KUALA LUMPUR: MYAirline Sdn Bhd's future has been thrown into limbo as the cash-strapped carrier suspends operation after a potential white knight pulled out of a deal to buy a majority stake at the 11th hour.
Questions linger on who will step in and rescue MYAirline after a potential investor decided against buying its shares from businessman Datuk Goh Hwan Hua.
Business Times had reported that the investor could be Sarawak Premier Tan Sri Abang Johari Tun Openg's son Abang Abdillah Izzarim Abang Abdul Rahman Zohari.
"It didn't happen. The decision was supposed to be made on Oct 11 but the (new) investor pulled out," sources told Business Times.
One of the sources said that the new investor might not have wanted to carry the weight of debts that MYAirline has accumulated and pump in a big amount of money to sustain its business.
"The airline business is very tough although it sounds sexy for outsiders. Today they (MYAirline) might need RM30 million to operate, tomorrow they might need more because airline business burns money every day.
"Operational expenses for airlines are very high and they're all in US dollar and interest rate is very expensive. They (MYAirline) are selling their flights at around RM60 for a two-way ticket domestically.
"Even the price from downtown to Kuala Lumpur International Airport (KLIA) is already RM55. Do they know their cost?" the source asked.
Business Times had reported on Oct 9 that MYAirline was struggling to pay its services providers as well as employees' salaries on time.
On MYAirline's nine Airbus A320s, another source said the aircraft would have been returned to its lessor and be given on a lease to any interested airlines given that narrow-body aircraft are currently in high demand.
MYAirline announced at 5.36am on Oct 12 (Thursday) that it had suspended all of its flight operations indefinitely without mentioning any timeline for operations resumption.
The budget carrier said the painful decision was made due to financial pressures that led to its decision to suspend operations.
The statement confirmed Business Times' reports that MYAirline was financially struggling.
MYAirline said its flights are suspended pending its shareholder restructuring and recapitalising the airline.
"We deeply regret and apologise for having to make this decision as we understand the impact that it will have on our loyal passengers, dedicated employees and partners. We have worked tirelessly to explore various partnership and capital raising options to prevent this suspension.
"Unfortunately, the constraints of time have left us with no alternative but to take this decision," MYAirline's board of directors said in the statement.
Since a few months ago, MYAirline had seen its top executives including chief financial officer and chief commercial officer, leaving the company which had been less than one year in operations.
Its former chief executive officer Rayner Teo had resigned last week due to health considerations.
However, Business Times had learnt that Teo tendered his resignation following a heated town hall session last Friday.
Interestingly, MYAirline was recently given a two-year air operator certificate (AOC) extension to operate commercially until 2025 despite its cash crunch.
The AOC was given by the Civil Aviation Authority of Malaysia (CAAM). The AOC audit was believed to have been done in May.
However, sources said CAAM only looks at the technical aspect of an airline during audit.
The financial and economics side of the business falls under the purview of the Malaysian Aviation Commission (Mavcom).
Mavcom today holds MYAirline accountable for refunds for affected travellers following the carrier's suspension of flight operations.
The aviation regulator said it had instructed MYAirline to discontinue the sale and booking of its flights from all booking platforms until further notice as well as notifying its customers.
"The commission stands firm that MYAirline is still liable to refund consumers who have purchased tickets with the airline but are unable to travel," Mavcom said in a statement.
MYAirline is also being investigated by Mavcom based on the internal reviews and complaints received on the airline's unpaid statutory payments to its employees, among others.
Sources said news of the carrier's flight suspension might not come as a surprise to industry insiders as there were already signs of trouble brewing since a few months ago following the resignation of its top executives.
"The so-called investigation should have been done earlier to avoid this. Also, the announcement (on the suspension of flights) should have been made a few days earlier instead. It is an inconvenience to the passengers affected," they said.