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EXCLUSIVE-Airbus to lose over $5 bln in orders under AirAsia X's proposed restructuring

Tue 22nd December, 2020 10:59am
* Airbus could lose over $5 bln from purchase terminations
    * Airbus supportive of AAX convening creditors' meeting
    * AAX denies scheme unfair, says debt-equity swap unhelpful
    * AAX says any party may have equity stake if injects funds
    * AAX says scheme will offer creditors chance for survival

 (Adds details of aircraft orders, impact on A330neo)
    By Liz Lee
    KUALA LUMPUR, Dec 22 (Reuters) - Planemaker Airbus  AIR.PA 
has said it stands to lose more than $5 billion worth of orders
if AirAsia X Bhd's (AAX)  AIRX.KL  debt restructuring scheme
goes through, court documents showed, joining more than a dozen
creditors that have challenged the Malaysian low-budget
carrier's plan.
    Airbus's challenge comes as AAX defends its scheme from
claims by key lessor BOC Aviation (BOCA)  2588.HK  that it
favoured Airbus and lacked a debt-to-equity swap offer for
creditors.  urn:newsml:reuters.com:*:nL4N2IR2JP
    In a Dec. 16 affidavit filed at Kuala Lumpur High Court,
Airbus's Asia-Pacific Head of Region Anand Stanley said there
was a strong possibility Airbus "will suffer substantial losses
and prejudice" from termination of purchase agreements.
    "AAX has ordered and Airbus has already built, or
substantially built, seven A330neo aircraft which are currently
in the inventory," he said, adding that there are another 71 on
order that may impact Airbus's profitability if cancelled.
    Despite Airbus's objections, AAX's affidavit filed on Monday
showed it supported a creditors' meeting needed to approve the
scheme. Other creditors, such as Rolls-Royce  RR.L , have agreed
to consider the scheme, while a few lessors said they support
the airline's restructuring efforts, it said.
    Castlelake's Vice President Marketing Sankalp Garg told AAX
in an email that the lessor clearly wanted to see AAX succeed.
    AAX has been seeking court approval to convene the meeting
for creditors to vote on the scheme. On Monday it asked the
court for a stay on all proceedings against it, adding it was
necessary to protect its assets pending approval of the scheme.
    AAX revealed in a Dec. 17 affidavit seen by Reuters it owes
Airbus 48.71 billion ringgit ($12 billion) including predelivery
payments for committed purchase of 118 aircraft.
    AAX has unfilled orders for 78 A330neo jets as well as 10
A350-900 and 30 A321neo, based on Airbus data.
    It accounts for a quarter of all orders for the A330neo and
its financial problems have cast a shadow over the future of the
upgraded model. Airbus has halted new investment in the plane
but continues to offer it as a cheaper alternative to its A350. 
    
    DEBT DEBATE
    BOCA has said AAX's debt calculations should not include
future debts, which are primarily owed to Airbus. Airbus alone
holds about 75% of the total debt value needed to approve the
restructuring, giving lessors relatively little say.
    AAX Senior Legal Counsel Shereen Ee denied the calculations
were unfair as they also consider termination compensation for
BOCA until the end of its lease period.
    As for BOCA's proposed debt-to-equity conversion, Ee said it
"would run counter to the objective of restructuring AAX to
ensure it can raise fresh funds to continue as a going concern."
    She said any party may have an equity stake in AAX if they
inject fresh funds in return for it.
    BOCA became one of Norwegian Air's  NORR.OL  top
shareholders in May after lessors agreed to convert debt to
equity.  urn:newsml:reuters.com:*:nL8N2D21S2
    The airline failed to get more state support last month and
sought bankruptcy protection. It secured shareholders' vote last
week for its rescue plan.  urn:newsml:reuters.com:*:nL1N2I40P5 urn:newsml:reuters.com:*:nL8N2IX2M6
    BOCA is AAX's largest lessor, AAX's lawsuit showed.
    AAX will continue engaging with all creditors, a company 
spokeswoman said. 
    "We are working with all stakeholders to expedite the
completion of this recapitalisation so that we can start flying
again," she said.
    The airline, which has been recording losses since June
2019, said the alternative was a liquidation with nothing for
creditors and shareholders.
    Airbus and BOCA declined to comment while legal proceedings
and discussions are ongoing.
    AAX, the long-haul unit of budget airline AirAsia Group
 AIRA.KL , has total debts and liabilities of about 64.15
billion ringgit ($15.8 billion), the lawsuit stated. It had
earlier proposed to reconstitute its debts into a principal
amount of 200 million ringgit.  urn:newsml:reuters.com:*:nL4N2GY0OX
    Legal Counsel Ee said the scheme would "at least offer
creditors a prospective chance for survival".
($1 = 4.0580 ringgit)

 (Reporting by Liz Lee; Editing by Stephen Coates/Louise
Heavens/Jane Merriman)
 ((liz.lee@thomsonreuters.com; Desk: +60323338039; Twitter:
@livinglizly;))
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