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Malaysian Tycoon Tony Fernandes’ AirAsia X Creditors Approve Debt Restructuring Plan

By News Creatives Authors , in Billionaires , at November 14, 2021

AirAsia X—the long-haul subsidiary of Malaysian tycoon Tony Fernandes’ AirAsia Group—said Friday 99% of its creditors approved its debt restructuring plan as the cash-strapped budget carrier seeks to stay afloat amid a pandemic-induced travel slump.

Under the plan, AirAsia X offered to repay just 0.5% of its over $8 billion debts to creditors and to terminate contracts with suppliers. As part of the deal, Airbus said it agreed to reduce the airline’s aircraft orders to 15 A330neo widebodies (down from 78) and 20 A321XLR narrowbodies (from 30).

AirAsia X said it expects to complete the restructuring—which also entails raising as much as $150 million in fresh equity through a rights offering and a secondary share sale—by the first quarter of 2022.

The completion of the restructuring plan will help the airline avoid being delisted from the Malaysian stock exchange. It was declared as a financially distressed company last month when auditor Ernst & Young qualified its accounts, risking a possible delisting if the financial condition doesn’t improve within 12 months.

“This wide and deep reset is required to provide the desired platform to rebuild the business,” AirAsia X said in a statement on Friday. “With the completion of this exercise, AirAsia X will be one of very few airlines worldwide that has no gearing and a restructured cost base that is significantly below that of its competitors in the region and will be in an excellent position to capture leisure travel and cargo opportunities post-Covid.”

Airlines are among the hardest hit by the Covid-19 pandemic as countries around the world closed their borders to contain the virus. AirAsia X has been negotiating the return of aircraft to lessors amid mounting losses, which had reached almost 34 billion ringgit ($8.2 billion) in the financial period ended June 30.

The airline is among several affiliates of Malaysian budget carrier AirAsia Group in the region. The group, which also includes airlines in Thailand and Indonesia, has been pivoting into digital businesses as Covid-19 travel restrictions drag passenger and cargo traffic lower.

Last week, AirAsia appointed Colin Currie—a former managing director of Adidas in the Asia Pacific—as chief commercial officer to help accelerate the growth of the group’s digital business. The airline targets 50% of total revenues coming from the digital businesses by 2025.

Fernandes and his business partner, Kamarudin Meranun, took over AirAsia in 2001 to build a low-cost carrier that would make air travel affordable. Fernandes—who dropped out of this year’s ranking of Malaysia’s 50 richest people—also has interests in hospitality, insurance and education.

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