The airline is being asked to return its leased aircraft, and the interim CEO, who was named less than a week ago, has resigned.
Things have quickly gone from bad to worse for Malaysia’s MYAirline, which abruptly suspended its operations on the morning of October 12, calling the action “temporary.” However, in the days since, it’s looking a lot less temporary and a lot more permanent.
MYAirline Sdn Bhd’s interim CEO, Stuart Cross, named last week in the wake of co-founder and CEO Rayner Teo’s resignation, has also tendered his resignation, exacerbating the airline’s already precarious situation.
Additionally, the carrier is in the process of returning its entire fleet of nine Airbus A320s, signaling deeper troubles within the company.
Datuk Seri Azharuddin Abdul Rahman is presently overseeing the airline’s operations as the interim accountable executive. In an official statement issued on Saturday, it was emphasized that all MYAirline employees remain employed and haven’t been placed on unpaid leave.
Reports indicate that eight aircraft lessors have approached MYAirline, seeking the return of their nine leased Airbus A320s, following the airline’s cessation of flight operations on October 12. These lessors include Aviation Capital Group LLC, AerCap Holdings NV, Aircastle Ltd, Avolon, Carlyle Aviation Partners, Genesis, Mizuho, and SMBC Aviation Capital. The majority of these lessors had provided MYAirline with a single Airbus A320 each, with Aircastle being the exception, having leased two aircraft to the carrier.
In May of this year, MYAirline secured leasing agreements with various lessors, including Aircastle, Avolon, Genesis, and SMBC, for a total of 17 aircraft valued at RM2.1 billion to be delivered by the end of 2023. However, the budget airline, which commenced operations on December 1, 2022, has faced severe financial challenges in less than a year of operation.
It remains unclear whether MYAirline has applied for the renewal of its air service license (ASL). Two critical licenses are required for an entity to function as a scheduled commercial air operator in Malaysia: the ASL and the air operator certificate (AOC). While MYAirline was recently granted a two-year extension of its AOC, the ASL is set to expire on November 14.
Reports suggest that the carrier should have applied for ASL renewal at least three months prior to the expiry date. In the absence of timely renewal, MYAirline’s AOC and ASL could become inactive or revoked by the respective aviation regulators in Malaysia, namely the Civil Aviation Authority of Malaysia (CAAM) and the Malaysian Aviation Commission (MAVCOM).
As per MAVCOM’s recent updates, AirAsia Bhd and AirAsia X Bhd have secured ASL renewals for a 12-month period from October 1, 2023, to September 30, 2024. The renewal process mandates the submission of financial reports to MAVCOM, a requirement that may not have been fulfilled, given the financial uncertainties surrounding the carrier.
Several media outlets have sought comments from MYAirline and Mavcom on this issue. In the past week, Malaysia’s Transport Minister, Anthony Loke, expressed his surprise and clear anger over MYAirline’s sudden suspension of operations, stating that neither the ministry nor MAVCOM had been informed of the airline’s decision. The abrupt cessation left passengers stranded and employees unaccounted for, causing considerable confusion and frustration.
In the wake of the cessation of operations, a bit of a blame game has begun to play out, with the government, clearly quite embarrassed, publicly scolding MYAirline executives and shareholders for not keeping them apprised, and industry experts publicly placing responsibility with regulators and questioning why the government allowed the airline to operate at all, given its obviously precarious financials.
“We were caught by surprise. We were totally shocked. They (MYAirline) didn’t even inform us or MAVCOM. MYAirline just disappeared. They stopped operating, the flights didn’t take off and their employees were also not around the airport, leaving passengers in total confusion,” Loke described in a press conference.
The circumstances surrounding MYAirline’s future operations and its ability to secure necessary licenses remain uncertain at this time, but surely most savvy observers can guess how this tale will end.
This recent spate of events, should they all materialize, would leave the airline with not only no cash, but no operator’s certificate, no airplanes, and no CEO. Needless to say, it’s not an ideal way to run an airline, so it looks increasingly apparent that MYAirline’s temporary suspension of operations will not be so temporary, after all.
Reports from New Straits Times, Free Malaysia Today, and Business Times contributed to this article.
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