Malaysia Airlines may have to shut down if restructuring plan fails

A group of leasing companies has rejected the restructuring plan put forward by Malaysia Airlines. (AFP file photo)
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Updated 10 October 2020

Malaysia Airlines may have to shut down if restructuring plan fails

  • A group of leasing companies has rejected the restructuring plan put forward by Malaysia Airlines

KUALA LUMPUR: Malaysia Airlines will have to shut down if its lessors decide not to back its latest restructuring plan, the airlines’ group chief executive was quoted as saying on Saturday.

A group of leasing companies has rejected the airline’s restructuring plan, bringing the state carrier closer to a showdown over its future, Reuters reported on Friday.

Malaysia Airlines group chief executive officer Izham Ismail said the group would have “no choice but to shut it down” if lessors decide against backing the restructuring plan.

“There are creditors who have agreed already. There are others still resisting, and another group still 50:50,” Izham said in an interview with The Edge weekly.

“I need to get the 50:50 ones (on board) with those who have agreed. I understand quite a sizeable amount of creditors have agreed.”

Izham said the plan was to restructure the airline’s balance sheet over five years, achieving break-even in 2023 on the assumption that demand in the domestic and Southeast Asian markets returns to 2019 levels by the second and third quarters of 2022.

The plan will also require a fresh cash injection from shareholder, state fund Khazanah Nasional, to help the airline over the next 18 months.

Malaysia Aviation Group (MAG), the airline’s parent company, did not immediately respond to a Reuters email seeking comment.

Lessors claiming to represent 70 percent of the airplanes and engines leased to the airline group have called the plan “inappropriate and fatally flawed” and pledged to challenge it, according to people familiar with the matter and a letter from a London law firm seen by Reuters.

Izham said the lessors will need to make a decision by Oct 11, so that the airline can decide whether to proceed with its restructuring plan or “execute Plan B.”

Izham said Plan B could involve shifting Malaysia Airlines’ air operator’s certificate (AOC) to a new airline under a different name, or leveraging on the AOCs of sister airlines Firefly and MASwings.

“If you ask me, is Plan B credible? Of course, it is. We have all the skills sets in place.”


Japan’s capital sees prices fall most in over 8 years as COVID-19 pain persists

Updated 27 November 2020

Japan’s capital sees prices fall most in over 8 years as COVID-19 pain persists

  • Tokyo core CPI marks biggest annual drop since May 2012
  • Data suggests nationwide consumer prices to stay weak

TOKYO: Core consumer prices in Tokyo suffered their biggest annual drop in more than eight years, data showed on Friday, an indication the hit to consumption from the coronavirus crisis continued to heap deflationary pressure on the economy.
The data, which is considered a leading indicator of nationwide price trends, reinforces market expectations that inflation will remain distant from the Bank of Japan’s 2% target for the foreseeable future.
“Consumer prices will continue to hover on a weak note as any economic recovery will be moderate,” said Dai-ichi Life Research Institute, which expects nationwide core consumer prices to fall 0.5% in the fiscal year ending March 2021.
The core consumer price index (CPI) for Japan’s capital, which includes oil products but excludes fresh food prices, fell 0.7% in November from a year earlier, government data showed, matching a median market forecast.
It followed a 0.5% drop in October and marked the biggest annual drop since May 2012, underscoring the challenge policymakers face in battling headwinds to growth from COVID-19.
The slump in fuel costs and the impact of a government campaign offering discounts to domestic travel weighed on Tokyo consumer prices, the data showed.
Japan’s economy expanded in July-September from a record post-war slump in the second quarter, when lockdown measures to prevent the spread of the virus cooled consumption and paralyzed business activity.
Analysts, however, expect any recovery to be modest with a resurgence in global and domestic infections clouding the outlook, keeping pressure on policymakers to maintain or even ramp up stimulus.