The govt is looking to make key leadership changes to revive the loss-making national carrier

by AZREEN HANI/ pic by MUHD AMIN NAHARUL

THE government has ruled out the possibility of pulling the plug on Malaysia Airlines Bhd (MAB), but is looking to make key leadership changes to revive the loss-making national carrier.

Sources close to the development said the government has shelved the shutdown option following the latest discussions with relevant stakeholders.

“No shutdown. That is confirmed,” the source told The Malaysian Reserve under the condition of anonymity. The source also said the government is expected to make an announcement on MAB’s next move “within days”.

In March, Prime Minister (PM) Tun Dr Mahathir Mohamad was reported as saying that the government was weighing all options, including the possibility of shutting down or selling MAB, as endless losses continued to haunt the national carrier.

“It’s urgent for the government to study whether to shut it down, sell it off or refinance it,” Dr Mahathir had said at a press conference in the Parliament almost four months ago.

“This is a very serious matter to shut down the national airline. We have to decide soon,” the PM said.

MAB’s sole owner, Khazanah Nasional Bhd, injected RM6 billion under a 12-point turnaround plan, axed 6,000 staff, culled unprofitable routes and renegotiated long-term agreements with service providers.

Two European heads had been appointed since the turnaround programme was initiated in 2014.

The carrier had over RM24 billion injected into the company since 2001. Besides a few years of profit, the carrier continued to bleed. Khazanah had to provide the billions spent on MAB.

Rising fuel cost and foreign currency translation had hit the carrier. Many parties have voiced their interest to save MAB, but it is not known how much they are willing to invest in the capital-intensive company which struggles to counter the challenges of bigger carriers like Emirates and other competitive low-cost airlines.

The government wants a lasting and sustainable solution for MAB and does not intend to inject a large amount of money as Putrajaya strives to balance its deficits. An industry observer said MAB needs a turnaround plan and an overhaul of its management and leadership.

“There have been various plans, job cuts, changes of CEOs, and clearly it is not working. So, who do we hold responsible for all these?” said the observer.

“The airline has suffered due to mismanagement and lack of clear directions in the past. Maybe, it is time for a new leadership,” he said.

In the last 12 months, the government has changed the leadership of many government-linked companies as it works to induct a new business dogma into these companies.

Another industry analyst told TMR that clearly, the government will not close down the national flag carrier, but some tough measures need to be implemented for MAB to keep afloat.

“Shutting down MAB is an option, but it is a hard decision to make considering its position. Now, what the airline needs is a proper plan, its business plan should be based on the best commercial decision.

“I think MAB needs to scale back (its operation) and focus on key markets. What is more important is to have someone with great entrepreneurial skills to navigate things over,” he said, noting that the outlook is still challenging for MAB to be profitable.

“The fact that all the interest for the airline comes from within (locally), instead of international investors, speaks volume,” he added.

It has been reported that several groups had requested for a meeting with Dr Mahathir to share their plans which include a possible takeover and merger.

According to The Edge, the latest interested party is The Weststar Group, which is owned by Tan Sri Syed Azman Syed Ibrahim.

The group, when contacted by TMR, declined to comment on the news report or on questions whether there was such a proposal or meeting.

Other reports have suggested parties linked to AirAsia Group Bhd are interested to revive the carrier.