Low-cost carrier Firefly could become Malaysia’s national airline, as the future of Malaysia Airlines remains in doubt, according to the head of state fund Khazanah Nasional.
Speaking to local media, Shahril Ridza Ridzuan’s comments are the first public statements made by the sovereign wealth fund since Malaysia Airlines flagged its potential demise, if lessors refused to agree to accept steep discounts.
Shahril reiterated that, as a wholly-owned subsidiary of Malaysia Aviation Group (MAG), the group will have the freedom to channel funds into Firefly in the event that Malaysia Airlines goes under.
Firefly is currently a largely domestic airline, operating a fleet of 12 twin-engine turboprops.
However, the carrier will be expanded to include both narrow-body and wide-body aircraft in the absence of Malaysia Airlines, according to Shahril.
Khazanah, the sole shareholder of MAG, will discuss next steps when the outcome of restructuring talks becomes clearer, which should happen over the coming days.
“If Khazanah continues to finance Malaysia Airlines, which does not have a strong financial position and often suffers losses, Khazanah will have to dispose of its holdings in other strategic assets or increase debt,” Shahril was also quoted as saying.
Finance Minister Tengku Abdul Aziz confirmed last week the government will not provide any financial support to Malaysia Airlines.
Earlier this week, Malaysia Airlines group CEO Izham Ismail threatened that the airline will have “no choice” but to shut down entirely if its lessors decided not to support its latest restructuring plan.
Lessors who claim to represent 70 per cent of the aircraft and engines leased to the Malaysia Aviation Group (MAG) have reportedly called the proposed restructuring plan “inappropriate and fatally flawed”, bringing the future of Malaysia Airlines further into question.
Izham claimed that some lessors are still undecided, and a final decision on the matter is still yet to be made.
Should lessors not agree to the restructuring plan, Izham said the company is not afraid to execute “Plan B”, which would involve shifting Malaysia Airlines’ air operators certificate (AOC) over to a new airline under a different name, or using the certificates of sister airlines Firefly and MASwings.
“If you ask me, is Plan B credible? Of course, it is. We have all the skill sets in place,” Izham said.
Malysia Airlines has struggled to recover from two unfortunate tragedies in 2014, firstly the mysterious disappearance of flight MH370 and then the shooting down of flight MH17 over eastern Ukraine.
The airline’s struggle has only been compounded by the ongoing COVID-19 crisis, which has decimated international travel demand to an unprecedented scale.