by SHAHEERA AZNAM SHAH/ pic by TMR FILE
KHAZANAH Nasional Bhd is waiting for its wholly owned subsidiary, Malaysia Airlines Bhd (MAB), to formulate a recovery plan before coming to its aid, as the national airline’s financial losses intensify amid the Covid-19 pandemic.
The sovereign wealth fund will then provide its input to help carry out the plan, Khazanah MD Datuk Shahril Ridza Ridzwan said.
“MAB is working on a plan right now and we are waiting to see one to provide our input and help them. However, it will take some time to work out.
“It is quite clear there is time pressure and we need to figure it out as soon as possible. They have to figure out the plan to present to the shareholders,” he told reporters on the sidelines of the Invest Malaysia 2020 Virtual Series 1 in Kuala Lumpur yesterday.
Shahril Ridza said passenger demand has been recovering following the easing of certain measures under Malaysia’s Movement Control Order (MCO). During the pandemic, MAB’s demand and capacity fell to less than 5% of what it was pre-MCO, he added.
“Even now after the MCO has been lifted, demand has been slowly rising as people are adjusting and that’s what makes it tricky in terms of predicting what the real demand will be,” he said.
“Although travelling by air is perfectly safe, there is a bit of apprehension and it will take some time for the market to recover.”
The unprecedented circumstances have pushed businesses to act on an assumption, which paints a cloudy future for the aviation sector as there is no clear picture of what the future will look like. Understanding how consumer behaviour and demand will change is a real challenge, Shahril Ridza added.
Last year, the sovereign wealth fund requested MAB to come up with a strategic plan in order to deliver better financial performance after it failed to meet deadlines for two profitability targets.
The national carrier, already bleeding prior to the pandemic, has been struggling to achieve a sustainable balance sheet since it was taken private by Khazanah in 2014.
Its previous turnaround plan involved a RM3 billion injection from the sovereign wealth fund after being taken private, followed by another RM800 million pumped in last year to keep the ailing carrier afloat.
In April, the airline slashed the salary of its top management — including its CEO — by 35%, reduced 50% of directors’ monthly fees and imposed sweeping operational expenses cuts in order to survive Covid-19, The Malaysian Reserve reported, citing a circular to staff from MAB group CEO Captain Izham Ismail.
This came after Malaysia’s MCO was imposed beginning March 18, resulting in strict movement restrictions including on air travel in order to curb the spread of the deadly virus.
MAB also recently received a new chairman, former Petroliam Nasional Bhd president and group CEO Tan Sri Wan Zulkiflee Wan Ariffin, whose appointment took effect from July 1.
“We look forward to his leadership and hopefully he will bring MAB to different heights in terms of being able to handle this crisis,” Shahril Ridza said.