Its highest every quarterly loss of $5.9 billion was posted by Malaysia’s AirAsia X Bhd on Monday. This loss amount was eight times higher than what the company had reported for the same quarter a year ago.
One of the major causes of the loss was a multibillion dollar provision that the company set aside for payment of debts which increased its operational expenses for the quarter.
This was the eighth straight quarterly loss for the airline.
AirAsia X Bhd is a subsidiary of AirAsia Group Bhd.
The net loss for the April-June quarter increased to 24.6 billion ringgit ($5.88 billion), compared to 305.2 million ringgit in the same period the previous year.
The airline stated that it made an accounting provision of 23.8 billion ringgit for its creditors during the quarter because it is in breach of its contractual obligations.
Revenue fell 20.9 per cent to 72.3 million ringgit, down from 91.4 million ringgit.
The impact of the provision should be temporary, the airline said in a stock exchange filing.
“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 cut expenses, the airline group intends to function with a smaller fleet and surrender superfluous aircraft to lessors. It stated that it has returned one aircraft and is in talks with additional aircraft lessors in order to “reach the appropriate fleet size.”
Future lease rental rates are being discussed, as are discussions with other service providers to decrease maintenance expenses.
The airline, which hopes to hold talks with creditors by the end of October to present a restructuring strategy, requested last October to restructure its 64.15 billion ringgit debt into a principle sum of 200 million ringgit.
It claims to be making significant headway in the discussions.
The company said that if creditors accept its proposal in the forthcoming meeting with its creditors, the deployment of a fund-raising exercise, including a rights issue and a share subscription for new investors to raise 500 million ringgit, will be started by the airline.
AirAsia X has stated that it intends to ask for a government guaranteed loan of up to 500 million ringgit.
The business altered its fiscal year end from December 31 last year to June 30 this year at the end of last year.
(Adapted from USNews.com)