MIAMI – Updating its last cash-burn warning, Malaysia Airlines Group (MAG) has told lessors that state fund Khazanah will stop its funding. Hence, if talks between the parties are unsuccessful, the group could face a liquidation process.

According to Reuters, if “Plan A” fails, which is related to some form of shareholder funding, an alternative plan could come out. The latter would include turning aside funds to its subsidiary airline Firefly (FY).

Additionally, Finance minister Tengku Zafrul Abdul Aziz said the government would not financially support Malaysia Airlines (MH). Apart from the not granted financial relief or debt guarantees, he said that the windingPlan B down of the company relies on Khazanah.

The group had already asked lessors for deep discounts on aircraft rentals to meet its payment obligations. While October 7 was the deadline to respond, sources said that lessors were also exploring bilateral negotiations with MAG.

Regarding the restructuring, the group told Reuters that it was a necessary step for a “sustainable and profitable organization in the future.”

Malaysia Airlines Boeing 777-2H6ER. Photo: Aero Icarus.

Plan B

The letter also revealed Plan B, under which Khazanah would inject funds into FY to start new operations at Kuala Lumpur. The company would then serve only domestic cities at first.

Currently, FY has a fleet of 12 twin turboprops, but it would take delivery of narrow-body and wide-body aircraft if Plan B gets the green light.

On its part, Khazanah told Reuters that it was supporting of MH’s restructuring efforts. However, it would evaluate options on how to maintain connectivity for Malaysia if the process proves to be unsuccessful.

Featured photo: Malaysia Airlines Airbus A350. Photo: © Malaysia Airlines.