KUALA LUMPUR (REUTERS) – Malaysia’s Khazanah Nasional has the option to channel funds to low-cost carrier Firefly, which could become the country’s national airline if Malaysia Airlines (MAS) were shut down, the head of the sovereign wealth fund was quoted as saying on Wednesday (Oct 14).

The comments by Datuk Shahril Ridza Ridzuan to the newspaper Berita Harian are the fund’s first public statements since it emerged that MAS’ parent company has warned that the flagship airline could be wound up if lessors did not agree to steep discounts.

Firefly, which operates a fleet of 12 twin turboprops, mainly within the country, is currently a fully owned subsidiary of Malaysia Aviation Group (MAG), which also owns MAS.

According to a MAG letter sent to lessors and seen by Reuters, Firefly would obtain narrow-body planes and subsequently wide-body aircraft from the market in a “Plan B” scenario.

Khazanah, the sole shareholder in MAG, will discuss next steps when the outcome of restructuring talks becomes clearer, the newspaper reported.

“If Khazanah continues to finance Malaysia Airlines which does not have a strong financial position and often suffers losses, Khazanah will have to dispose of its holdings in other strategic assets or increase debt,” Mr Shahril was also quoted as saying.

Malaysia’s Finance Minister Tengku Zafrul Abdul Aziz said last week the government will not provide financial support to Malaysia Airlines and that any aid was for Khazanah to address.