Malaysia Aviation Group received the British court approval on Monday (Feb 22), which enables it to begin a restructuring plan with RM3.6 billion (US$ 892 million) of new capital from its leasing unit and a majority of its aircraft operating owners.
MAG, a Malaysia Airlines parent, said the scheme had received a unanimous support from relevant investors and was a key component of broader restructuring, which would contribute to a more than RM 15 billion reduction in its liabilities.
“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 Nasional Bhd and existing stakeholders,” the Group said in its statement.
For the company, this restructuring is a step forward, with long-term costs, and the economic consequences of the coronavirus pandemic in recent times.
The group will commit the new capital of RM36 billion to fund the business throughout 2025 by Khazanah Nasional, also the sovereign wealth fund in Malaysia.
The airline will conclude bilateral agreements with financial ministers, spare engine lessors, maintenance service providers, corporate lenders and government-specific entities under restructuring planned to take place at the beginning of March.
“Operating lessors have continued to support the airline with a reset of lease rates to market and deferrals,” he said.
It stated that steps have also been taken to help the country overcome the COVID-19 crisis by reducing networks, reducing structural costs, retaining cash and delaying payments of $5.5 billion in 2020, with the first quarter target of €397million.
Group Chief Executive Izham Ismail said MAG is shifting priorities regarding different business segments and subsidiaries in its portfolio in order to set itself 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.