Malaysia Airlines aeroplanes at Kuala Lumpur International Airport in Sepang, Malaysia. REUTERS/LIM HUEY TENG
Malaysia Airlines aeroplanes at Kuala Lumpur International Airport in Sepang, Malaysia. REUTERS/LIM HUEY TENG

Singapore — Malaysia Aviation Group, the holding company for Malaysia Airlines, said in a letter to lessors 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 $84m” but only had $88m in liquidity up to August 31 and an additional $139m 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 in September 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 $1.5bn restructuring but efforts to turn around 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, the holding company group includes other local carriers and entities involved in aircraft leasing and ground handling services.

Reuters

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