Malaysia Airlines’ parent says group has no cash to make payments beyond November

Photographer: Sanjit Das/Bloomberg

Malaysia Aviation Group, the holding company for Malaysia Airlines Bhd, said in a letter to lessors that the group is unlikely to be able to make payments owed after November unless it receives more funding from state fund Khazanah.

The letter, reviewed by Reuters, follows a request by the troubled carrier for steep discounts on aircraft rentals from its lessors as part of a broad restructuring plan, three sources with knowledge of the matter said.

According to the letter, the aviation group was experiencing “an average monthly operating cash burn of $84 million” but only had $88 million in liquidity as of Aug. 31 and an additional $139 million available from Khazanah, its sole shareholder.

“Based on the current run-rate, absent further funding from shareholders, the group will likely be unable to meet its obligations, including payments to lessors, post November 2020,” it said.

The letter was sent last month but the exact date was not immediately clear.

Malaysia Aviation Group and Khazanah had no immediate comment in response to Reuters queries.

Malaysia’s national airline has struggled to recover from two tragedies in 2014 – the mysterious disappearance of flight MH370 and the shooting down of flight MH17 over eastern Ukraine.

Khazanah took it private that year as part of a $1.5 billion restructuring but efforts to turnaround its business have been further upended by the coronavirus pandemic.

Malaysia Airlines plans to negotiate the steep discounts with its lessors via a restructuring plan it is seeking to implement through a UK court process, the sources said, declining to be identified due to the sensitivity of the matter.

In addition to Malaysia Airlines Bhd, the holding company group includes other local carriers and entities involved in aircraft leasing and ground handling services.

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.