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The UK court has given the green light to Malaysian Aviation Group (MAG), the parent company of Malaysian Airlines Berhad (MAB) to proceed with the financial restructuring exercise which will inject RM3.6 billion capital commitment from Khazanah Nasional Berhad, it’s sole shareholder, to fund the restructuring until 2025.
This is seen as a lifeline to Malaysian Airlines which has been struggling during the unprecedented coronavirus pandemic.
In a statement, the company said, MAG which is solely owned by the nation’s sovereign wealth fund Khazanah, can now proceed to reduce the airline’s liabilities of over RM15 billion.
The UK Court approved a scheme of arrangement under Part 26 of the UK Companies Act 2006 between MAG’s leasing unit and majority of its aircraft operating lessor, with the restructuring plan gaining the consistent support of the lessor.
According to MAG, this financial restructuring exercise, involves all of the company’s key stakeholders and, besides the scheme, will see the airline successfully achieve bilateral agreements with finance lessors, spare engine lessors, maintenance service providers, corporate lenders and government-related entities.
The implementation measures to sustain the business include network cuts, structural cost, savings, cash conservation and payment deferral initiatives worth RM5.5 billion in savings in 2020. It targeted RM397 million for the first quarter of 2021.
The aircraft lessors had continued to support the airlines with a reset of lease rates to market and deferrals, which would also be implemented with finance and other lessors.
According to MAG group CEO Captain Izham Ismail, the company is seeking to expand the involvement into other travel-related products and services beyond flight, which would go a long way in helping their customers complete their end-to-end travel experience.
According to Finance Minister Tengku Seri Zafrul Abdul Aziz, Khazanah had injected a total RM28 billion into Malaysia Airlines.
The airline has also struggled following the disappearance of MH370 and the loss of MH17 in 2014, which led Khazanah to privatise Malaysian Airlines in a bid to save it.
