Who will prevail for MAB?

But there are rising worries that finding the right partner for MAB alone will not solve its financial woes

pic by TMR FILE

THE clock is ticking and it is ticking fast. Khazanah Nasional Bhd will have to make some important decisions before year-end. All eyes will be on the state-owned fund’s decision on how to address the around RM1 billion a year bleeding national carrier Malaysia Airlines Bhd (MAB).

The fund had admitted that the previous RM6 billion turnaround plan introduced a few years ago was a flop.

Khazanah, the sole shareholder of Malaysian Aviation Group (MAG), registered RM7.3 billion impairments last year, up from RM2.3 billion in 2017, after incurring a RM3.1 billion loss in investment value in MAG.

Interestingly, despite bleeding hundreds of million ringgit annually, the airline can still find suitors, from local to international investors.

It is believed that from the initial three offers, MAB attracted three other suitors as the race to land the country’s former aviation king company heightens.

Last month, Economic Affairs Minister Datuk Seri Mohamed Azmin Ali said the government had shortlisted four candidates, and emphasis on proposals would take into account financial prudence and operation synergy with MAB.

Who are these four investors? Names like Najah Air Sdn Bhd and AirAsia X Bhd have been thrown in the mix for quite some time despite the latter’s denial of a merger with MAB. It is believed that the other two suitors are carriers from Europe. A surprise candidate would be from another regional airline. However, Khazanah has been silent on who are the four frontrunners.

Azmin, who is also the fund’s board member, had only hinted that they were recognised brands, internationally and regionally.

But there are rising worries that finding the right partner for MAB alone will not solve its financial woes. Khazanah MD Datuk Shahril Ridza Ridzuan said MAB has continued to post losses due to the oversupply in the industry.

According to him, for a market of 30 million people, having four airlines would translate to about 1.7 seats per true passenger.

His opinion is shared by others. In a small competitive market, consolidation could be the Holy Grail to all the predicaments.

For a pessimist, MAB is already a lost cause and a very expensive liability to Khazanah.

Attempting to revive the national carrier at taxpayers’ expense should not be tolerated. After various failed bailouts, common sense will tell you it seems like a cardinal sin to pump public’s money into the carrier.

Yet, as Qatar Airways Co CEO Akbar Al Baker succinctly said a country should never shy away in sustaining the national carrier.

Whether we like it or not, a flag carrier is an important economic tool.

There is a question of whether the current industry structure is no longer working for MAB that the government — namely the Transport Ministry and Malaysian Aviation Commission — can look into.

Perhaps MAB should be given priorities for the routes it had benefitted most from in the past. Some quarters have argued that preferences should be accorded to the national carrier.

There are many factors for Khazanah to take into consideration. It goes without saying that everyone wants a win-win solution, but some truth may be hard to swallow for some. History and old success are good as a self-ego boosting tonic, but it does not dictate and decide the future.

Azreen Hani is the online news editor of The Malaysian Reserve.