AirAsia Group Bhd.’s long-haul unit has proposed to pay creditors just 0.5% of the more than $8 billion total debt they are owed and cancel all present contracts as it seeks to restructure, a report seen by Bloomberg shows.
AirAsia X Bhd. told creditors it could not meet instant debt and other financial responsibilities based on its fiscal situation and industry outlook. The low-cost airline has hardly flown in 19 months since the early days of the COVID-19 pandemic. Half of the 36.6 billion ringgit ($8.1 billion) liability is the cost of terminating orders with Airbus SE, its largest creditor, for 78 A330neo and 30 A321neo aircraft, according to the document.
“To avoid a liquidation and to allow the airline to fly again, the only option is for AAX to undertake the proposed debt restructuring, proposed corporate restructuring and proposed fundraising and update its business model to survive and thrive in the long term,” the airline said.
An Airbus spokesperson refused to comment, referring to the continuing debt restructuring process. An AirAsia X spokesperson refused to comment.
According to an exchange filing, AirAsia X has set November 12 for creditor meetings to vote on the restructuring proposal. Reuters first published the proposed payment plan earlier Monday. The carrier posted a record quarterly net loss of 24.6 billion ringgit in the three months ended June, mainly on provisions for the amount payable to creditors. Its shares fell 5% to 9.5 sen at the close.