Malaysia Aviation Group (MAG), the holding company of Malaysia Airlines, announced that the group would have “no choice” but to shut down operations if lessors chose not to back the airline’s restructuring plan. The company considered closure after its restructuring plan had been rejected by lessors on October 9, 2020.
Ismail Izham, the CEO of MAG, speaking to local media told that the company set October 11, 2020, as a deadline for the lessors to agree on the restructuring plan, otherwise Malaysia Airlines might transfer its Air Operator Certificate (AOC) into a new airline under a new name and terminate its operations. The deadline was set after a part of the lessors rejected a plan and called it fatally flawed earlier on October 9, 2020.
The CEO of MAG claimed that if a restructuring failed to gain lessors support, it would force Malaysia Airlines to shut down its operations.
“There are creditors who have agreed already. There are others still resisting, and another group still 50:50. I need to get the 50:50 ones [on board] with those who have agreed. I understand quite a sizeable amount of creditors have agreed,” Izham told local media.
Under Malaysia Airlines’ submitted plan, the air carrier required a fresh cash injection from Khazanah Nasional, the airline’s shareholder, in order to help the company over the next 18 months. The plan also included the restructuring of the airline’s balance sheet over five years as Malaysia Airlines needed nearly $5 billion to continue operations until 2025.