by ALIFAH ZAINUDDIN/ pic by TMR

KHAZANAH NASIONAL Bhd has admitted its ambitious RM6 billion turnaround plan to revive Malaysia Airlines Bhd (MAB) which included the axing of 6,000 staff, has failed to achieve its objectives.

The national carrier which changed its corporate name from Malaysian Airline System Bhd (MAS) as part of the major overhauling more than five years ago, continued to post huge losses and require about RM1 billion capital injections annually.

In a report released by the Public Accounts Committee yesterday, Khazanah MD Datuk Shahril Ridza Ridzuan said developments within the industry had shown early signs on that Khazanah’s RM6 billion recovery plan for MAB was not on track.

The report quoting Shahril Ridza said Khazanah had injected a huge amount of money into Malaysian Aviation Group Bhd under the restructuring.

“However, the plan did not move smoothly and did not achieve the targets set earlier,” according to the extract of the 109-page report.

MAB’s financial debacle led to its single shareholder, Khazanah to post a huge pretax loss of RM6.3 billion in 2018.

Shahril said MAB’s massive RM3.1 billion impairments last year could have been declared earlier but were not made to ensure the confidence of the recovery plan. As a result, Khazanah posted a RM6 billion loss for its financial year 2018 (FY18) dragged by overall impairments worth RM7.3 billion.

“By right, what should have happened is that we should have started staggering that RM3.1 billion even in preceding years as it had become evident that the plan was not working as you expected.

“All I can say when it comes to 2018, very clear the plan was not going to work. I think both of our audit committee and the board took the view that it is better to bite the bullet and accept the fact that it is not going to work. The market is not going to allow you to make that revenue,” Shahril told the committee in over an hour-long meeting at Parliament on April 1.

He said massive undercuts taken by the airline were defenceless against the open skies policy adopted by the government to liberalise the region’s air services industry.

Local carriers were forced to face overcapacity and cutthroat rivalry, he said.

Khazanah’s 12-point recovery plan for MAB was introduced in August 2014 to hoist the carrier back into profitability within three years.

The restructuring fund comprised RM1.4 billion for the delisting of MAS via a selective capital reduction exercise — RM1.6 billion for the restructuring and retrenchment cost — as well as a progressive injection of RM3 billion into MAB. The target has since been shifted multiple times including to 2018, which it has also missed.

Shahril said a final decision on MAB will have to be made based on how much more capital is needed to keep the airline flying.

“You’re looking at probably about RM1 billion-plus a year of capital, I guess to sustain as it is if you don’t have any industry consolidation or industry review,” he said.

On Tuesday, Economic Affairs Minister Datuk Seri Mohamed Azmin Ali said Khazanah has shortlisted four bidders to be MAB’s strategic partner, out of 20 invitations sent out in August. The result is expected to be announced by the end of this year, or early 2020.

Speculation is rife that the final four bidders could be Japan Airlines Co Ltd, Qatar Airways, Najah Air Sdn Bhd and AirAsia X Bhd.