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KUALA LUMPUR (Reuters) – Malaysia Airlines will have to shut down if its lessors decide not to back its latest restructuring plan, the chief executive of the airline’s parent group said on Saturday.
A group of leasing companies rejected the restructuring plan, bringing the state airline closer to a showdown over its future, Reuters reported on Friday. [L4N2H103A]
Malaysia Aviation Group (MAG) chief executive Izham Ismail said the group “would have no choice but to shut it down” if the lessors decide not to back the restructuring plan.
“There are creditors who have already accepted. There are others who are still resisting, and another group still 50:50,” Izham said in an interview with The Edge weekly.
“I need to get the 50:50 (on board) that they have agreed with. I understand a considerable number of creditors have agreed.
Izham said the plan was to restructure the airline’s balance sheet for five years, breaking even in 2023 assuming demand in domestic and Southeast Asian markets returns to 2019 levels for the second and third quarters. of 2022.
The plan will also require a fresh injection of cash from the airline’s shareholder, the state fund Khazanah Nasional, to help the company over the next 18 months.
MAG declined to comment.
Lessors who claim to represent 70% of the planes and engines leased from the airline group have called the plan “inappropriate and fatally flawed” and vowed to challenge it, according to people familiar with the matter and a letter from a law firm in London seen by Reuters. .
MAG had previously warned the lessors that Khazanah would stop financing the group and force it into a liquidation process if restructuring plans fail.
Izham said the lessors would have to make a decision before October 11, so the airline can decide whether to continue with its restructuring plan or “execute Plan B”.
Izham said Plan B could involve changing Malaysia Airlines’ air operator certificate (AOC) to a new airline under a different name, or taking advantage of the AOCs of sister airlines Firefly and MASwings.
“If you ask me, is Plan B credible? Of course it is. We have all the skills in place.”
(Report by Joseph Sipalan and Anshuman Daga; edited by Richard Pullin and Mark Potter)
