30 October 2021
Long haul budget airline AirAsia X Bhd. was officially categorized as a financially distressed company, giving the company a year to restructure its finances or risk losing its Malaysian listing.
AirAsia X’s external auditor Ernst & Young issued a disclaimer of opinion on the airline’s audited financial statements for the 18-month period ended June 2021, the company said in a stock exchange filing on Friday. There are threats that may cast “significant doubt” on AirAsia X continuing as a going concern, Ernst & Young said.
“The company is taking the necessary steps to address its PN17 (Practice Note 17) status,” AirAsia X said in a separate filing, adding that it has one year to regularize its financial condition, failing which it will be delisted from the stock exchange.
AirAsia X, the sister company of technology and budget carrier AirAsia Group Bhd., 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% of the more than $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.
Ernst & Young said the basis of its disclaimer of opinion is dependent on various management initiatives such as successful implementations of the proposed debt restructuring, a fundraising exercise and a revised business plan that involves AirAsia X operating a “leaner and more sustainable cost structure,” as well as the global recovery from the pandemic.
“In view of the multiple uncertainties described above, we are unable to form an opinion on the financial statements due to the potential interaction of the uncertainties and their possible cumulative effects on the financial statements,” the auditor said.
AirAsia is set to meet its creditors to vote on its restructuring proposal on Nov. 12. The stock has ended unchanged at 9.5 sen Friday before the PN17 announcement.
Source: bnnbloomberg.ca
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