Malaysia Airlines (MH, Kuala Lumpur Int'l) parent Malaysia Aviation Group (MAG) has said it would proceed with a MYR3.6 billion ringgit (USD890 million) restructuring plan after obtaining approval at the High Court of Justice in London on February 22 for a deal with a majority of its lessors.

The court sanctioned the debt restructuring scheme under Part 26 of the UK Companies Act 2006, the group said. Part 26 is a section of the act that governs “arrangements and reconstructions.”

“The scheme received the unanimous support of the relevant lessors and represents an important component of MAG’s wider restructuring exercise which will achieve a reduction in MAG’s liabilities of over MYR15 billion [USD3.71 billion],” it said. “Operating lessors have continued to support the airline with a reset of lease rates and deferrals.”

Under the restructuring exercise, which is expected to be completed in early March, the airline expects to strike bilateral agreements with lessors, spare-engine lessors, maintenance providers, corporate lenders, and Malaysian government-related entities.

“Now that the scheme has been formally sanctioned by the UK court, the airline can proceed to implement its restructuring plan with the support of its sole shareholder, Khazanah Nasional Bhd, and existing stakeholders,” the group elaborated.

The ruling paves the way for Khazanah Nasional, Malaysia’s sovereign wealth fund, to commit the MYR3.6 billion in new capital to the group to fund it until 2025.

Malaysia Aviation Group also said it had taken other steps to help it survive the Covid-19 crisis, such as paring down its network, structural cost savings, cash conservation, and payment deferral initiatives, saving MYR5.5 billion (USD1.36 billion) in 2020 and an estimated additional MYR397 million (USD98.2 million) in the first quarter of 2021.

MAG has plans to alter its priorities regarding its various units as it seeks to set itself up as a “global travel group” other than just flights, said group CEO Izham Ismail.

“The longer-term vision of MAG is to establish itself as a leading global travel group. This signifies a paradigm shift in the way we prioritise the different business segments and subsidiaries in the group’s portfolio. We seek to expand MAG’s involvement into other travel-related products and services beyond flights, which will go a long way in helping our customers complete their end-to-end travel experience,” he said.

The UK court ruling follows a meeting between the group’s MAB Leasing unit and its creditors on February 10, whose outcome was not disclosed but which MAG said would be reported to the court for consideration. That, in turn, followed UK court approval in January for the group to implement its debt restructuring efforts.