Malaysia Airlines' future uncertain, survival in doubt, says its CEO
_A Monitor Report 01 Oct, 2020 | 198 Views|-+
Kuala Lumpur : Malaysia Airlines will have to shut down if its lessors decide not to back its latest restructuring plan, the airline's group chief executive was quoted as saying on October 10. Meanwhile, a group of leasing companies has rejected the airline's restructuring plan, bringing the state carrier closer to a showdown over its future, according to reports.
Malaysia Airlines group chief executive officer Izham Ismail said the group 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 said. "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 its major shareholder, the state fund Khazanah Nasional, to help the airline over the next 18 months.
Malaysia Aviation Group (MAG), the airline's parent company, said on October 10 that it was "pleased" with the level of support it had received from its lessors and was continuing discussions with them. They are confident that there are appropriate legal mechanisms available, should that support not be universal," it said.
"MAG reiterates that the spirit of its restructuring plan is not intended to create unnecessary pain among its creditors, but is done in good faith to drive for the long-term survivability of MAG and its dependent value chain of partners."
The airline group is seeking to implement the restructuring plan through a UK court process, according to sources.