Malaysia's AirAsia X reports record quarterly loss of $7.95 billion

To reduce costs, the airline group plans to operate a reduced fleet and return excess aircraft to the lessors.
To reduce costs, the airline group plans to operate a reduced fleet and return excess aircraft to the lessors.PHOTO: REUTERS

KUALA LUMPUR (REUTERS) - Malaysia's AirAsia X on Monday (Sept 27) posted a record quarterly loss of RM24.6 billion (S$7.95 billion), eight times more than a year ago, as a multi-billion-dollar provision to cover debts drove operating costs higher.

It was the ninth loss in succession for the airline, an affiliate of AirAsia Group.

The net loss for the April-June period widened from a RM305.2 million loss a year ago.

The airline said it made an accounting provision of RM23.8 billion to its creditors during the quarter as it is in default under the contract terms.

Revenue dropped 20.9 per cent to RM72.3 million, versus RM91.4 million.

In a stock exchange filing, it said the impact of the provision should be temporary.

"The contractual liabilities for which the provision is made will be waived upon a successful completion of the proposed debt restructuring exercise," it said.

To reduce costs, the airline group plans to operate a reduced fleet and return excess aircraft to the lessors. It said it has returned one aircraft and is in discussions with other aircraft lessors "to achieve the optimal fleet size".

Discussions to reduce future lease rental rates are ongoing, as are talks with other service providers to reduce maintenance costs.

The airline, which is looking to convene meetings with creditors to propose a restructuring scheme by the end of October, proposed last October to restructure its RM64.15 billion debt into a principal amount of RM200 million. It said it is making good progress in negotiations.

The implementation of a fund-raising exercise involving a rights issue and a share subscription for new investors to raise RM500 million, will start provided the upcoming creditors'meeting approves it, it said.

AirAsia X also plans to apply for a government guaranteed loan of up to RM500 million, it said.

The group at the end of last year changed its financial year end from Dec 31 last year to June 30 this year.