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Tuesday, March 9, 2021

UK deal paves way for RM3.6bil Malaysia Airlines restructuring

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PETALING JAYA: Malaysia Aviation Group (MAG), the parent company of Malaysia Airlines Bhd, has obtained a court approval in the UK that will allow it to begin a restructuring plan with some RM3.6 billion in capital injected by Khazanah Nasional Bhd.

Reuters reported that the UK court approved a deal between MAG’s leasing unit and a majority of its aircraft operating lessors yesterday, with the restructuring plan obtaining the unanimous support of the lessors.

MAG said the scheme also represented a wider restructuring that will help reduce the company’s liabilities of more than RM15 billion.

“Now that the scheme has been formally sanctioned by the UK court, the airline can proceed to implement its restructuring plan with the support of its sole shareholder, Khazanah and existing stakeholders,” Reuters quoted MAG as saying in a statement.

Khazanah will be committing the RM3.6 billion in new capital to the group to finance the business until 2025.

With the restructuring expected to be completed by early March, MAG said it will strike bilateral deals with finance lessors, spare engine lessors, maintenance service providers, corporate lenders, and government-related entities.

“Operating lessors have continued to support the airline with a reset of lease rates to market and deferrals,” it said.

It also said it has implemented measures to sustain the business amid the Covid-19 pandemic through network cuts, structural cost savings, cash conservation and payment deferral initiatives worth RM5.5 billion last year, with a target of RM397 million for the first quarter of 2021.

Group chief executive officer Izham Ismail said the company is looking to expanding its other business segments, setting MAG up as a global travel group.

“We seek to expand MAG’s involvement into other travel-related products and services beyond flights, which will go a long way in helping our customers complete their end-to-end travel experience,” he said.

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