MALAYSIA’S troubled airlines could get up to RM10 billion financial aid from Khazanah Nasional Bhd, reports the New Straits Times.

Citing sources, the report said the amount would specifically be in the form of loans guaranteed by Khazanah as a means to help them cope with the Covid-19 outbreak.

A source told the daily this was meant to cover operating costs and improve liquidity on a short-term basis.

“The assistance depends on how long the Covid-19 crisis will last. Most airlines have cash reserves less than a month to keep their operations, except AirAsia Group,” the source said.

The local airlines in question are Malaysia Airlines Bhd, AirAsia, Firefly and Malindo Air. In 2018, the national air transport industry supported about 450,000 jobs in the country.

“The short-term relief is important for local airlines to continue operations and keep their staff employed amid capacity reduction in certain affected routes, aircraft grounding and travel restrictions enacted to curb the spread of the virus,” the source added.

Khazanah’s managing director Shahril Ridza Ridzuan was quoted by the daily as saying he could not comment on the possible aid owing to the fluidity of the situation.

The aviation industry has been hit hard by the pandemic, having to suspend flights, initiating a voluntary unpaid leave scheme and pay cuts of at least 10% from among its senior management.

Malaysia Airlines group chief executive officer Captain Izham Ismail, meanwhile, confirmed to the daily that it had been discussing with Putrajaya on emergency measures to help them sustain operations, but added that it did not involve a merger with AirAsia.

The report also quoted Sobie Aviation consultant and Singapore-based independent analyst Brendan Sobie as saying that the virus crisis offered a rare chance for the local airline industry to benefit from a reset.

Sobie however said a critical first step is for the industry to secure government support to ride through the present crisis.

“This is not about the survival of the fittest airlines but about which governments will follow the likes of the US and Singapore in supporting their airlines,” he added.

Some components, he said, include job support schemes, loans or loan guarantees, and lowered or waived taxes. – April 1, 2020.