Kuala Lumpur: Malaysia Airlines Bhd. has reached out to lessors, creditors and key suppliers as part of its “urgent” restructuring exercise as it sees little sign of the pandemic easing.
The flag carrier, wholly owned by Malaysia’s sovereign wealth fund Khazanah Nasional Bhd., would take more drastic measures if the restructuring can’t be completed over the next few months, according to a statement issued on Friday. Bloomberg reported earlier that the airline was said to be talking to banks and leasing companies to defer payments.
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“The deep impact of the prolonged Covid-19 crisis has necessitated Malaysia Aviation Group to take drastic steps in revising its long-term business plan further to ensure the group’s relevance and survival,” according to the statement, which refers to the holding company.
The carrier has embarked on salary cuts for its management and pilots, offered no-pay leave, sought payment deferrals and contract renegotiations since March. It will now review its network and fleet plans.
Khazanah supports the restructuring effort, it said in a statement. “If this effort proves unsuccessful, Khazanah will need to evaluate options going forward on how to maintain connectivity for Malaysia.”
Airlines globally are grappling with the drop in air travel, especially as authorities bring back restrictions to combat a resurgence of the coronavirus pandemic in many countries. Virgin Australia Holdings Ltd. and Colombia’s Avianca Holdings have collapsed, while American Airlines Group Inc. and United Airlines Holdings Inc. said they would cut more than 32,000 employees combined.
Malaysia Airlines’ struggle goes back to at least 2014 when it was taken private by Khazanah, following the disappearance of MH370 and the loss of MH17 four months later.
This year, the carrier maintained a few domestic flights and minimal international routes in the middle of the pandemic, mostly for repatriation and cargo operations, it said in the statement. The country reported the highest number of new cases since the start of the outbreak on Friday, with movement limits imposed on the Borneo state of Sabah to curb the spread of infections.