AirAsia X Writes Back RM33bil to Profit?

AirAsia X (“AAX”) said on 16 March 2022 it had completed its debt restructuring, and will write RM33bil back to profits in the next quarter.

Under the airline's restructuring proposal, it would pay just 0.5% of debt owed and end its existing contracts. It was approved by its creditors and the High Court of Malaya in 2021. The restructuring was proposed to avoid liquidation after the long-haul low-cost airline posted a record quarterly loss last September. It is one of many carriers in the Asia-Pacific region to have entered a court-overseen debt restructuring process to survive the pandemic.

Social media users expressed frustration over low cost carrier AirAsia X Bhd’s proposal to pay only 0.5% of RM33 billion debt owed to each of its creditors and passengers. That works out to just 5 sen for every RM10 and RM50 for anyone who had bought tickets for RM10,000. 

Source: https://www.airasia.com

For first half of 2021, MAVCOM said of the complaints received, 41.4% of that total was against AirAsia, 28.7% on MAS and 12.1% for Malindo Air.

By 2026, AirAsia Group aims to connect more than 1 billion passengers in Southeast Asia via its aviation unit, which is expected to include a new joint venture airline after restructuring the firm into an investment holding company called Capital A.

Capital A chief executive Tony Fernandes said because AirAsia's load factor and flights in the fourth quarter posted record highs, its furlough policy is expected to be terminated shortly.

One social media user called Retweeter said the move was unfair to other businesses as the move is to prevent liquidation of the company.

Could I could take huge loans/mortgages & just pay 0.5% to my lenders... not going to happen for an ordinary person? Now every creditor can enjoy 0.5%!

Isn’t this exercise of write-down/restructuring like a sleight of the hand by David Copperfield? The losers are the creditors! How could they settle for 0.5%? Shareholders are in a great position, to reap the benefit from future cash flows.

The missing link in the restructuring is the RM500 million facility to be guaranteed by Danajamin. Will Danajamin issue their guarantee without the principal shareholders commitment or guarantee? No ordinary company or person could do this “magic”! Don’t try it at home!

References:

AirAsia X completes debt restructure, to write back RM33bil to profit, The Star, 16 March 2022

AirAsia eyes 1bn flyers by 2026, Dusida Worrachaddejchai Bangkok Post, 29 January 2022

Fury over 0.5% payment to AsiaAsia X passengers, creditors, FMT Reporters, FreeMalaysiaToday, 21 October 2021