AirAsia X Bhd (AAX) (AIRX.KL) is proposing to pay just 0.5 percent of debt owed to each of its creditors and to terminate all existing contracts so it can restructure RM33.7 billion of liabilities, a document seen by Reuters shows.

The Malaysian low-cost long-haul airline, a sister carrier to cash-strapped AirAsia Group Bhd (AIRA.KL), said in a stock exchange filing on Monday it set Nov 12 for creditor meetings to vote on the restructuring proposal.

"To avoid a liquidation and to allow the airline to fly again, the only option is...