AirAsia X shares sink as much as 21% amid going concern doubt

AirAsia is set to meet its creditors to vote on its restructuring proposal on Nov 12. PHOTO: REUTERS

KUALA LUMPUR (BLOOMBERG) - AirAsia X's shares dived by the most in more than a year after the long-haul budget airline was officially categorised as a financially distressed firm, which gives the company a year to recast its finances or risk losing its Malaysian listing.

The stock tumbled as much as 21.1 per cent to 7.5 sen on Monday (Nov 1), set for the steepest drop since August last year. The shares traded at eight sen at 10:40am amid volume that was six times the average for this time of day.

On Friday, AirAsia X's auditor Ernst & Young issued a disclaimer of opinion on the airline's audited financial results for the 18-month period ended June this year, citing threats that cast "significant doubt" on the firm continuing as a going concern, the airline said in a filing. AirAsia X said it has a year to recast its finances, failing which it will be delisted from Bursa Malaysia.

"AirAsia X continues to face severe liquidity constraints and all hopes are on successful debt restructuring and new equity funding from existing and new investors to provide sufficient capital to restart operations when international borders reopen," Public Investment Bank wrote in a note on Monday. The brokerage maintained its stock-target price of one sen.

"The company is taking the necessary steps to address its Practice Note 17 status," AirAsia X said on Friday, referring to its categorisation as a financially distressed company.

AirAsia X is one of the many airlines in the Asia-Pacific region to have been hit by travel restrictions imposed to curb the coronavirus pandemic. It has grounded most of its aircraft fleet since March last year and has deferred payment to creditors.

AirAsia X recently offered to pay creditors only 0.5 per cent of the more than US$8 billion (S$10.8 billion) total debt they are owed and terminate all existing contracts as it tries to restructure after it triggered events of default for various agreements.

AirAsia is set to meet its creditors to vote on its restructuring proposal on Nov 12 and it would require at least 75 per cent of each class of scheme creditors in the meeting to vote favourably for its proposed debt restructuring exercise to carry.

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