KUALA LUMPUR – It is confirmed: AirAsia X Bhd (AAX) will not be delisted or go private, said its deputy chairman Datuk Lim Kian Onn.
This follows the budget airline’s focus to restructure the company and raise new capital amounting to RM500 million, which is necessary as it has yet to receive any external financial support.
It has proposed a renounceable rights issue of new shares to raise gross proceeds of up to RM300 million from its existing shareholders, as well as a proposed issuance and allotment of new AAX shares to raise another RM200 million.
“If you look at the court documents that we submitted, there’s a whole list of investors who have expressed interest in investing.
I am also one of those investors who will put in money into the company, but probably at this point in time I won’t go into names, and just say that there is a fair amount of interest.
“I am in Singapore now and I have just come back from lunch with a party we are doing business with. They’re interested to put money in so I don’t think it’s a major issue now that the airline has been cleaned up,” Lim said in an exclusive interview with The Vibes.
Also present was AAX chief executive Benyamin Ismail.
On October 30, The Malaysian Reserve reported that AAX has officially been categorised as a financially distressed company, giving it a year to restructure its finances or risk losing its Malaysian listing.
AAX in a stock exchange filing said its external auditor Ernst & Young issued a disclaimer of opinion on the airline’s audited financial statements for the 18-month period ended June this year.
“The company is taking the necessary steps to address its PN17 (Practice Note 17) status,” AAX said in a separate filing, adding that it has one year to regularise its financial condition, failing which, it will be delisted from the stock exchange.
How much does AAX owe creditors?
On the amount owed to creditors, Lim said it can be broken down into three components – accrued liability totalling RM4 billion, crystalised liability amounting to RM64 billion, and the mitigated amount of RM33 billion.
“The real amount owed is RM4 billion – that’s the figure that should really be addressed. The bulk of it is to Airbus (and) Rolls-Royce; RM500 million or so is owed to passengers.
“Meanwhile, 99% of creditors have agreed to write off the amount owed,” Lim said.
AAX’s creditors – despite many being owed vast sums – voted overwhelmingly on November 12 to give the budget airline the opportunity to survive and recover stronger.
“Similarly, it is in the best interest of our passengers to allow us to fly again so that we are in a position to honour their travel credits with us.
“Put simply, the alternative is that everyone loses without any chance of recovery of what is owed if we are not successful in this restructuring.”
Benyamin chipped in on the issue of whether Putrajaya has been supportive of the airline’s recovery efforts. He said the government should consider increasing the frequency of flights to Sarawak because limiting them will increase the price of tickets.
“We are lobbying for Kuching now. The government, in restricting the number of flights to Sarawak, makes the tickets expensive – so it doesn’t make sense, right?
“So they’re listening, and it takes them time to digest (the matter) and put it into policy,” Benyamin said.
He, however, thanked the government for being supportive thus far and listening to AAX’s request to do away with certain requirements that restrict its planes’ passenger capacity.
“The government has been very supportive for a while for the markets to open, but I think it has approached it the right way to make sure people are vaccinated.
“(The government) is willing to listen as long as we make sense, like in the case where it was enforcing social distancing on aircraft that included a requirement to have one seat empty in the middle.
“But we justified it, saying if you hold airlines to that, we won’t be able to make money. How can you fly a half-empty aircraft? So, it listened and allowed us.”
Operating under siege mentality
Asked on when the airline would see a full recovery, Lim said in jest: “We operate under a siege mentality all the time, so our answer is no, never, as there is always something that challenges us.”
The airline’s priority now is to comprehensively restructure and recapitalise, so it can operate again as one of the world’s leading low-cost medium-haul operators.
Benyamin said in rebuilding a solid platform for a sustainable and viable future so that new investors will be prepared to inject new capital into the company, the company will have to reset the network.
We are looking at routes that are very profitable. Secondly, we are focusing more on cargo. Cargo has never been our focus in the past – now with the current demand that we see, we will be flying a lot of cargo flights with passengers.
“Our three-pronged approach – and part of the restructuring – is we have negotiated a lot of new contracts with lessors. Lessors are people who lease planes to us, so we’ve managed to reduce the cost load,” said Benyamin, adding that the airline is now operating five flights to Sydney.
He said the airline will re-emerge in the market when the borders are opened as there is no point in flying empty aircraft.
Countries that remain closed include Australia, Japan, South Korea, Taiwan, and China.
“We want to do what we were doing before. The only difference is, we won’t have as many aircraft as we used to during the pre-Covid-19 days. We currently have 15 planes, compared with before when we were flying 24 planes,” Benyamin said, noting that the company foresees business picking up within a year.
Meanwhile, Benyamin said the company is engaging with the Transport and Health Ministries to relook the “harsh” guidelines requiring local and foreign aircrew to undergo Covid-19 screening upon arrival – which does not augur well for the country, especially when Malaysia is set to reopen its borders.
“We are lobbying so that it doesn’t happen, because we are fully vaccinated. So, it is up to the Transport Ministry to decide for us, as we just want to control the destiny of our crew and not put them through unnecessary quarantine. Discussions started on November 21 and after that, we will go to the Health Ministry (MoH).”
It was reported by The Edge that several foreign airlines are deferring plans to reinstate their flights to Malaysia following a requirement for local and foreign aircrew to undergo fever screenings and Covid-19 RTK-Ag tests.
According to the report, if a crew member tests positive, they will need to undergo seven days of self-quarantine in the country or until the next scheduled flight.
Currently, aircrew are not required to take RTK-Ag tests upon arrival.
The Edge also reported that foreign aircrew – including pilots, cabin crew, and engineers – will need to take Covid-19 tests every time they arrive in Malaysia, which may take up to two to three hours.
The latest guidelines by MoH are said to have come into effect on November 21.
At yesterday’s market close, AAX’s share price settled unchanged at 7.5 sen, giving the company a market capitalisation of about RM311.11 million after 68.927 million shares changed hands. – The Vibes, November 26, 2021
Additional reporting by A. Azim Idris
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