Khazanah in a rush to meet target to resolve Malaysia Airlines issue

Khazanah has previously said it hopes to wrap up its plans for the ailing airline by the end of the year


KHAZANAH Nasional Bhd is in a rush to seek a resolution to the Malaysia Airlines Bhd (MAB) problem, which has dragged the former into the red for the first time in almost a decade.

The national carrier has been the bane of the fund, which had in 2014 injected RM6 billion in a turnaround plan that failed to meet all its objectives.

A source close to the development did not deny the probability of Khazanah appointing a consultant like Morgan Stanley as the fund speeds up the process to find a solution before year-end.

“The sooner a decision is made, the better it will be for everyone,” said the source, who spoke under the condition of anonymity as the discussions are private.

The fund had said it hopes to wrap up the plans for MAB by year-end. MAB’s continued failures will force Khazanah, the sole owner of the airline, to dig deeper into its pockets to fund the national carrier.

The government has said it would consider all options, as saving the national carrier has been a very expensive venture with disappointing results.

Prime Minister Tun Dr Mahathir Mohamad was quoted as saying that the government will consider all options, including selling a stake in the carrier and becoming a minority shareholder.

He also said the government’s role will be preserved, the airline’s identity retained and that the jobs of MAB staff will not be jeopardised.

The last turnaround plan saw 6,000 people retrenched, the largest for a government-linked company in a single exercise.

Bloomberg yesterday reported that Khazanah has hired Morgan Stanley to explore strategic options for MAB and that the investment bank will be responsible for looking at options for the airline, including a potential stake sale.

However, the source said the proposal to appoint the consultant needs approval from the government. Dr Mahathir is also Khazanah’s chairman.

The report — citing an anonymous source — stated that Khazanah aims to get a deal done by the end of this year, but discussions are ongoing and details, including the timeline, could still change.

An industry analyst said Khazanah’s move to hire a foreign consultant firm could be due to the shortcomings of the proposals the government had received so far to resolve the MAB issue.

“I think the only explanation is that Khazanah is looking for a wider client base and not just locally.

“It could be interpreted that they may not be confident with the current proposals received so far,” said the analyst.

The government had received a few proposals to turn around the airline. A few parties have voiced their intention to participate in MAB’s turnaround programme.

Meanwhile, Khazanah — in a statement to The Malaysian Reserve (TMR) — said it is currently working with the Malaysia Aviation Group on the way forward for MAB, including evaluating all strategic options to revive the company’s performance.

“The government has said it is also open to proposals from external parties, including potential acquisitions by the private sector,” it said.

The government has received several proposals on the takeover of MAB — one of which came from a group of businessmen led by AirAsia Group Bhd co-founder and former chairman Datuk Pahamin Ab Rajab, who is reportedly seeking about RM1 billion to support its takeover bid for MAB.

However, the analyst told TMR that RM1 billion is still not sufficient for the ailing airline as its annual burn rate is about RM800 million.

“Based on my estimation, the RM1 billion could last 11⁄2 years. So, I honestly do not know how will they turn MAB around,” he said.