KUALA LUMPUR (Businesshala) – AirAsia X (AX) creditors have agreed to a restructuring that will pay just 0.5% of outstanding debt and terminate its existing contracts, Malaysian long-haul low-cost airline said on Friday. .
AAX said the first of the three groups of creditors voted 100% in favor of a plan to restructure 33.65 billion ringgit ($8.1 billion) of liabilities and the second 97.6% voted in favor.
The last group, which includes plan maker Airbus, also voted 100% in favor of the plan. AAX required 75% of each of the three classes of creditors to approve the plan to proceed.
Shares of AAX jumped 33% to their highest level since November 1 following the announcement.
AAX said the results would be submitted for court approval in the coming weeks after which it would begin the recapitalization, expected to be completed in the first quarter of 2022.
The airline said that post restructuring, its cost base will be significantly lower than that of regional competitors.
Last month, the airline warned of liquidation if creditors did not agree to the plan, after which 500 million ringgit equity would be raised.
It is one of several carriers in the Asia-Pacific region that has entered into a court-monitored debt restructuring to avoid the pandemic. Others include Malaysia Airlines, Virgin Australia, Thai Airways and Philippine Airlines.
The first category of AAX creditors include airports, financial institutions and maintenance providers, a 127-page explanatory statement for the meeting of creditors seen by Businesshala shows.
The second class includes engine suppliers, lessees, business creditors, travel agents and passengers, the document said.
The document states that half of the airline’s total liability is the cost of liquidating airplane orders from Airbus for 78 A330neo widebodies and 30 A321neo narrowbodies. A person with knowledge of the matter said that AAX has decided to reduce its orders to 15 A330neos and 20 A321XLRs.
Airbus did not immediately respond to a request for comment.
AAX also said it is in talks with the lessees of the 29 aircraft and some other creditors for continuing or future business relationships on commercial terms.
The airline said in the document that 0.5% of the debt on each creditor will be paid out of operating cash flows for one year after the restructuring takes effect.
AAX also proposed that if it were to achieve more than 300 million ringgit in annual income before interest, taxes, depreciation and amortization, lease rentals and restructuring costs during its 2023-2026 fiscal years, all except Airbus Creditors will be entitled to 20%. those earnings.