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KUALA LUMPUR, Jan 20 — Malaysia Aviation Group (MAG) has successfully obtained the approval from the UK Court to proceed with a major component of its debt restructuring, following the severe impact of the Covid-19 pandemic on the travel and tourism industry globally.
In a statement, MAG said its aircraft leasing subsidiary, MAB Leasing Ltd (MABL), had on December 23 last year, issued a Practice Statement Letter to certain groups of its creditors notifying them of the company’s intention to file a scheme of arrangement under Part 26 of the UK Companies Act 2006.
The convening hearing was then held as scheduled on January 20, 2021, and the Court has approved MABL to convene a meeting of creditors to consider the proposed scheme.
The outcome of the creditor meeting will be reported back to the Court at the sanction hearing set for February 22, 2021.
“It is expected that the UK Court process and the wider Group restructuring exercise will conclude by the end of first quarter in 2021,” said MAG, the parent company of Malaysia Airlines Bhd, in a statement here, today.
MAG has since been in active discussions with all its key stakeholders and has managed to obtain overwhelming support to carry out its restructuring after many rounds of intense negotiations.
However, there remains a small minority of creditors that have yet to indicate their support for the restructuring. Therefore, part of the restructuring is being implemented by means of a scheme of arrangement to be proposed by MABL.
MAG said it will continue working with its relevant stakeholders with a view to completing the numerous transactions as soon as possible.
Throughout this process, MAG has continued to fulfil its duty as the national flag carrier to ensure domestic and international air connectivity including to rural areas of the country and supporting vital national supply chains.
It is expected that daily operations and activities of the main airline, Malaysia Airlines, and all subsidiaries under MAG will not be impacted by the ongoing restructuring.
The Group remains committed to its entire ecosystem including its customers, suppliers and other stakeholders, and aims to ensure that the restructuring exercise is carried out in a fair and transparent manner.
MAG said the restructuring is based on a revised long-term business plan and will pave the way for the company to ensure its long-term sustainability, together with the strong support from its shareholder and the large majority of its creditors.
Early 2020 had seen the Group off to a flying start, with the ongoing turnaround programme on track.
However, the Covid-19 pandemic then brought the momentum to a grinding halt. With borders closed and aircraft grounded, the aviation industry was most severely impacted, and a full recovery is expected only in 2023.
MAG took decisive actions to reduce costs, preserve cash, transform the business, and realign the long-term aspirations to weather this crisis.
In September 2020, with air traffic still at an all-time low, coupled with continued uncertainty around the recovery of the industry, it became apparent that the Group would need to take the difficult decision to embark on a holistic restructuring exercise aimed at resizing the business and emerging sustainably profitable in the long term as Malaysia’s flag carrier with a stronghold in Asia Pacific and an improved Asean short-haul business model. — Bernama