Malaysia’s Ministry of Finance refuted a media report which claimed that it provided loans for some of the country’s airlines. The ministry’s denial of these reports came after the emergence of an unsubstantiated report which stated that a total of RM1 billion had been intended for AirAsia Group Bhd.
The report in question had been published on Nikkei Asia. The report claimed that AirAsia was to receive the loan. It also stated that a group of local banks would make the loan. This loan was supposedly part of a government scheme intended to assist AirAsia with the effects of the Covid-19 pandemic.
Airlines in Malaysia and Loans
The matter of funding for airlines has been a contentious recent topic. The government has already made it clear that it does not intend to provide bailouts for any airlines. The issue was once again brought into the spotlight last week.
Last Saturday, a restructuring plan which Malaysia Airlines proposed to a group of leasing companies was rejected. This turn of events placed the future of Malaysia Airlines in a much more precarious position than the one in which it had found itself.
The lessors in question claimed to represent a total of 70% of all planes and engines which had been leased to Malaysia Airlines. According to a report published by Reuters, these lessors said that the plan was greatly flawed and intended to challenge it.
AirAsia X Bhd is another of Malaysia’s airlines which has fallen on hard times as of late. It is currently in need of a considerable amount of debt relief.
At the beginning of the Covid-19 pandemic, AirAsia X made the decision to suspend all flights until further notice. As a result, its financial position deteriorated rapidly. AirAsia X recently made a request to its creditors and suppliers to ask them to overlook more than RM63 billion of its liabilities. AirAsia X would instead prefer to have its creditors and suppliers accept a deferred payment of up to RM200 million.
The Financial State of Malaysia’s Aviation Industry
Just as has been true of other countries’ aviation industries, the aviation industry in Malaysia has suffered because of the Covid-19 pandemic. According to comments made by Transport Minister Wee Ka Siong in July, the industry is expected to post an annual loss of around RM13 billion.
The majority of the financial losses suffered by the industry have come about through direct monetary losses of various airlines based in Malaysia. The country’s airport operators suffered the remainder of the losses.
Airlines have had to pay significant sums of money to customers. This is because the customers have opted for either a cash refund or flight credit. Customers deemed this necessary after deciding to cancel or postpone their flights. Such cancellations and postponements are likely to increase as the pandemic shows no signs of abating.
14th October 2020 16:09
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