Malaysia Aviation Group (MAG), the parent company of Malaysia Airlines, is running out of cash and likely would be unable to fulfill the obligations to its lessors.
In the letter intended for its lessors, seen by Reuters, the struggling company allegedly requested the lessors to step into discounts on issues related to aircraft rental while MAG would run its restructuring plan.
According to the letter, MAG expected that an average operating cash burn would reach $84 million a month. However, in August 2020, it had only $88 million in liquidity and an additional $139 million available from its only shareholder Khazanah. The group supposedly would not be able to pay off the lessors starting from November 2020, whereas its shareholders have stopped further funding.
The letter allegedly was sent in September 2020.
The national air carrier of Malaysia has been fighting financial asperities since 2014 – the year when two of the airline’s aircraft were involved in catastrophes. Following the disappearance of flight MH370 in March 2014, the fatal incident of shooting down the airline’s Boeing 777-200 (flight MH17) while flying over Eastern Ukraine followed in June the same year.