AirAsia Indonesia Mulls Share Sales, Liability Restructuring

Indonesian low-cost carrier AirAsia Indonesia is exploring various options to restructure its liabilities and potentially sell shares, as the airline's balance sheet has remained negative since July, leading to a suspension of its shares. According to a recent filing, the company is contemplating converting trade payables and lease liabilities owed to controlling entities into perpetual instruments, effectively turning them into equity.

Alternative recaps include a rights issue or a private placement. These recapitalization options are taking place amidst a significant funding squeeze at its parent company, AirAsia Group Bhd, which holds a record debt of US$4.1 billion as of June and is seeking an additional US$1 billion in refinancing. AirAsia Group's co-founder and adviser, Tony Fernandes, had previously announced that fresh capital would be injected into the Indonesian and Philippine operations, with new shareholders expected to join the affiliates.

As of now, AirAsia Indonesia has not chosen a particular path and is still evaluating its funding requirements, market conditions, and the feasibility of each option in consultation with shareholders and external advisers. The proposed measures aim to strengthen the company's capital structure and ensure compliance with exchange requirements.