Malaysia Airlines parent firm says group very low on cash -letter


SINGAPORE: Malaysia Aviation Group, the holding company for Malaysia Airlines Bhd, said in a letter to lessors the group is unlikely to be able to make payments owed after November unless it receives more funding from state fund Khazanah.

The letter, reviewed by Reuters, follows a request by the troubled carrier for steep discounts on aircraft rentals from its lessors as part of a broad restructuring plan, three sources with knowledge of the matter said.

Malaysia Airlines later confirmed in a statement on Friday it had reached out to its lessors, creditors and key suppliers recently as it embarks on an urgent restructuring exercise.

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 run-rate, absent further funding from shareholders, the group will likely be unable to meet its obligations, including payments to lessors, post November 2020," it said.

The letter was sent to lessors last month but the exact date was not immediately clear.

Khazanah, the country's sovereign wealth fund, said it was supportive of the airline's restructuring efforts but if they prove unsuccessful, it will need to evaluate options on how to maintain connectivity for Malaysia.

Malaysia's national airline has struggled to recover from two tragedies in 2014 - the mysterious disappearance of flight MH370 and the shooting down of flight MH17 over eastern Ukraine.

Khazanah took it private that year as part of a $1.5 billion restructuring but efforts to turnaround its business have been further upended by the coronavirus pandemic.

Malaysia Airlines said its current plan was "highly dependent on the individual contributions of all relevant stakeholders in supporting the group."

"It is intended that this restructuring exercise be completed over the next few months. However, if such an outcome is not possible, the group will have no choice but to take more drastic measures," it said.

Sources said Malaysia Airlines plans to negotiate the steep discounts with its lessors via a restructuring plan it is seeking to implement through a UK court process.

The sources declined to be identified due to the sensitivity of the matter.

In addition to Malaysia Airlines, the holding company group includes other local carriers and entities involved in aircraft leasing and ground handling services. - Reuters

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

   

Next In Business News

UMediC gets Bursa Malaysia Securities, SC nods for Ace Market listing
Tengku Zafrul: Subsidies may touch RM71bil in 2022, inflation contained
Pecca 3Q net profit flat at RM8.09mil
WZ Satu posts higher earnings in 1Q
Samaiden reports almost 4-fold profit jump in 3Q
Hong Seng posts improved net profit, revenue in 2Q
Genting Malaysia revenue rises to RM1.7bil
DRB-Hicom 1Q net loss widens toRM25.74mil
PetDag 1Q net profit dips 38% to RM118mil
Sunway's net profit surges to RM140.11mil in 1Q amid strong performance across all segments

Others Also Read