Khazanah: Firefly May Become Our New National Airline If Malaysia Airlines Shuts Down
The outcome of restructuring talks with lessors will be closely watched because it will determine the future of both Firefly and Malaysia Airlines.
By Yap Wan Xiang — 15 Oct 2020, 01:00 PM — Updated about 4 years ago
Khazanah Nasional has indicated that they could channel funds to low-cost carrier Firefly and turn it into the country's national carrier if Malaysia Airlines was to shut down
The comment by Malaysia's sovereign wealth fund is the first public statement after a letter sighted by Reuters last week revealed that Malaysia Aviation Group (MAG) could close down its flagship airline — Malaysia Airlines — if lessors did not agree to steep discounts.
In a report by Berita Harian published yesterday, 14 October, Khazanah's managing director Datuk Shahril Ridza Ridzuan said negotiation with lessors is still ongoing, while the sovereign wealth fund's next steps on the matter will be revealed once the restructuring talks become clearer.
"Among the alternative options that are being considered is Khazanah preparing to end financing for Malaysia Airlines and channel the fund to Firefly to expand its operations for the purpose of fulfiling the connectivity needed by the country," said Shahril.
If implemented successfully, Firefly has the potential to become a national airline.
Shahril admitted that stakeholders would be affected if Malaysia Airlines was to shut down
He said the aviation industry was a strategic sector for Malaysia as it was an 'enabler' for the economy and had contributed 3.5% to the national Gross Domestic Product (GDP) last year.
Shahril said Khazanah could continue supporting Malaysia Airlines by injecting more funds to the carrier if restructuring talks were successful or they would shift their focus to Firefly.
"In any case, the airline selected must have sustainable finances so that it can generate returns," he said.
"If Khazanah continues to finance Malaysia Airlines which does not have a strong financial position and often suffers losses, Khazanah will have to dispose of its holdings in other strategic assets or increase debt."
Firefly, which is also a subsidiary under MAG, currently operates a fleet of 12 twin turboprops that mainly fly within the country
According to the company's website, Firefly was established in April 2007, operating out of the Penang and Subang hubs.
Other than offering domestic routes, it also connects passengers to Southern Thailand, Singapore, and Sumatera of Indonesia.
However, the glowing insect which the company is named after is not an insect unique to Malaysia.
The company named the low-cost carrier Firefly because it depicts "the airline's characteristics, which are agility, brilliance, charm, and fun."
