AirAsia X had RM34B liabilities and the pandemic grounded its fleet — creditors got 0.5%

AirAsia X Bhd, the long-haul low-cost affiliate of the AirAsia group, nearly collapsed under RM34 billion in liabilities after the COVID-19 pandemic grounded its entire fleet. The airline, founded in 2007 as a spin-off from the short-haul budget carrier, had pursued an aggressive expansion of long-haul routes on a low-cost model that left it vulnerable to any disruption in travel demand. When the pandemic hit in March 2020, every aircraft was grounded and the airline stopped paying its creditors.

The scale of the collapse was extraordinary. For the 18-month financial period ended June 30, 2021, AirAsia X reported a net loss of RM33.72 billion. Current liabilities exceeded current assets by RM34.21 billion. The provision for termination claims from defaulted contracts alone was RM25.16 billion. External auditor Ernst & Young issued a disclaimer of opinion, citing material uncertainties about the airline's ability to continue as a going concern. The airline was classified as PN17, a financially distressed status on Bursa Malaysia, on October 29, 2021.

AirAsia X proposed a debt restructuring scheme that was among the most aggressive in aviation history. Creditors approved the plan on November 12, 2021, and the High Court of Malaya sanctioned it on December 16, 2021. The scheme was completed on March 16, 2022. Under the restructuring, RM33 billion in liabilities and provisions were waived. Creditors received just 0.5% of what they were owed. The airline also underwent a 99.9% share capital reduction, effectively wiping out existing shareholders.

The restructuring saved AirAsia X from liquidation but at a staggering cost to creditors, suppliers, and shareholders. The airline eventually exited PN17 status in November 2024. In 2026, it consolidated all AirAsia-branded airlines under its umbrella and rebranded as AirAsia, completing a remarkable turnaround from the brink of collapse to becoming the centrepiece of the entire AirAsia group.