Malaysian Tycoon Tony Fernandes’ Distressed AirAsia X Risks Delisting After Auditor Qualifies Accounts


AirAsia X—the long-haul subsidiary of tycoon Tony Fernandes’ AirAsia Group—may be delisted from Bursa Malaysia after its external auditor cast significant doubt on the airline’s ability to continue as a going concern.

Ernst & Young issued a disclaimer of opinion on AirAsia X’s accounts for the 18 months ended June 30, 2021, triggering its status as a financially distressed company under Bursa Malaysia’s Practice Note 17, the company said Friday in a filing to the stock exchange. To avoid being delisted, AirAsia X would have to “regularize” its financial condition within 12 months, it added.

“The company is taking the necessary steps to address its PN17 status,” AirAsia X said. The airline is proposing to restructure 33.7 billion ringgit ($8 billion) of the company’s liabilities, which will be submitted for approval by creditors at a court convened meeting on November 12. At the same time, it is seeking to raise as much as $150 million in fresh equity through a rights offering and a secondary share sale.

Airlines are among the hardest hit by the Covid-19 pandemic as countries around the world closed their borders to contain the virus. Besides AirAsia X, several carriers in Asia Pacific have begun court-supervised debt restructuring plans to survive the pandemic-induced travel slump, including Malaysia Airlines, Philippine Airlines, Thai Airways and Virgin Australia.

AirAsia X’s current liabilities exceed current assets by more than 34 billion ringgit, Ernst & Young said. The airline—which also recorded shareholders’ deficit of 33.6 billion ringgit—has triggered defaults for various contracts, it added.

“These events or conditions indicate the existence of material uncertainties that may cast significant doubt on the group’s ability to continue as a going concern,” Ernst & Young said.

AirAsia X has been negotiating with creditors to restructure its debts amid mounting losses, which had reached almost 34 billion ringgit in the financial period ended June 30. It has also been discussing returning some of its aircraft to lessors as part of a fleet downsizing exercise aimed at focusing operations on mature routes and terminating flights to unprofitable destinations.

The airline is among several affiliates of Malaysian budget carrier AirAsia Group in the region. The group, which also includes airlines in Thailand and Indonesia, has been pivoting into digital businesses as Covid-19 travel restrictions drag passenger and cargo traffic lower. 

Fernandes and his business partner, Kamarudin Meranun, took over AirAsia in 2001 to build a low-cost carrier that would make air travel affordable. Fernandes—who dropped out of this year’s ranking of Malaysia’s 50 Richest people—also has interests in hospitality, insurance and education.



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