AirAsia X aims a debt restructuring of between US$500 million and US$600 million after it bought Capital A’s short-haul business this week, as per the group deputy chief executive officer Farouk Kamal.
AirAsia X, the medium-haul affiliate of AirAsia under Capital A, plans to merge seven airlines under one brand.
“We are also looking at various refinancing initiatives, to extend the tenor of the loans, reduce interest costs and consolidate all our debt instruments into one or two loan instruments,” Farouk said in an interview.
Capital A Berhad has completed the disposal of its aviation businesses, AirAsia Berhad and AirAsia Aviation Group Limited, to AirAsia X Berhad (AAX), as disclosed in its Bursa Malaysia announcement dated 16 January.
The completion of the transaction consolidates all AirAsia-branded airlines under a single airline platform, described as the AirAsia Group, within AAX.
AirAsia Group has been one of Asia’s largest low-cost airline operators since its inception in 2001. However, travel restrictions due to the pandemic have severely hit the earnings of its parent company, Capital A, prompting Bursa Malaysia to classify it as a company in financial distress.
The consolidation of all AirAsia-branded airline businesses under AirAsia X will allow the airlines to focus on expanding operations and reducing costs, while Capital A focuses on restoring its financial position.
AirAsia X plans to start flights to London as early as the middle of this year, Farouk said, more than a decade after it last operated flights to the British capital's Gatwick and Stansted airports.
The airline launched flights to Istanbul in November. It will also develop a hub in Bahrain to improve connectivity to Central Asia, the Middle East, Europe and Africa, Farouk said.
AirAsia X expects to receive delivery of four Airbus long-range A321LR aircraft this year which will enable it to expand beyond Asia, Farouk also said.
The airline, which has a 255-strong fleet, in July ordered 50 longer-range A321XLR aircraft and agreed the right to convert 20 models already on order to the single-aisle jet. It is also working with planemakers for regional-type aircraft, Farouk said, as it considers ordering a further 150 jets.
It is also working with aircraft manufacturers for regional aircraft, Farouk said, as it considers ordering an additional 150 aircraft.
After the merger, AirAsia X is targeting near-term revenue of nearly US$6 billion, as well as an earnings before interest, tax, depreciation and amortization (EBITDA) margin of 20 percent and a passenger load factor of more than 80 percent, said Chief Financial Officer Low Kar Chuan in the same interview.
He said the airline aims to repay all bank loans granted during the COVID-19 pandemic, when government travel restrictions severely affected revenue, within two to three years.
Meanwhile AirAsia X has approved a new management structure with several reappointments following the group's consolidation exercise, which entailed the airline's aquisition of AirAsia Bhd and AirAsia Aviation Group Limited (AAAGL) from Capital A Bhd.
Bo Lingam has been apointed group CEO for overall strategic leadership while Farouk Kamal has been made the deputy group CEO to oversee corporate functions and operations and driving performance across the business.
AirAsia X also announced the successful listing and quotation of 606.06 million placement Shares and 2.31 million consideration shares, marking the completion of its proposed private placement.
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