on Friday.

The proposal was widely criticized and labeled as wholly inadequate and unreasonable when announced last month. If it had failed, AirAsia X would have faced liquidation followed by an equity raising of 500 million ringgit ($120 million).

But AirAsia X said it managed to change negative perceptions of the deal through "transparent discussions on our business plan and alignment of common business interests." Like many Asian carriers, the airline's finances were severely affected when countries more than a year and a half ago began closing borders in attempts to keep the coronavirus at bay.

"This overwhelming and near-unanimous support will be presented for court sanction in the coming weeks," AirAsia X said.

"Once approved, the airline will embark on its recapitalization which was approved by its shareholders in June 2021," it went on. "[C]ompletion 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."

Shares of AirAsia X, owned by tycoon Tony Fernandes, rose as much as 33% on Friday, to 0.08 ringgit. The airline was recently placed under Practice Note 17 by the Malaysian stock exchange. When financially distressed companies are put under this note they are given a year to restructure and revive, or else lose their listing status.

Sources close to the company told Nikkei Asia that more than half of AirAsia X's liabilities are to Airbus. They were incurred by terminating orders for 78 A330neo wide-bodied and 30 A321neo narrow-bodied jets, according to the sources.

According to Reuters, which saw the restructuring document, 0.5% of the debt owed to each creditor will be paid from operating cash flow one year after the debt restructuring goes into effect.

Reuters also reported that all creditors except Airbus would be entitled to 20% of the airline's annual earnings between 2023 and 2026 if they hit 300 million ringgit before interest, tax, depreciation and amortization, lease rentals and restructuring costs.

In the AirAsia X statement, Fernandes said the debt restructuring would not jeopardize the carrier's relationship with business partners and supporters, particularly passengers.

"We wish," he said, "to assure all passengers affected by the restructuring that it is the firm intention of AirAsia X to put in place traveling privileges in the form of travel credits, which can be utilized for future purchases of flight tickets once international borders reopen."


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O problema é que a Asia continua predominantemente fechada e sem previsão de reabrir de maneira significativa.

Só a Tailandia começou a dar seus primeiros esboços de reabertura.

É preciso que Vietnam, Indonesia, Singapura, Malaysia, Hong Kong e Filipinas reabram.

A China a gente já sabe que não vai reabrir tão cedo.





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