KUALA LUMPUR, Nov 15 — Shares of AirAsia X Bhd (AAX) were flat at 7.5 sen today amid the approval of its proposed debt restructuring by the scheme creditors.
At 10.33am, total shares’ volume of the low-cost airline stood at 46.90 million unit.
AAX creditors have agreed to a restructuring that will see it receive just 0.5 per cent of debts owned, and its existing contracts cancelled.
AAX has also reached a deal with Airbus to reduce its order for 78 A330neo widebody planes and 30 A321XLR narrowbodies to 15 and 20, respectively.
The 0.5 per cent of debt owed to creditors will be paid from operating cash flow one year after the restructuring goes into effect.
The low-cost airline also proposed that if it were to garner more than RM300 million in its annual earnings before interest, tax, depreciation and amortization, lease rentals and restructuring costs during the 2023-2026 financial years, all creditors except Airbus would be entitled to 20 per cent of those earnings.
Public Investment Bank, in a note, said this was undoubtedly a very positive development for the group and shareholders, very much less so for creditors of all forms.
“We upgrade our call on AAX to ‘neutral’, and we keep valuations and financial forecasts under review.
“However, pending a meeting with management, though we note upsides now appear to be more encouraging following this successful debt restructuring and recapitalisation exercise with RM500 million in new equity funding coming in to provide sufficient capital to restart its operations when international borders reopen,” it said.
The research house said it expects demand for international air travel to pick up as countries continue to loosen travel restrictions, such as in the United Kingdom (only a pre-booked lateral flow test before the end of day two of passengers’ arrival).
“The US’ reopening to vaccinated international travelers this month should also contribute to increase international air travel.
“For Malaysia, the National Recovery Council has proposed the country’s borders to be reopened to foreign visitors on Jan 1, 2022 to countries with high vaccination rates, boding well for AAX,” it added. — Bernama