"The negotiations are still ongoing and taking longer than the planned timeline, but we are gaining encouraging traction from the lessors and creditors thus far," Izham Ismail, chief executive of Malaysia Airlines and group CEO of parent Malaysia Aviation Group (MAG), said in a memo to staff on Oct. 16.

In response to a Reuters query, MAG said in an email on Saturday it is "continuing discussions with creditors on its ongoing restructuring exercise".

MAG, owned by state fund Khazanah, said Izham's memo to staff was to address concerns among employees.

Malaysia's national airline is seeking to restructure after the coronavirus pandemic forced it to slash operations.

The carrier had restructured after two deadly crashes in 2014 but unlike at that time the government is unwilling to bail it out this time.

Reuters reported last week that a group of lessors had rejected a restructuring plan that involved steep discounts, bringing the carrier closer to a showdown over its future.

In the memo to staff, Izham assured them that MAG's restructuring exercise "is still work in progress".

"Do you see me throwing in the towel yet? Together with the senior leadership team, we are here still fighting for the company's survival," Izham said.

On Thursday, MAG said subsidiary Firefly Airlines will start flying in early 2021 as part of a realigned group-wide business strategy.

Reuters reported last week that MAG had warned lessors that its sole shareholder would wind down the airline if restructuring talks are unsuccessful, and would focus on Firefly.

(Reporting by Anshuman Daga; Editing by Kirsten Donovan and David Hmolmes)

By Anshuman Daga