Malaysia Airlines Folds If Lessors Don’t Accept Restructuring

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The Malaysian Government has indicated that it is not willing to provide any more cash or loan guarantees to the parent of Malaysia Airlines through the state fund Khazanah unless plane lessors accept concessions.

Malaysia Airlines was rebooted once in the mid-2010s and run into problems already before the Covid-19 hit the airline sector in the first quarter of 2020.

According to the papers seen by Reuters, the plan is to restart the airline through the FireFly subsidiary unless an agreement with the plane lessors is reached.

FireFly, an ATR operator, currently flying tertiary routes, would acquire jets and fly select domestic routes before acquiring widebody jets for regional/long-haul routes.

Here’s an excerpt from the Reuters:

The parent of Malaysia Airlines has warned leasing companies that state fund Khazanah will stop funding the group and force it into a winding down process if restructuring talks with lessors are unsuccessful, according to a letter seen by Reuters.

The warning from Malaysia Aviation Group (MAG), the holding company for the state carrier, raises the stakes in negotiations for a financial shake-up known as “Plan A” and sets out an alternative plan to divert funds to a sister airline unit called Firefly.

“In the event Plan A fails, shareholder (Khazanah) will cease funding for MAG and will trigger winding down/liquidation process for MAG,” according to the document, the contents of which were confirmed by six people familiar with the matter.

Sources, who declined to be identified due to the sensitivity of the matter, say Malaysia Airlines is negotiating discounts with lessors via a restructuring plan it is seeking to implement through a UK court process.


Malaysia Airlines has not been run as a commercial enterprise, unlike its Singaporean counterpart, which is previously a part of, but rather what the government wishes were at a time.

At some point, the airline decided to curtail long-haul routes only to reintroduce them the next year. It currently has 25 planes out of 88 in storage, waiting for better times.

There are similarities between what is going on with Thai Airways and Malaysia Airlines. Both are state-owned and chronically money-losing.

I am unsure if the plane lessors have other choices presently than accept reduced payments or take the planes back and park them in a dessert.

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