Malaysia Airlines boss says will have to shut down if restructuring plan fails: report
KUALA LUMPUR (Reuters) - Malaysia Airlines will have to close if lessors decide not to support their latest restructuring plan, the airline's parent company executive director was quoted as saying on Saturday.
A group of leasing companies have rejected the restructuring plan and brought the state airline closer to a showdown on their future, Reuters reported on Friday. [L4N2H103A]
Izham Ismail, chief executive officer of Malaysia Aviation Group (MAG), said the group would have "no choice but to close it down" if lessors choose not to support the restructuring plan.
"There are believers who have already agreed. There are others who are still resisting and another group who are still 50:50," Izham said in a weekly interview with The Edge.
"I have to get the 50:50 (on board) with those who agreed. I understand that a significant number of creditors have agreed."
Izham said it plans to restructure the airline's balance sheet over a five-year period and break even in 2023, assuming domestic and Southeast Asian market demand will hit the levels by Q2 and Q3 2022 from 2019 returns.
The plan also provides for a new cash injection from the airline's shareholder, the state fund Khazanah Nasional, to help the company over the next 18 months.
MAG declined to comment.
Landlords, who claim to represent 70% of the aircraft and engines leased to the airline group, have described the plan as "inadequate and fatally flawed" and committed to contesting it, according to people familiar with the matter and a letter from a Londoner Reuters law firm.
MAG had previously warned landlords that Khazanah would stop funding the group and force them into a wind-up process if the restructuring plans fail.
Izham said the lessors had to make a decision by October 11th so the airline can decide whether to proceed with its restructuring plan or "execute Plan B".
According to Izham, Plan B could include moving the Air Operator Certificate (AOC) from Malaysia Airlines to a new airline under a different name or using the AOCs of sister airlines Firefly and MASwings.
"If you ask me, is Plan B believable? Of course it is. We all have the skills there."
(Reporting by Joseph Sipalan and Anshuman Daga; Editing by Richard Pullin and Mark Potter)
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