State fund Khazanah to stop funding Malaysia Airlines if lessor talks fail: Source

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 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. Khazanah, MAG's sole shareholder, declined to comment. MAG said details concerning its restructuring plan were strictly bound by non-disclosure agreements between the parties involved. "MAG will depict its final position upon achieving resolution with the parties it is negotiating with," it said, adding the restructuring plan was a crucial step for it to come out as a "sustainable and profitable organisation in future". It also said the restructuring comes after various cash conservation and cost reduction initiatives to keep its business afloat proved to be inadequate due to the prolonged effect of the coronavirus crisis.<br/>