KUALA LUMPUR/SINGAPORE (Reuters) - Malaysia Airlines Bhd is tapping banks to fund about nine Boeing 737 MAX planes in what will be the carrier’s first jet financing with lenders since it was restructured more than three years ago, sources familiar with the situation said.
FILE PHOTO: Malaysia Airlines planes sit on the tarmac at Kuala Lumpur International Airport July 21, 2014. REUTERS/Edgar Su
The financing represents a key test for the airline, which was taken over by Malaysian sovereign wealth fund Khazanah Nasional [KHAZA.UL] in December 2014, months after MH370 disappeared and MH17 was shot down over Ukraine.
Finance industry sources, speaking on condition of anonymity, said Malaysian, European and Chinese banks are expected to compete for financing of the planes, for which Malaysia Airlines sent out a request for proposal a few weeks ago.
The jets have a list price of around $1 billion, but airlines typically receive large discounts from manufacturers.
Malaysia Airlines said on Tuesday it was considering “various funding and leasing options” for its 737 MAX order, which is meant to replace older 737s coming off lease, but declined to provide more specific details.
Khazanah had no immediate response to a request for comment.
Though the aviation financing environment remains strong, the sources said Malaysia Airlines’ poor operating performance and a forced haircut taken by banks and lessors on finance and operating leases during the airline’s restructuring could make some banks wary of a financing deal with the carrier.
They could also be discouraged by the airline’s struggle to show a meaningful recovery after job cuts, fleet changes and route adjustments undertaken as part of a five-year turnaround plan.
“The way they managed their restructuring and put pressure on banks, that’s something banks haven’t forgotten. There are also
