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Malaysia Airlines is heading for privatisation and "overhaul".

State investment fund to buy out troubled Malaysia Airlines

Malaysia's state investment fund will pay 1.38 billion ringgit (HK$3.33 billion) to take troubled Malaysian Airline System private, the airline said yesterday.

Malaysia's state investment fund will pay 1.38 billion ringgit (HK$3.33 billion) to take troubled Malaysian Airline System private, the airline said yesterday, paving the way for a "complete overhaul" of its loss-making operations following two devastating jetliner disasters this year.

Khazanah Nasional, which owns 69.37 per cent of the airline, will offer 27 sen for each share in the company it does not own, a 12.5 per cent premium to the stock's close on Thursday, MAS said in a statement after suspending its shares.

The move had been expected after the national carrier lost two airplanes this year, sparking a slump in bookings that has hurt its already struggling operations amid intense competition from budget Asian airlines.

Hit by slumping ticket sales in the wake of the baffling disappearance of MH370 on March 8, the company turned in its worst quarterly performance in two years in the January-March period and is burning through its operating cash. Its troubles deepened dramatically on July 17, when another jet, MH17, was shot down over Ukraine, killing all 298 people on board.

The head of Malaysia Airlines' main labour union said it would support the plan only if the top management team, led by chief executive Ahmad Jauhari, was replaced.

"Ahmad Jauhari has had three years to turn things around. We've made it very clear, we will support a new team that has the aviation knowledge and integrity for the job," Mohd Jabarullah Abdul Kadir said.

The carrier warned in May of a "dramatic impact" on passenger traffic from the loss of MH370, which disappeared with 239 passengers and crew. The July 17 disaster, in which MH17 was believed to have been shot down by Russian-backed rebels in Ukraine, sped up government efforts to restructure the airline, sources said.

This article appeared in the South China Morning Post print edition as: State fund to buy out ailing Malaysia Airlines
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