Financial woes ground Malaysian budget carrier MYAirline abruptly
Transport Minister hits out at airline’s sudden decision, says aviation industry has been damaged as a result
Tan Ai Leng
[KUALA LUMPUR] Malaysia’s Transport Minister Anthony Loke on Thursday (Oct 12) criticised the “sudden decision” by MYAirline to suspend all operations with immediate effect, with the budget carrier citing financial problems.
The shock announcement, coming barely a year after the airline was launched amid much fanfare, was posted on its Facebook page at about 5.30 am. The carrier described the move as an “extremely painful” one that had to be made because of significant financial pressures.
Operations will be ceased until further notice, pending the completion of shareholder restructuring and a recapitalisation of the company.
The carrier’s board of directors said in a statement: “We have worked tirelessly to explore various partnerships and capital-raising options to prevent this suspension. Unfortunately, the constraints of time have left us with no alternative but to take this decision.
“We deeply regret and apologise for having to make this decision, as we understand the impact it will have on our loyal passengers, dedicated employees and partners.”
That did not stop Loke from hitting out at MYAirline and its management at a press conference on Thursday evening.
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“They didn’t even inform us about their suspension. The sudden decision to suspend the operation, without informing the passengers, is irresponsible and unacceptable,” said Loke, who estimated that as many as 125,000 passengers will be affected in the long run.
The transport ministry, through the Malaysian Aviation Commission (Mavcom), will ensure these passengers’ rights are protected and that they will get refunds, said Loke.
He added that Mavcom would investigate the matter further and decide whether to revoke MYAirline’s air service licence, which will expire in a month’s time on Nov 14.
“I understand that they are looking for new investors, but without the operating licence, they will not have any value,” said Loke.
He said that MYAirline’s “irresponsible move” has damaged Malaysia’s aviation industry and the country’s image as a tourist destination.
For now, the budget carrier has also been instructed to cease the sale and booking of flights on all booking platforms until further notice.
Mavcom said: “We are currently investigating the airline based on internal reviews and complaints received regarding the airline’s unpaid statutory payments to its employees.”
Grounded passengers
Hundreds of passengers were blind-sided by the announcement when they arrived at the Kuala Lumpur International Airport 2 on Thursday morning, only to find out that their flights to cities like Penang, Kuching and Bangkok had all been cancelled.
Malaysia Airports Holdings said 39 flights to destinations in Malaysia and Bangkok had been cancelled, and that around 5,000 passengers were affected on Thursday alone.
Budget carriers AirAsia and Indonesia’s Batik Air jumped in to help by offering flights at a discount for affected MYAirline passengers. AirAsia also reached out to the carrier’s employees with an invitation to explore job offers with AirAsia.
The news of the suspension of service came just three days after its chief executive officer Rayner Teo resigned “due to health considerations”, after having headed the airline since its inception in November 2020.
The timing of the suspension surprised observers, given that the Civil Aviation Authority of Malaysia had just granted the airline an extension of its air-operator certificate, which was to have been valid for another two years.
Last October, Singapore mainboard-listed SIA Engineering Co announced that it had signed a 10-year agreement with MYAirline to provide support services to its aircraft.
Reports that MYAirline was in financial trouble had surfaced in the local media in the last few days, as the company had failed to pay its service providers and employees’ salaries on time.
Earlier, it was reported that the airline had approached the son of Sarawak’s premier Abang Johari Tun Openg about becoming an investor.
MYAirline is Malaysia’s second budget carrier after AirAsia. It operates a fleet of nine Airbus A320-200 planes that fly from Kuala Lumpur to other parts of Malaysia, as well as to Bangkok. Earlier in April, The Business Times reported that there were plans to expand to Indonesia, Vietnam and Singapore.
Apart from former CEO Teo, MYAirline’s board includes co-founder and major shareholder Allan Goh and his son Sean, former Civil Aviation Department of Malaysia director-general Azharuddin Abdul Rahman, and former Malaysia Airports Holdings chief operating officer Hamid Mohd Ali.
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