Jamie Freed, Liz Lee

KUALA LUMPUR – AirAsia X Bhd.(AAX) proposes to repay 0.5% each of its creditors, and to end all current contracts to restructure 33.65 Bn Ringgit ($8.1B) of liabilities.

Malaysia’s low-cost, long-haul carrier, AirAsia Group Bhd was a brother airline to AirAsia Group Bhd. It told the stock exchange on Monday that it had given a Nov. 12 date for creditors to meet to discuss the restructuring plan.

“To prevent liquidation, and allow the airline fly again,” the airline declared in a 127-page explanation statement that was being sent out to creditors.

According to the document, half the total liability is for terminating orders of Airbus SE (OTC), its largest creditor Airbus SE. This applies to 78 A330neo Widebodies and 30 A321neo Narrowbodies.

AAX proposed that all creditors, except Airbus, would receive 20% of the earnings if they were to earn more than 300m ringgit ($72million) annually in earnings before interest tax, depreciation, amortisation and amortization during their 2023-2026 financial year.

This is among many airlines in Asia Pacific that have successfully completed a court order-overseen debt restructuring to survive the pandemic. Other carriers include Virgin Australia, Malaysia Airlines, Thai Airways, Philippine Airlines and Virgin Australia.

According to the document, 0.5% of each creditor’s debt will be paid out of operating cash flow within one year following the restructuring.

AAX stated that it was in discussions with 29 lessors, as well as certain creditors regarding commercial terms to continue or improve business relationships.

Lessors have two options: to continue to lease aircraft to AAX under new terms, or accept termination and return the planes. Two lessors indicated that they would like to terminate their leases. AAX stated this in the document.

It added that the scheme’s goal was to create a viable business and debt structure, and strengthen the company’s financial position.

AAX must get approval from all creditors with at least 75% in each of its classes of creditors to approve the proposal.

The airline plans to raise 500 million ringgit https://www.reuters.com/article/airasia-x-fundraising-idUSL1N2IU0SV after its debt restructuring through a rights issue and share subscription.

($1 = 4.1560 ringgit)