Malaysia Airlines will have no choice but to shut down if its lessors do not back its latest restructuring plan, its group CEO, Izham Ismail stated on Oct. 10, according to the Bangkok Post.

On Oct. 9, Reuters reported that a group of leasing companies had rejected the restructuring plan the airline had put forward, with lessors claiming to represent about 70 percent of the airplanes and engines leased to Malaysia Airlines group calling the plan “inappropriate and fatally flawed”.

However, despite his warning, a different note was struck by Izham, who added that apart from creditors who resisted the plan, there were others who had "agreed already", along with a third group that was "50:50."

"I need to get the 50:50 ones (on board) with those who have agreed. I understand quite a sizeable amount of creditors have agreed", he added.

What does the restructuring plan entail?

The plan involves restructuring the airline's balance sheet over a period of five years, and breaking even in 2023, the Bangkok Post further reported.

It operates on the assumption that demand within the domestic and wider Southeast Asian markets will have returned to pre-Covid-19 pandemic levels seen in 2019 by around the second and third quarters of 2022.

The plan also requires a fresh amount of cash from the airline's major shareholder, Malaysia's state fund Khazanah Nasional, to help the airlines tide over the next 18 months.

Malaysia's government will not bail out airline

Meanwhile, the New Straits Times further reported that the Malaysian government has insisted it will not bailout the national carrier.

The country's Finance Minister Tengku Zafrul Tengku Abdul Aziz clarified:

"We have consistently said this is a matter where Khazanah as a sole shareholder has to resolve. We at the Ministry of Finance will not be injecting any cash or capital into Malaysia Airlines through Khazanah."

He further added that the government did not have guarantees or support for the airline.

Tengku Zafrul added however, that he had not said anything specifically about closing down the airline.

Malaysia Airlines CEO: There is also a Plan B

Reuters further quoted Izham highlighting the presence of a Plan B should the restructuring plan fail.

This plan involves either shifting the airline's operator's certificate (AOC) to a new airline with a different name, or using the AOCs of Firefly and MASwings for leverage.

In the meantime, the carrier has introduced an "upskilling and reskilling programme" for its employees, The Edge Markets reported.

A statement by the airline said:

"Subject to approval, [this] group of employees will be temporarily re-assigned to support other departments that require workforce for critical roles or job functions resulting from the constrained workforce due to added deliverables and attrition."

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Top photo from Malaysia Airlines Facebook