AirAsia X (AAX) is pleased to announce that at the Scheme of Arrangement (SOA) meetings held today, creditors in each of the three classes voted to support the SOA with the following majority:
- Class A: 100.0%
- Class B: 97.6%
- Class C: 100.0%
Across all three classes, 99.0% of all creditors voted in favour of the scheme.
This overwhelming and near unanimous support will be presented for court sanction in the coming weeks. Once approved, the airline will embark on its recapitalisation which was approved by its shareholders in June 2021. Completion is expected in the first quarter of 2022 after which the airline will be well poised to compete very effectively in the markets where it will operate.
AAX wishes to thank all its creditors for their strong support for its future at these very difficult times. When the scheme was initially announced in October 2021, it was comprehensively rejected and widely derided as being wholly inadequate and unreasonable. However, through a process of many transparent discussions on our business plan and alignment of common business interests, all major creditors have agreed that the combined interests of the various groups of stakeholders are best served by allowing the airline to proceed with the scheme intact and without substantial changes to what was initially presented.
Unlike other aviation restructurings completed recently, the AAX scheme is all encompassing, comprehensive and covers all creditors without being restricted to a particular class or groups of creditors. This wide and deep reset is required to provide the desired platform to rebuild the business. With the completion of this exercise, AAX will be one of very few airlines worldwide that has no gearing and a restructured cost base that is significantly below that of its competitors in the region and will be in an excellent position to capture leisure travel and cargo opportunities post-Covid.
It is worth pointing out that at the same time as international aviation creditors with very substantial amounts owing by AAX are supporting this restructuring at very great costs to themselves, several local aviation pundits have continued aggressively to advocate a liquidation of AAX arguing without basis that the airline is moribund, terminally ill and with no valid reason not to be liquidated.
AAX welcomes a dialogue with these experts and to be given an opportunity to update them on developments in a rapidly changing global aviation business and to provide them a better understanding of Malaysian restructuring laws for a more informed appreciation of how and why the restructuring scheme was framed in the manner and structure it was.
We would also point out to them and those who are still questioning AAX’s contribution to the nation that, since AAX’s establishment in 2007 to April 2020, AAX carried a total of 43.5m passengers, employed 2,364 staff as at 31 Dec 2019, 76% of whom are Malaysians. In 2019 AAX brought in 1.91m international tourists into Malaysia which translated to a RM78.8b contribution to the Malaysian economy in 2019 alone based on the commonly applied multiplier of 12.5 times. AAX is also a consumer of the services of airports and a wide range of goods and services from local suppliers and between 2015 and 2020, over RM5.3b was paid to local suppliers.
Through an aggressive process of cost containment and seeking of alternative sources of revenue, the cash burn in the 10 months year to date to October 2021 was a total of RM34m which works out to a monthly cash burn of only RM3.4m or USD800,000. AAX currently operates four wide body A330’s for its regional cargo flights with a further two to be operational by year end. It has begun operating dedicated belly cargo flights for several of the largest global freight companies with ongoing discussions for belly cargo agreements on passenger / cargo combination flights when borders reopen.
Tan Sri Rafidah Aziz, Chairman of AAX further added that the sacrifices made by its staff was a critical component of the cost containment exercise.
“We would like to thank all our furloughed pilots, crew and support staff and assure them that all of them will be further brought back to full employment in the coming months as borders open up.”
AAX wishes to reiterate that business partners and supporters, particularly passengers, are vital and important to AAX and values this relationship.
“We wish to assure all passengers affected by the restructuring that it is the firm intention of AAX to put in place travelling privileges in the form of travel credits, which can be utilised for future purchases of flight tickets once international borders reopen,” added Tan Sri Tony Fernandes, Co-founder and Director of AAX.
The Company was advised by Foong and Partners, Mercury Securities, Gopal Sreenevasan, Suhendran Sockanathan and Simon Hong. New York based Seabury Securities and the Singapore office of Bird and Bird provided specialist aviation restructuring and legal support required to successfully complete the scheme of arrangement.
