MALAYSIA Aviation Group (MAG), the holding company of Malaysia Airlines Bhd, looks set to default payments for aircraft rentals if it doesn’t get funding from Khazanah Nasional Bhd, Reuters reports.

In a letter reviewed by Reuters, the group is requesting steep discounts on aircraft rentals from its lessors as part of a broad restructuring plan.

According to Reuters, the letter stated MAG was experiencing “an average monthly operating cash burn of US$84 million (RM350 million)” but only had US$88 million in liquidity as of August 31 and an additional US$139 million 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,” said the report.

However, Reuters said the letter was sent last month but the exact date was not immediately clear.

MAG and Khazanah had no immediate comment in response to Reuters queries.

Malaysia Airlines has struggled to recover from two tragedies in 2014, with 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 US$1.5 billion restructuring but efforts to turnaround 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, sources told Reuters, declining to be identified due to the sensitivity of the matter.

In addition to Malaysia Airlines Bhd, the holding company group includes other local carriers and entities involved in aircraft leasing and ground handling services. – October 2, 2020.