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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 airline group’s chief executive officer said on Saturday (October 10).
A group of leasing companies has rejected the airline’s restructuring plan, bringing the state airline closer to a showdown over its future, Reuters reported on Friday.
Malaysia Airlines group 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.
He said the plan was to restructure the airline’s balance sheet for five years, reaching equilibrium in 2023 assuming demand in domestic and Southeast Asian markets returns to 2019 levels by the second and third quarters of 2022.
The plan will also require a fresh injection of cash from the shareholder, the Khazanah Nasional state fund, to help the airline over the next 18 months.
Lessors who claim to represent 70 percent 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. London seen by Reuters.
Mr. Izham said the lessors will have to decide before October 11 so the airline can decide whether to continue with its restructuring plan or “execute Plan B”.
He 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.”
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