Entities affiliated with the governments of Malaysia and Thailand have in recent days affirmed support for their respective flag carriers, both undergoing court-led restructurings.
Malaysia Airlines Group’s (MAG) sole shareholder Khazanah Nasional, Malaysia’s sovereign wealth fund, said in a 4 March statement announcing its 2020 financial results that it “continues to provide full support and close cooperation in the comprehensive efforts to ensure the national carrier’s sustainability post-pandemic”.
On 22 February, a UK court approved a scheme of arrangement between MAG’s leasing entity MAB Leasing and the majority of MAG’s operating lessors. The scheme was unanimously supported after one final lessor, which previously had faced challenges getting approval from its own financiers, consented to the scheme.
The approval followed months of what MAG described as “intense” negotiations.
Malaysia Airlines on 5 March declined to comment, but tells Cirium it will share more on the restructuring and its plans “soon”.
Cirium has contacted Khazanah for comment.
In neighbouring Thailand, Thai Airways International submitted its rehabilitation plan on 2 March, and the director general of the State Enterprise Policy Office, Pantip Sripimol said the key elements are “quite acceptable”, according to a 3 March Bloomberg report.
Sripimol, whose office is under the country’s finance ministry, added that the finance ministry will study the restructuring proposals in detail before deciding on its vote. The finance ministry holds a 47.9% stake in Thai Airways, according to the Stock Exchange of Thailand.
Cirium has contacted the State Enterprise Policy Office for comment.
Thai’s creditors will have to vote on the rehabilitation plan at a meeting to be convened on 12 May and/or 19 May. That plan was written by seven rehabilitation planners – six individuals as well as EY Corporate Advisory Services.
Thai confirmed to Cirium on 3 March that it plans to raise Bt50 billion ($1.65 billion) over the next two years and that it expects to deploy a fleet of 86 aircraft in 2025, comprising of only five aircraft types. The finance ministry will support that fundraising plan, Sripimol said, according to the Bloomberg report.
Such support from government entities has not always been a given amid the Covid-19 downturn.
Back in October, Khazanah said that if creditors could not agree to a restructuring plan, the fund could end financing for Malaysia Airlines and redirect it to Firefly, a Malaysia Airlines subsidiary. At that time, many lessors were opposing Malaysia Airlines’ restructuring, citing in particular a cramdown mechanism that could have effectively forced them to consent to the restructuring.
In the early months of the Covid-19 pandemic, Thai Airways had sought a Bt58.1 billion bridge loan guaranteed by the finance ministry.
While the loan was approved on 29 April by a committee chaired by prime minister Prayuth Chan-ocha and scheduled to be put to the Thai cabinet for approval, the loan was ultimately replaced with a business rehabilitation process after the government asked Thai to come up with a way to restructure its debts, according to Reuters articles dated 30 April and 18 May.
Thailand’s Central Bankruptcy Court later accepted Thai’s application for business rehabilitation on 27 May and approved it in September.
Meanwhile, seven Thai airlines are still seeking soft loans from the Thai government. Back in September, Chan-ocha received a letter from seven Thai airline executives asking him to “consider measures to help the aviation business of Thailand due to the impact of the Covid-19 outbreak”, and to provide Bt24 billion in soft loans to local carriers.
Thai AirAsia is among the seven and its chief executive Santisuk Klongchaiya warned this week that Thailand’s reputation as a regional aviation hub could be damaged if the government cannot speed up reopening the country to tourism.
“After facing the pandemic for a year, the key factors that can strengthen Thai tourism are reopening borders and financial aid such as soft loans to help airlines maintain their business and save jobs,” Klongchaiya was quoted as saying in a 5 March Bangkok post report.
Cirium has contacted AirAsia for comment.
Updated with comment from Malaysia Airlines