MIAMI – The Malaysia Aviation Group, the owner of Malaysia Airlines (MH), has said to lessors, creditors, and suppliers in a letter that it is facing difficulties to make payments it owes.
Unless the group receives more funding from its state shareholder Khazanah, it will not be able to meet its obligations, read the letter disclosed by Reuters. The funds must be received by the end of the year, according to the group, as its current plan was “highly dependent” on the individual shareholders’ contributions.
By August 31, the company was having a monthly operating cash burn of US$84m and recorded US$88m in liquidity. Additionally, it had US$139m available from its shareholder.
Malaysia Airlines Faces a Turbulent Restructuring
Prior to the group letter, MH requested lessors steep discounts on aircraft rentals in the scenario of a restructuring plan. Several sources have said that MH is seeking to implement the process through a UK court.
For six years, the airline has been trying to recover. In 2014, it experienced two major incidents that involved Boeing 777 aircraft: the disappearance of flight MH370 and the shooting down of flight MH17. At the time, the carrier had already faced a restructuring process when it was set to become a private entity under a US$1.5bn injection given by Khazanah. However, the plan failed.
Then, in 2019, the Malaysian Prime Minister, Mahathir Mohamad urged the government to decide the future of the airline. The carrier has already commented that it would now need to rework its network and fleet.
Featured photo: Malaysia Airlines Airbus A350. Photo: © Malaysia Airlines