AirAsia And AirAsia X Record Losses; AirAsia X Gets Shareholder Go Ahead For Restructuring Plan
Malaysian flagship budget airline AirAsia Group Bhd has recorded a net loss for the January-March quarter.
A first-quarter net loss at AirAsia Group Bhd narrowed 4.5%, primarily dragged down by depreciation in leased assets and interest on lease liabilities, a stock exchange filing showed.
However, the airline, which marked its seventh consecutive quarterly loss, saw fair value gains on derivatives and said that it had successfully negotiated for deferrals with lessors that resulted in 80% reduction in repayment of borrowings and lease liabilities. Fixed costs also fell 54%, it said.
The airline recorded a 767.4 million ringgit ($185.45 million) net loss for the January-March quarter compared with 803.8 million ringgit in losses a year ago. The performance superseded the 234 million ringgit net loss an analyst forecast on Refinitiv.
Revenue plunged 87% to 298.2 million ringgit, as lockdowns in Malaysia at the start of the year to curb coronavirus infections further dampened the sales during the quarter.
Passengers carried totalled 976,968, a 90% drop from a year ago, while the load factor, which measures how full planes are, fell 10 percentage points to 67%.
The group said that it focused on providing limited domestic operations in the countries it operates.
"Even if borders remain closed, the Group is well prepared to rely solely on domestic operations alone this year. We remain focused and committed to further strengthen our domestic position at this juncture as we await developments in regards to international air travel," it said.
The airline also expects to see improved stability in operations as vaccinations continue to be rolled out in all key markets and travel bubbles could be introduced.
"We have restructured our fuel hedges with supportive counterparties, and thus, expect to see no fuel hedging losses from (the second quarter) onwards," President for airlines business Bo Lingam said in a separate statement.
Chief executive Tony Fernandes said that sufficient liquidity is the key priority to support the airline's strong return, and AirAsia had "obtained approval letters from certain banks", for a government-guaranteed financing scheme.
The airline has raised 336.5 million ringgit so far through private placements to funds and individuals during the quarter.
Last month, he said that the group expected clarity on its fundraising efforts in two to three months, as it continues talks with prospective funders. He had said that the group expected to secure one billion ringgit in loans from three Malaysian banks pending regulatory approvals.
AirAsia has initially aimed to secure 2.5 billion ringgit by the end of last year, to weather the slump in global travel since the pandemic began.
Last month, an unnamed investor agreed to inject up to 3.15 billion baht ($100.41 million) into AirAsia's Thai unit, as part of a restructuring plan proposed by parent company Asia Aviation PCL.
AirAsia X Quarterly Loss
Malaysian long-haul budget airline AirAsia X Bhd has also recorded a loss for the first three months of the year, which is both a record loss and its eighth quarterly loss in a row as the coronavirus pandemic devastated demand for air travel.
The airline, which is an affiliate of AirAsia Group Bhd, recorded a net loss of 5.67 billion ringgit ($1.37 billion) for January-March, more than 10 times the loss of 549.7 million ringgit seen in the same period last year.
The loss was primarily attributable to the impairment of assets, it said in a statement.
Revenue for the quarter fell by 95.8% to 38.5 million ringgit.
AirAsia said that it has assessed the recoverability of its assets in light of the COVID-19 pandemic and its restructuring process, and impaired those assets by 5.28 billion ringgit.
The airline has been looking to reconstitute 64.15 billion in debt, and said the asset impairment does not impact the restructuring.
"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.
It also said it remains committed to resuming commercial operations as soon as possible on the successful completion of the restructuring plan and the opening of international borders.
The airline has changed its financial year end from December 31 to June 30, expecting the outcome of the restructuring to be known then. It said that the basis of preparation for its audited financial statements will clear and be of more value to shareholders at that point.
AirAsia X Gets Shareholder Go-Ahead For Restructuring Plan
AirAsia X Bhd shareholders have approved the Malaysian budget airline's debt restructuring, it said, allowing it to pursue a scheme it viewed as key to survival.
Shareholders of the long-haul affiliate of AirAsia Group Bhd approved all resolutions at an extraordinary general meeting, including a rights issue and a share subscription for new investors to raise 500 million ringgit.
Last October, AirAsia X proposed restructuring its 64.15 billion ringgit ($15.6 billion) debt into a principal amount of 200 million ringgit and having the rest waived.
The airline said in a separate statement that the resolutions were passed with at least a 99.8% margin, and marked a major milestone in its restructuring progress.
"These approvals have been obtained simultaneously with final negotiations being held with creditors," it said, adding that with advisers New York-based Seabury Capital it had been "in active and productive" talks with lessors and others.
In February, a Malaysian court in February granted the airline leave to convene separate meetings with its different groups of creditors within six months, to vote on its scheme.
The meeting is scheduled for late July or August, AirAsia X said.
In March, the court also granted AirAsia X a three month order against any proceedings that may be filed against it, which could have slowed down its restructuring.
Last year, plane maker Airbus last year joined more than a dozen creditors to challenge the debt restructuring plan, telling the court it stands to lose more than $5 billion worth of orders if the proposal goes through.