Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  BURSA MALAYSIA  >  AirAsia Group    AIRASIA   MYL5099OO006

AIRASIA GROUP

(AIRASIA)
  Report
SummaryChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsPress ReleasesOfficial PublicationsSector newsMarketScreener StrategiesAnalyst Recommendations

Exclusive: Malaysia Airlines group low on cash, big discounts from lessors sought

10/02/2020 | 11:02am EST
FILE PHOTO: Malaysia Airlines crew members walk under a Malaysia Airlines arch at Kuala Lumpur International Airport in Sepang

Malaysia Aviation Group, the holding company for Malaysia Airlines Bhd, said in a letter to lessors the group is unlikely to be able to make payments owed after November unless it receives more funding from state fund Khazanah.

The letter, reviewed by Reuters, follows a request by the troubled carrier for steep discounts on aircraft rentals from its lessors as part of a broad restructuring plan, three sources with knowledge of the matter said.

The letter added that in the absence of an implemented restructuring by the end of the year, Khazanah, its sole shareholder, "intends to divert all efforts and funds to an alternative company with an existing air operator's permit to ensure connectivity for Malaysia (i.e. Plan B)."

The alternative company was not named. Malaysia has two major airlines, the other being AirAsia Group, as well as other smaller carriers.

The letter was sent to lessors last month but the exact date was not immediately clear.

Malaysia Aviation Group later confirmed in a statement on Friday that Malaysia Airlines had reached out to lessors, creditors and key suppliers recently as it embarks on an urgent restructuring due to the impact of the coronavirus pandemic.

According to the letter seen by Reuters, the aviation group is experiencing "an average monthly operating cash burn of $84 million" but only had $88 million in liquidity as of Aug. 31 and an additional $139 million available from Khazanah.

"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," it said.

Sovereign wealth fund Khazanah said in an emailed response to Reuters' queries that it was supportive of the airline's restructuring efforts aimed at creating a pathway to a financially self-sustainable post-COVID airline". But if they prove unsuccessful, it will need to evaluate options on how to maintain connectivity for Malaysia, it said.

It did not provide clarity on whether it would provide additional funding beyond November.

In the letter, Malaysia Aviation Group said that additional shareholder support beyond December 2020 was conditional upon "agreeing successful restructuring terms with all stakeholders."

Globally, governments have bailed out shattered airlines this year but that hasn't been enough to prevent layoffs.

Last month, Thai Airways International debt restructuring was approved by a bankruptcy court. Singapore Airlines has raised $11 billion in a rescue package led by state investor Temasek Holdings.

STEEP DISCOUNTS

Malaysia's national airline has struggled to recover from two tragedies in 2014 - 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 $1.5 billion restructuring but efforts to turn around its business have been further upended by the pandemic.

Malaysia Aviation Group said in its statement that its plan was "highly dependent on the individual contributions of all relevant stakeholders in supporting the group."

"It is intended that this restructuring exercise be completed over the next few months. However, if such an outcome is not possible, the group will have no choice but to take more drastic measures," it said.

Since last year, Malaysia had been looking for a strategic partner for its airline, which has been beset by high costs and a bloated workforce.

Sources said the carrier plans to negotiate discounts with lessors via a restructuring plan it is seeking to implement through a UK court process.

Lessors, who have been given an Oct. 7 deadline to respond to the letter, and other stakeholders have been taken aback by the hardline stance, said the sources, who declined to be identified due to the sensitivity of the matter.

"The lessors are already under pressure in this market and what Malaysia Airlines is asking is just not doable," said a banking source, adding that the carrier was seeking discounts as deep as 75% or so.

The airline's global lessors include AerCap, Avolon and Standard Chartered's leasing arm. Avolon and Standard Chartered declined to comment, while there was no immediate response from Aercap.

In addition to Malaysia Airlines, the holding company group includes other local carriers and entities involved in leasing and ground handling services.

The letter also said the group was in the process of restructuring about $2 billion of "debt/similar liabilities" with the support of its shareholder.

By Anshuman Daga


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
AIRASIA GROUP -1.32% 0.75 End-of-day quote.-55.88%
SINGAPORE AIRLINES LIMITED 0.92% 4.39 End-of-day quote.-51.44%
STANDARD CHARTERED PLC -0.12% 484.1 Delayed Quote.-31.57%
THAI AIRWAYS INTERNATIONAL 1.33% 3.04 End-of-day quote.-55.62%
All news about AIRASIA GROUP
12/03TRAVEL ADVISORY : Flooding in Nakhon Si Thammarat
PU
12/02AIRASIA : offers early Christmas treat for uniformed personnel, with promo for t..
PU
11/30AIRASIA : Clarification in relation to the article appearing on the edge malaysi..
PU
11/29AIRASIA : Cuti-Cuti Malaysia RM50 e-voucher now available for redemption on aira..
PU
11/27Airbus re-sells six unwanted jets built for AirAsia
RE
11/27Airbus re-sells six unwanted jets built for AirAsia
RE
11/25Mexican airline Volaris sees second-quarter profit, room to grow
RE
11/24AIRASIA : slashes Malaysia capacity recovery outlook
RE
11/24AIRASIA : slashes Malaysia capacity recovery outlook
RE
11/24AIRASIA : Berhad Third Quarter 2020 Financial Results
PU
More news
Financials
Sales 2020 3 559 M 876 M 876 M
Net income 2020 -3 125 M -769 M -769 M
Net Debt 2020 14 132 M 3 480 M 3 480 M
P/E ratio 2020 -0,81x
Yield 2020 -
Capitalization 2 506 M 615 M 617 M
EV / Sales 2020 4,68x
EV / Sales 2021 2,02x
Nbr of Employees 21 059
Free-Float 59,1%
Chart AIRASIA GROUP
Duration : Period :
AirAsia Group Technical Analysis Chart | AIRASIA | MYL5099OO006 | MarketScreener
Technical analysis trends AIRASIA GROUP
Short TermMid-TermLong Term
TrendsBullishNeutralBearish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus SELL
Number of Analysts 19
Average target price 0,48 MYR
Last Close Price 0,75 MYR
Spread / Highest target 2,67%
Spread / Average Target -36,3%
Spread / Lowest Target -85,3%
EPS Revisions
Managers
NameTitle
Tharumalingam Kanagalingam Chief Executive Officer
Adrian Jenkins Chief Operating Officer
Pattra Boosarawongse Group Chief Financial Officer
Kin Choy Lau Group Head-Information & Communication Technology
Nadzri Hashim Head-Engineering
Sector and Competitors
1st jan.Capitalization (M$)
AIRASIA GROUP-55.88%615
DELTA AIR LINES, INC.-29.77%26 085
RYANAIR HOLDINGS PLC8.03%21 513
AIR CHINA LIMITED-16.06%16 567
CHINA SOUTHERN AIRLINES COMPANY LIMITED-1.91%13 707
UNITED CONTINENTAL HOLDINGS, INC.-43.34%13 598