Malaysia Airlines group CEO Izham Ismail has threatened that the airline will have “no choice” but to shut down entirely if its lessors decide not to support its latest restructuring plan.
Izham said that there are a “sizeable” number of creditors who have agreed to the proposed restructuring plan however a number have outright rejected the plans, while some still remain undecided, or “50:50” in his words.
“I need to get the 50:50 ones (on board) with those who have agreed,” he said.
According to Izham, the proposed plan was to restructure the airline’s balance sheet over five years, and would see the company break even in 2023, assuming that demand in the domestic and south-east Asian travel markets hit 2019 levels by the second or third quarter of 2022.
Included in the plan was also a further cash injection from its only major shareholder, the state fund Khazanah Nasional, which would see the airline through the next 18 months.
Sources have also said the airline has requested “steep discounts” on aircraft rentals as a part of this plan.
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.
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”.
Other sources have confirmed that some lessors are backing the proposed plans.
MAG has previously warned lessors in a letter that Khazanah, the sole shareholder of MAG, will cease funding the group, which will result in the liquidation of MAG.
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.
More to come.