Airline News
MAS privatization must go far enough
August 19th 2014
The government's latest effort to resuscitate ailing flag carrier Malaysia Airlines (MAS) is likely to go the way of previous failed attempts unless it shows an appetite for difficult but necessary decisions, said the Financial Times. Read More »
In an analysis titled “Malaysia Airlines seeks change of fortune”, the UK business daily pointed out that a lack of political will to push through a radical overhaul of the airline has seen three such attempts to turn its fortune around falling short. Nevertheless, the paper remained moderately optimistic things could change this time.
Khazanah Nasional, the investment holding arm of the Malaysian government, currently holds 69.4% of MAS shares, but has announced it is looking to purchase the remainder for 0.27 ringgit (US$0.08) per share. In total, the move will cost Khazanah almost 1.4 billion ringgit (US$435 million).
“We reiterate that the proposed restructuring will critically require all parties to work closely together to undertake what will be a complete overhaul of the national carrier on all relevant aspects,” Khazanah said. “Nothing less will be required in order to revive our national airline to be profitable as a commercial entity and to serve its function as a critical national development entity.”
Khazanah said it will disclose additional details by the end of August and that a “complete overhaul” will take six to twelve months.
Meanwhile, Malaysia’s The Rakyat Post has reported MAS is currently reviewing the economic viability of all its routes and that termination announcements are imminent. However, “it’s very clear that the Kangaroo route and flights to India will not be touched” as these were the most profitable for MAS, a source close to MAS told the Malaysian news daily.
MAS is facing resistance to change from within its powerful workers union, which contested the merger over concern for their jobs and welfare.
MAS keeps almost 19,500 people on its payroll to operate its fleet of 108 aircraft. This is nearly 50% more than Singapore Airlines employs to fly just five fewer planes.
The high payroll count – alongside lopsided contracts with suppliers – has been identified as one of the main reasons bogging the airline down.
