AirAsia X, the long-haul arm of AirAsia, is proposing a restructuring plan to facilitate an injection of fresh equity which will allow the airline to fly again. At the same time, it has also appointed Lim Kian Onn as deputy chairman to lead the restructuring.
The airline said in a statement that it is facing "severe liquidity constraints" to meet debt and other financial obligations with no imminent return to normalcy. The proposed plan includes a debt restructuring scheme, revision of the group's business plan, engagement with business partners and airline customer and travel agents.
The debt restructuring scheme involves a proposed debt settlement and waiver of debts involving unsecured creditors, aimed at enabling the group to address its debt obligations in an orderly manner and to arrive at a debt structure that is sustainable from future operating cash flows. AirAsia X will also look into route network rationalisation, aircraft fleet right-sizing, cost base overhaul and workforce optimisation, all of which are aimed at ensuring a leaner and more sustainable business going forward.
Meanwhile, the airline continues to engage all key business partners and hopes to enter into contracts, agreements and/or arrangements that are reflective and supportive of the airline’s revised business plan upon successful completion of the restructuring which is critical to the future viability of the business. Lastly, under the proposed scheme, AirAsia Unlimited Pass holders and guests with valid flight bookings will receive travel credits with extended validity for future travel or purchase of seat inventory.
The proposed restructuring plan and establishment of new contracts, agreements and/or arrangements based on terms to be agreed upon which are sustainable based on the group’s revised business plan is aimed to right-size the group’s level of operations and financial obligations, which is crucial to the Group’s continued existence in the aviation landscape.
"These exercises are pre-requisite for the raising of any fresh capital, comprising both equity and debt needed to implement the Group’s revised business plan," AirAsia X said.
It added that in the last two months, AirAsia X has had extensive discussions with all major creditors. Whilst there are varying degrees of support for the restructuring scheme as has been proposed, all of them have expressed strong support for a continuation of the airline business, it said.
AirAsia X CEO Benyamin Ismail said it has been extremely difficult for the airline during this period as it had to ground all scheduled flights, implement salary cuts and retrenchment for the first time in the company’s history as a consequence of the pandemic.
"Similar exercises are likely to continue during the restructuring process, but our focus is to ensure a successful restructuring to keep as many jobs as possible," he added.
Meanwhile, AirAsia Japan recently ceased operations on 5 October six years after it was incorporated in July 2014. Travel restrictions and the uncertainties it created have severely curtailed demand for business and leisure travel resulting in flight reductions, cancellations and grounding of aircraft. According to AirAsia, these factors have weighed heavily on the company's ability to continue operations.
Representative director and COO of AirAsia Japan, Jun Aida said: “Despite our unrelenting efforts to sustain operations through successive and wide-ranging cost reduction initiatives, we have concluded that it would be an extremely challenging feat for us to continue operating without any visibility and certainty of a post-pandemic recovery path.
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