KUALA LUMPUR: Khazanah Nasional Bhd may opt to ground Malaysia Airlines Bhd permanently and instead turn turboprop operator Firefly into the new national carrier, sources said.
Khazanah, however, would prefer Malaysia Airlines' creditors to share the burden of the carrier's restructuring, rather than going down the liquidating path, they added.
Closing Malaysia Airlines would be the last resort if creditors failed to agree on its restructuring, they said.
Meanwhile, Khazanah managing director Datuk Shahril Ridza Ridzuan told Berita Harian (BH) that Firefly could be the new national carrier.
"If implemented successfully, Firefly has the potential to become the national airline," said Shahril when responding to BH's query on whether closing Malaysia Airline was the best option under Khazanah's consideration.
The sister daily of the New Straits Times (NST) said Khazanah was willing to end financing for Malaysia Airlines and continue funding Firefly.
This would help the short-haul airline to expand its operations, thus continuing air connectivity for Malaysia.
A source directly involved in the negotiations with the creditors said Khazanah might opt to reboot Malaysia Airlines' air operator licence by transferring it to other company belonging to the fund.
"We can't justify using national resources to rescue foreign creditors excessively," the source told the NST.
Meanwhile, Malaysia Airlines said it could not disclose information and update the outcome of the discussions with its lessors and creditors due to the confidentiality of the negotiation.
"Our focus now is to get our lessors, creditors and key suppliers to help us achieve mutual agreement to make the restructuring work. We are prepared to reset the company and start afresh if the plan fails," a Malaysia Airlines spokesperson said when contacted.
He said Khazanah was supportive of the restructuring efforts, currently undertaken by Malaysia Aviation Group (MAG), to create a pathway to a financially self-sustainable aviation company post-Covid-19.
"If this effort proves unsuccessful, they will need to evaluate options as we advance on how to maintain connectivity for Malaysia. Additional support beyond November 2020 is conditional upon successful restructuring terms with all stakeholders."
He said the mutual agreement between Malaysia Airlines and its creditors would help to stabilise MAG's cost base and subsequently to ensure the sustainability of the carrier's business.
"This allows us to continue supporting the whole value-chain and balancing our role as a contributor to the aviation industry, and subsequently, continue to be the flag bearer of Malaysia," he added.