By Liz Lee

KUALA LUMPUR (Reuters) - Malaysia's AirAsia X Bhd , the long-haul arm of AirAsia Group Bhd , said it wanted to restructure $15.3 billion of debt and slash its share capital by 90% to continue as a going concern.

Hard hit by the coronavirus pandemic as closed borders have grounded most of its planes, the budget airline said it had severe liquidity constraints and, with no return to normalcy in sight, added, "Imminent default of contractual commitments will precipitate a potential liquidation."

Its statement late on Tuesday came just days after Malaysia Airlines, the other major carrier, said it was very low on cash and had reached out to lessors, creditors and suppliers for urgent restructuring.

AirAsia X is seeking to reconstitute 63.5 billion ringgit ($15.3 billion) of debt into a principal amount of 200 million ringgit and waiver of the rest.

That debt restructuring as well as a revamp of its business model would be needed to raise fresh equity and debt, which in turn would be required to restart the airline, it said.

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From Bloomberg News

AirAsia Ceases Operations in Japan

AirAsia Group Bhd. will cease operations in Japan immediately as it tries to reduce cash burn amid the coronavirus outbreak that’s wiped out travel demand globally.

AirAsia Japan has stopped operations as of Monday, Southeast Asia’s second-biggest budget carrier said in a statement. That will help the parent conserve cash. Further steps on the decision will be made in accordance with applicable laws and regulations including the Japan Civil Aeronautics Act, it said.

The low-cost airline has been under immense pressure this year as Covid-19 roils the aviation industry. It reported its largest loss on record in the second quarter ended June 30 and Chief Executive Officer Tony Fernandes has been in talks for joint ventures and collaborations that may result in additional investment.

“We have concluded that it would be an extremely challenging feat for us to continue operating without any visibility and certainty of a post-pandemic recovery path,” said Jun Aida, the chief operations officer of AirAsia Japan. “This painful decision to cease operations was decided neither in haste nor taken lightly.”