KUALA LUMPUR: AirAsia X Bhd may have requested Airbus SE to cancel its aircraft orders without incurring any penalties as part of its proposed RM63.5 billion debt restructuring, analysts said.
The debt restructuring includes future lease rentals and aircraft purchase commitments, and estimated compensation or penalties arising from early termination of contracts.
They also said the debt proposal would need to be approved by at least 75 per cent of the total creditors (present and voting) or it would be deemed terminated.
AirAsia X had on Tuesday submitted proposals to Bursa Malaysia on restructuring RM63.5 billion of debts as well as debt waivers, termination of contracts with related parties and conversion of advance payment and placed deposits into travel credits to stave off liquidation.
MIDF Research said what was left right now was for AirAsia X's creditors to make a resounding decision on whether to accept or reject the proposals.
"The creditors could potentially come to an agreement on the terms but they would have to be content with recovering a minute fraction of their capital.
"Additionally, the earliest repayment is expected to be due in three years after the exercise. Should the proposals fell through, AirAsia X could potentially initiate liquidation proceedings and the creditors will end up losing everything (especially the unsecured lenders)," MIDF Research explained.
AirAsia X shares dropped 10 per cent yesterday, following the group-wide debt and corporate restructuring.
The stock lost 0.5 sen to close at 4.5 sen yesterday, after hitting an intrday low of 4.0 sen, for a market capitalisation of RM186.7 million.
On August 30 last year, AirAsia X had finalised a firm order with Airbus for an additional 12 A330neo and 30 A321XLR aircraft, for a combined value of over US$5 billion.
Delivery of the A330neo was expected to start in mid-2020 while the A321XLR was slated to begin in 2023.
The new contract increases the number of A330neo aircraft ordered by AirAsia X to 78 units, reaffirming the carrier's status as the largest airline customer for the type.
According to its 2019 annual report, AirAsia X had leased various aircraft and engines under non-cancellable operating lease agreements.
The lease terms were between six and 12 years, beginning 2018.
When contacted yesterday, AirAsia X chief executive officer Benyamin Ismail confirmed to the New Straits Times that the airline has 25 plane from 14 international aircraft lessors.
Bloomberg Intelligence transport analyst James Teo said the large amount of debt likely included aircraft purchase commitments, besides aircraft lease rentals and maintenance fees.
"The creditors could include aircraft manufacturers, lessors, maintenance service providers and banks," he told the NST.
Teo said creditors might not have much choice but to take a steep haircut on the debts owed, as they may get even less if the company was wound up and liquidated.
"AirAsia X is in a negative equity position as of June 30, 2020," he added.
Public Investment Bank Bhd said as at June 30 this year, AirAsia X had unaudited liabilities of RM10.3 billion, including RM6 billion secured borrowings.
"Majority of the borrowings are lease liabilities amounting to RM5.8 billion. Todate, the group remains in hibernation due to travel and border restrictions,' PublicInvest said today.
"We believe the debt restructuring exercise is needed to address its stretched cash flow and current liquidity constraints, though the significant haircut expected to be assumed by its creditors may be a sticking point," it added.