AirAsia X: Income statement loss primarily attributable to assets impairment

An AirAsia logo is pictured at the ticketing counter at Changi Airport in Singapore, December 29, 2014. — Reuters pic
An AirAsia logo is pictured at the ticketing counter at Changi Airport in Singapore, December 29, 2014. — Reuters pic

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KUALA LUMPUR, May 20 — AirAsia X Bhd (AAX) has clarified that its income statement loss is primarily attributable to the impairment of assets, which is made in accordance with the accounting standards issued by the Malaysian Accounting Standards Board.

In a statement today, the long haul low-cost carrier said the relevant adjustments were required in the context of the current operating environment and the ongoing restructuring process.

“Under the applicable standards, the assets are deemed impaired but the liabilities associated with those assets currently remain contractually payable and therefore remain on the balance sheet.

“This impairment of assets does not impact the restructuring process that the company is currently undertaking and appropriate accounting entries will be made on a successful restructuring that will reflect more appropriately the assets and liabilities based on the final agreed restructuring terms,” it said.

The airline said AAX and its restructuring advisers, New York-based Seabury Capital, have been in active discussions with lessors and other creditors in the two months post the court convened meeting (CCM) court decision with an outcome targeted in the next few weeks.

It said as announced on May 7, 2021, AAX would be holding an extraordinary general meeting (EGM) on June 1 for shareholders to vote on the scheme.

“The CCM will be held in the third quarter for creditors to similarly vote on the restructuring scheme,” it said.

It said AAX remain committed to resume commercial operations as soon as possible on a successful completion of the restructuring plan and the opening of international borders.

Meanwhile, in a filing with Bursa Malaysia, the airline said there would be no comparative financial information available for the preceding year corresponding periods due to the change of its financial year end to June 30, 2021 from Dec 31, 2020.

It said for the quarter ended March 31, 2021, the airline recorded a net loss of RM5.67 billion while revenue stood at RM38.49 million.

On prospect, it said AAX have sought payment deferrals and concessions from its suppliers, lessors and lenders and reduced capital expenditure wherever possible in order to maintain liquidity during these challenging times.

It said salary reductions have been implemented across all levels of the company apart from the most junior staff, and headcount has been reduced by 10 per cent with further reductions planned, primarily in the flight operations related functions.

AAX said it has also restructured a major portion of its fuel hedges and still in the process of restructuring the remaining exposure.

“We have applied for bank loans to improve liquidity and have commenced bilateral negotiations with our aircraft lessors and maintenance partners to significantly reduce the operating cost base of the company. This process is ongoing,” it said.

It said in the current circumstances, the airline would continue to seek additional liquidity and work towards a material reduction of the company’s cost base to enable AAX to continue as a going concern in the post-Covid-19 environment when overall demand for international air travel is expected to be significantly below the level of 2019 and previous years. — Bernama

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