KUALA LUMPUR – Malaysia Airlines will have to shut down if its lessors decide not to back its latest restructuring plan, said its CEO.
A group of leasing companies has rejected the airline's restructuring plan, bringing the national carrier closer to an end.
Malaysia Airlines group chief executive officer Datuk Capt Izham Ismail said it would have "no choice but to shut it down" if lessors decide against backing the restructuring plan.
"There are creditors who have agreed already. There are others still resisting, and another group still 50:50," Izham told The Edge in an interview published today.
"I need to get the 50:50 ones (on board) with those who have agreed. I understand quite a sizeable amount of creditors have agreed."
Izham said the plan was to restructure the airline's balance sheet over five years, achieving break-even in 2023 on the assumption that demand in the domestic and Southeast Asian markets returns to 2019 levels by the second and third quarters of 2022.
The plan will also require a fresh cash injection from main shareholder Khazanah Nasional, to help the airline over the next 18 months.
Malaysia Aviation Group (MAG) is the airline's parent company.
Reuters reports that lessors claiming to represent 70% of the aeroplanes and engines leased to the airline group have called the plan "inappropriate and fatally flawed" and pledged to challenge it.
Malaysia Airlines, like other airline companies, is reeling from the Covid-19 pandemic, which in its case has compounded its problems.
A letter sent to lessors by MAG said Malaysia Airlines had an average monthly operating cash burn of US$84 million (RM347 million) but only had US$88 million in liquidity as of August 31 plus US$139 million available from Khazanah. – The Vibes, October 10, 2020
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