A high court recently held that a scheme of arrangement under Section 366 of the Companies Act 2016 is an insolvency-related event for the purposes of the Convention on International Interests in Mobile Equipment and the protocol thereto. This is an interesting case which will likely be instructive in many jurisdictions as the number of airline restructurings continues to rise due to COVID-19's impact on the aviation industry.
The High Court recently issued a landmark decision that extensively examined the court's jurisdiction and duties when considering an application under Section 366(1) of the Companies Act 2016 for an order to convene creditors' meetings to consider and approve an arrangement scheme. The court ruled that the proposed arrangement scheme was an 'insolvency-related event' for the purposes of the Cape Town Convention's aircraft protocol.
The Kuala Lumpur High Court recently ordered the immediate release of a Pakistan International Airlines Boeing 777 aircraft. The aircraft had been grounded and detained at Kuala Lumpur International Airport for two weeks as a result of a mandatory injunction. This is believed to be the first Malaysian case to involve a mandatory injunction to ground an aircraft.
With airline companies rapidly depleting cash reserves and any form of subsidies to ensure survival in the current climate, the unsurprising reality is that efforts to go green have taken a step back. However, the pandemic has in a way allowed relevant industry players to pause and ponder on long-term strategies, including but not limited to the sustainability of both airline companies and, importantly, environmental protection.
The domino effect of airlines' massive lay-offs of pilots is a decrease in pilot training applications in Malaysia. One of the many flight training organisations in Malaysia has seen a 30% fall in enrolment at its eastern Malaysia centre and a 15% decrease in its western Malaysia centre. The reason for this is because the investment does not necessarily guarantee its returns.