State fund Khazanah plans to take Malaysian Airlines private
Malaysian state investor Khazanah Nasional plans to take Malaysian Airline System (MAS) private as the first step in a major restructuring of the loss-making airline following the disappearance of its Flight MH370, sources said.
Malaysian state investor Khazanah Nasional plans to take Malaysian Airline System (MAS) private as the first step in a major restructuring of the loss-making airline following the disappearance of its Flight MH370, sources said.
A delisting would pave the way for Khazanah to revive the ailing carrier, possibly by selling off its profitable engineering, airport services or budget airline units, trimming its bloated payroll and installing a new management team.
Shares of MAS rose up to 16.7 per cent in trading yesterday, the biggest jump in more than two weeks, before closing at 23 sen (55.8 HK cents).
At the current price, majority shareholder Khazanah would need to pay about 1.07 billion ringgit for the 30.6 per cent of shares it does not own.
The restructuring and potential sale of MAS is politically fraught due to heavy opposition to job losses from its powerful labour union, which has hampered previous revival plans, and its status as Malaysia's national flag carrier.
Khazanah's board, chaired by Prime Minister Najib Razak, is expected to meet at the end of the month to discuss the plan, one of the sources said, adding that an announcement would be made by the end of this year.
The state investor was working with CIMB Investment Bank on the restructuring, the sources added, but cautioned that the plan, and its details, were subject to change depending on the ultimate decision by the Malaysian government.
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 currently burning through its operating cash.
Its shares have fallen 16 per cent since the disappearance compared to a 2.8 per cent gain in the benchmark index.
MAS chief executive Ahmad Jauhari Yahya said last week the business needed to embrace "radical or sweeping" change to survive.
A Khazanah official declined to comment on the privatisation plan.
Taking MAS private could enable Khazanah to restructure it with little interference from shareholders and the powerful airline union, analysts say.
Resistance to previous restructuring efforts by the union, which represents a workforce of about 20,000, has hampered the airline's efforts to cut costs and improve competitiveness in the face of fast-growing, low-cost carriers such as AirAsia and Indonesia's largest private airline, Lion Air.
