UK Court gives MAG restructuring nod, Khazanah to commit RM3.6 bil

 
by RAHIMI YUNUS/ FILE PIX
 
The UK Court has sanctioned Malaysia Aviation Group’s (MAG) restructuring scheme between MAG’s leasing entity, MAB Leasing Ltd, and the majority of its aircraft operating lessors on Feb 22, 2021, upon unanimous support from relevant lessors representing an important component in the plan to reduce over RM15 billion in liabilities.
 
With the sanction, MAG, the parent company of Malaysia Airlines Bhd (MAB), can proceed with the financial restructuring exercise that is expected to complete in early March 2021 involving all of MAG’s key stakeholders. 
 
MAG said the restructuring also entailed a new RM3.6 billion capital commitment from Khazanah Nasional Bhd, its sole shareholder, to fund the business throughout the restructuring period until 2025.
 
Other key elements of the restructuring included network cuts, structural cost savings, cash conservation and payment deferral initiatives that translated to a total of RM5.5 billion in 2020 and a target of RM397 million for the first quarter in 2021.
 
MAG said operating lessors have continued to support the airline with a reset of lease rates to market and deferrals and deferrals will also be implemented with finance and other lessors.
 
The group further said revolving credit facility lenders and hedging counterparties agreed on a term-out of their facilities while various concessions from entities related to the Malaysian government have been agreed to enable a solvent recapitalisation of Malaysia Airlines.
 
“The longer-term vision of MAG is to establish itself as a leading global travel group. This signifies a paradigm shift in the way we prioritise the different business segments and subsidiaries in the group’s portfolio. 
 
“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,” MAG group CEO Capt Izham Ismail said in a statement yesterday. 
 
He said its geographical advantage, award-winning solutions and services, plus signature Malaysian Hospitality will help the company to diversify its revenue stream by minimising the need to rely on the heavily competitive air travel industry for survival.