In an effort to survive and recover, Malaysia's AirAsia X is proposing a massive restructuring plan.

KUALA LUMPUR: AirAsia X Bhd (AAX), Malaysia's leading mainline low-cost airline, has offered to restructure its debt and reduce its issued share capital to avoid liquidation and open the way for new capital, according to a late filing of exchange filings. Tuesday.

AAX said in a separate statement that it faces severe liquidity constraints to pay off debt and other financial obligations and, with no return to normalcy, "imminent contractual default will accelerate the airline's potential liquidation."

It says that a major debt restructuring and a renegotiation of financial commitments, as well as a renegotiation of the volume of operations are prerequisites for raising new capital that will be required to restart the airline.

The group is seeking to restructure approximately 63.5 billion ringgit ($ 15.30 billion) in debt and ditch any balance, AirAsia Group subsidiary Bhd said.

AAX said unaudited reports as of June 30 show that it has an equity deficit of RM960 million and current liabilities of RM 3.38 billion exceed current assets of RM 1.39 billion.

The group, hit hard by the coronavirus pandemic, as the borders have kept most of its aircraft for several months, has also proposed to reduce the issued share capital by 90% and consolidate every 10 existing common shares into one share.

He appointed board member Lee Qian Onna, a chartered accountant and former banker, as vice chairman to spearhead the restructuring.

AAX's restructuring plan has been implemented despite efforts made to control costs, including the termination of all scheduled flights, pay cuts and staff reductions across the group.

“To avoid liquidation and allow the airline to start flying again, the only option for AAX is to restructure the debt and corporate restructuring of the entire group and update its business model to survive and thrive in the long term,” he added.

AAX's revised business plan includes streamlining the route network, selecting the right fleet size, overhauling the baseline cost, and optimizing the workforce to deliver a more economical and sustainable business.