Malaysia Airlines defers sukuk payments by six months

Malaysia Airlines (MH, Kuala Lumpur Int’l) has issued deferral notices to holders of MYR1.5 billion ringgit (USD361 million) in sukuk musharakah Islamic bonds, saying that payments have been postponed by six months. The agent for the unrated perpetual bonds, CIMB Investment Bank, revealed in a statement that the flag carrier had sent the deferral notices in mid-September, to say that amounts that had been due on September 30 would resume at the next scheduled distribution date on March 31, 2021. Both Malaysia Airlines and CIMB Investment Bank have the same sole shareholder, Malaysia’s sovereign wealth fund, Khazanah Nasional. The airline was already struggling financially before the coronavirus outbreak, but in early April it said it had made cost cuts and was working with Khazanah Nasional to devise ways to survive the crisis. Sources at the sovereign wealth fund told local media at the time that Khazanah was supporting the carrier via its parent Malaysia Aviation Group, assistance deemed necessary for the “strategic needs” of the country by maintaining air links in a time of crisis. Meanwhile, Malaysia Airlines’ chief operating officer, Ahmad Luqman Mohd Azmi, has told the New Straits Times that the carrier is looking to raise capacity to 50% of pre-covid levels, or 150 flights per day, by December and 70% by mid-2021. “However, we are very cautious about adding capacity and frequencies as things are very fluid at the moment,” he qualified. For long-haul and medium-haul destinations, two of the carrier’s six A350-900s, thirteen out of fifteen A330-300s, and three out of six A330-200s are currently active, the ch-aviation fleets advanced module shows. For domestic routes, Malaysia Airlines currently operates twenty-nine of its forty-seven B737-800s. All six A380-800s and all six DHC-6-400s remain grounded.