The sovereign wealth fund is still waiting for the comprehensive strategic business plan to be presented by MAB

by MOHAMAD AZLAN JAAFAR / MUHD AMIN NAHARUL

KHAZANAH Nasional Bhd is not discussing with any party, including AirAsia Group Bhd or Tan Sri Dr Tony Fernandes, over the prospect of taking control of the ailing Malaysia Airlines Bhd (MAB), according to a source.

The source said the sovereign wealth fund is still waiting for the comprehensive strategic business plan to be presented by the MAB management before any decision is made over the national carrier’s future direction.

“It’s hardly surprising to hear such speculation, but let’s not get ahead of ourselves here. While all options are being considered, there have been no clandestine chats between the two (Khazanah and AirAsia), let alone unrefusable offers,” said a source familiar with the current development related to MAB.

A business weekly reported that Khazanah is in talks with AirAsia to revive the full-service airline, quoting a source familiar with the aviation sector.

The report said Khazanah may again turn to Fernandes to help revive the carrier where its continued losses had forced its only shareholder to make a hefty RM7.3 billion in provisions for its 2018 financial year.

The business weekly quoted the source as saying: “They will make an offer to Fernandes that he cannot refuse.”

In 2012, a share swap deal between the then Malaysian Airline System Bhd and AirAsia fell through following strong objections from the former’s unions.

MAB’s continued losses had dragged Khazanah into the red, posting losses amounting to RM6.27 billion loss before tax last year, the first negative earnings in a decade. The state-owned fund decided to purge its financials and wipe the slate clean as it embarked on a new mandate. About half of the RM7.3 billion impairments were due to MAB.

Khazanah’s financial loss announcement due to the national carrier triggered a tsunami of speculations, including the disposal of the airline.

Last week, Prime Minister Tun Dr Mahathir Mohamad revealed that several parties had expressed their interest to buy the national flag carrier.

“There are certain parties who are interested to buy (the airline), so we don’t reject (the possibility of selling),” he said. But Dr Mahathir did not disclose who were the interested parties.

“I love MAS (Malaysia Airlines). I want MAS to be a national airline, but it looks like we cannot afford it,” Dr Mahathir was quoted as saying. Previously, Dr Mahathir said the government was considering all options, including to shut down, sell or refinance the airline.

Several local parties have formed alliances to convince the government that they are the most suitable parties to revive the airline.

Khazanah unveiled a RM6 billion turnaround plan to save the loss-making national carrier in August 2014.

After having two foreign CEOs — who left before the end of their contracts — a comprehensive turnaround plan, a national legislature to help in its revival, the axing of 6,000 staff, shelving of unprofitable routes and renegotiating hundreds of contracts, the airline continues to be in the red.

MAB is also reeling from two disasters in 2014 — the MH370 disappearance and the shooting down of flight MH17 over eastern Ukraine.

When announcing Khazanah’s results, its MD Datuk Shahril Ridza Ridzuan said MAB will produce a strategic plan on how it could deliver better returns.

“We expect them to have a better realisation of what their core strengths and concerns are. That is what we want, so that we can advise the government properly on what the cost of running a national airline company is, versus the other spinoffs that you get in tourism, business and connectivity.

“If the shareholders decide that this is an activity that they want to support and they are willing to accept the cost, then that’s fine. But it needs to be an informed decision,” Shahril Ridza said.