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According to the letter, the aviation group was experiencing “an average monthly operating cash burn of $ 84 million,” but only had $ 88 million in liquidity as of Aug. 31 and an additional $ 139 million available from Khazanah, its sole shareholder. (Reuters photo)
+A SINGAPORE (Oct 2): Malaysia Aviation Group, the holding company of Malaysia Airlines Bhd, said in a letter to lessors that the group is unlikely to be able to make payments due after November unless it receives more funds from the state Khazanah fund. .
The letter, reviewed by Reuters, follows a request by the troubled airline for deep discounts on aircraft rentals from its lessors as part of a comprehensive restructuring plan, three sources with knowledge of the matter said.
According to the letter, the aviation group was experiencing “an average monthly operating cash burn of $ 84 million,” but only had $ 88 million in liquidity as of Aug. 31 and an additional $ 139 million available from Khazanah, its sole shareholder.
“Based on the current execution rate, without further funding from shareholders, it is likely that the group will not be able to meet its obligations, including payments to lessors, after November 2020,” he said.
The letter was sent last month, but the exact date was not immediately clear.
Malaysia Aviation Group and Khazanah had no immediate comment in response to Reuters inquiries.
Malaysia’s national airline has struggled to recover from two tragedies in 2014: the mysterious disappearance of Flight MH370 and the downing of Flight MH17 over eastern Ukraine.
Khazanah took it private that year as part of a $ 1.5 billion restructuring, but efforts to reverse his business have been further disrupted by the coronavirus pandemic.
Malaysia Airlines plans to negotiate the big discounts with its lessors through a restructuring plan that it seeks to implement through a court process in the United Kingdom, said the sources, who declined to be identified due to the sensitivity of the matter.
In addition to Malaysia Airlines Bhd, the group of holding companies includes other local companies and entities involved in aircraft leasing and ground handling services.
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Malaysia Airlines embarks on a restructuring exercise
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