KUALA LUMPUR: The MYAirline company which is in a limbo at the moment had sound financial capabilities and positive equity to run its operations for at least three to six months, at the time the Air Service License (ASL) was renewed.
Transport Minister Anthony Loke, in his winding up speech for the ministry during the debate on the 2024 Budget, said up till October, the company's finances did not indicate any struggles based on the business plan and proposal submitted to the Malaysian Aviation Commission (Mavcom).
"At that time, Mavcom assessed that both the company and its shareholders had strong financial capability to commence flight operations as planned.
"However, over time, since it started its operations in December last year, the airlines gradually experienced an increase in operating costs due to the sudden appreciation of the United States dollar against the Malaysian ringgit, going from the expected rate of RM4.30 against US$1 as projected in MYAirline's business plan, to the actual rate of RM4.68 against US$1 in September 2023.
"The increase in jet fuel costs from US$113 to US$131 per barrel and its other commitments such as the aircraft lease payments and considering that most of its transactions were also said to have been in US dollar, caused it to slip further.
"Moreover, based on the analysis conducted by Mavcom on Oct 3, this year, MYAirline did not show signs of severe financial issues that could lead to a suspension of its operations," he said.
Loke said this was evident in various aspects, including minimal flight rescheduling and timely customer refunds as well as its plans to expand its operations to 12 aircraft from the initial eight by the end of 2023, was reassuring.
He said, on Oct 9, MYAirline informed Mavcom that it was finalising the sale of shares to new investors, both domestic and international, but the airline had not successfully concluded these transactions.
"This situation placed the company in a position where it needed to finance its daily operations. As a result, MYAirline made the decision to suspend its operations immediately without prior notification to the ministry and regulatory agencies, as well as its passengers."
In regards to the issuance of the Air Operator Certificate (AOC) renewal by the Civil Aviation Authority of Malaysia (CAAM) for the period from Oct 1, 2022, to Sept 30, 2023, Loke said it was following a technical audit conducted from May 29 to June 1, 2023.
He said CAAM approved the renewal of MYAirline's AOC for a two-year period starting from Oct 1, 2023, to Sept 30, 2025.
"The technical audit conducted by CAAM adhered to international standards set by the International Civil Aviation Organisation and thoroughly assessed the company's capacity and competence in aspects of commercial air transport, flight operations, and airworthiness.
"The evaluation covered various aspects, including management and organizational systems, maintenance and flight worthiness, safety, and cabin operations. Additionally, financial aspects were also included as one of the audit elements to assess the company's ability to operate safely.
"Based on the audit report from May 29 to June 1, 2023, CAAM was satisfied with the findings and renewed the AOC accordingly," Loke explained in his reply to queries from the Bagan, Rasah and Libaran members of parliament.
Mavcom yesterday announced the suspension of MYAirline Sdn Bhd after it found the show cause letter's reply to be unsatisfactory.
On Oct 12, MYAirline abruptly suspended operations after a potential new investor pulled out of a deal to buy a controlling stake in the airline at the eleventh hour. New stakeholders are being sought but nothing has been finalised to save the airline from closing down.
A lawyer for an investment company believed to be linked to the co-founder of low-cost airline MYAirline, was the latest in a long list of people investigated by the police following the suspension of MYAirline's operations.
On Oct 17, police arrested the co-founder of the local airline, along with associates and family members to facilitate investigations under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001. Investigations are still ongoing.