Beleaguered long-haul, low-cost carrier AirAsia X could be delisted from the Malaysian stock exchange if it fails to sucessfully restructure its business.
The announcement comes as the airline was officially categorised as a financially distressed company, after its auditors, Ernst & Young, issued a disclaimer of opinion on its financial statements for the 18 months ended 30 June.
Since the start of the coronavirus pandemic, AirAsia X has been largely grounded, operating a limited schedule of repatriation and cargo-only flights, amid global travel restrictions.
The airline, which is linked to the AirAsia Group, posted a record MYR24.5 billion ($5.9 billion) operating loss for the quarter ended 30 June.
Ernst & Young auditors in a 29 October report note that the pandemic has “led to a significant fall in demand for international air travel which have impacted … [AirAsia X’s] financial position, financial performance and cash flows”.
They add: “These events or conditions indicate existence of material uncertainties that may cast significant doubt on [AirAsia X’s] ability to continue as going concern.”
However, auditors note that the validity of AirAsia X’s ability to continue operations would be “highly dependent” on the “successful implementation” of several initiatives, including a proposed debt restructuring exercise, a fundraising exercise, as well as a revised business plan which will see the airline “operating a leaner and more sustainable cost structure”.
“In view of the multiple uncertainties…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 auditors write.
In a separate stock exchange filing, AirAsia X says it is “taking the necessary steps” to address concerns raised by its auditors, which have triggered a financially distressed status from Bursa Malaysia.
Under stock exchange requirements, AirAsia X, which will be meeting its creditors on 12 November about debt restructuring, will have a year to “regularise” its financial condition, or face delisting.