KUALA LUMPUR, June 10 ― Malaysia Airlines (MAS) has enough capital to survive the year but long-term options are being considered to help the loss-making flag carrier stay afloat beyond the 12 months, Khazanah Nasional Berhad said today.
Tan Sri Azman Mokhtar, who is the managing director of Khazanah, the majority stakeholder in MAS, would not elaborate, however, if bankruptcy is among the solutions considered to save the airlines from its problems post-MH370.
“In the near term, 12 months, they have enough to go ahead,” Azman told a press conference at the sidelines of the Invest Malaysia 2014 conference here today.
“Whether selling, or bankruptcy, or injecting more funds, or not going through bankruptcy, we continue to study all options. At this point, it's premature to say which option,” he added.
Azman said three factors need to be considered in the restructuring exercise for the government-linked company ― MAS's internal work culture and productivity; external support from the government and the country for the national carrier; and the airline's leadership in carrying through the restructuring.
“It's a serious issue, an issue where we have to balance between an important national institution and managing taxpayers' money,” said Azman.
When asked if the RM5 billion that Khazanah has injected into MAS over the past 10 years has been used effectively, Azman said it was not, from a financial standpoint, since the airline has continued to bleed money.
“From a more economic, national development standpoint, the answer is less obvious,” he added, noting the national carrier's less tangible impact in bringing people from other countries to Malaysia.
Last month, international newspaper the Wall Street Journal reported the possibility of bankruptcy to restructure MAS, which has been struggling through years of repeated losses, conflicts with labour unions and a series of mishaps involving its aircraft fleet, the worst being MH370’s disappearance.
The report, which quoted Prime Minister Datuk Seri Najib Razak saying that “different modalities” have been suggested to save the ailing airlines, was carried a day after the carrier’s filing to Bursa Malaysia where it announced yet another staggering RM443 million loss in the first quarter of this year.
In the filing, MAS said the disappearance of MH370 had a “had a dramatic impact on the traditionally weak first quarter performance”.
In the same period of last year, MAS lost RM279 million.
The disappearance of MH370 that carried 153 Chinese nationals among the 239 people on board has hit the carrier’s market in China most, causing it to lose 60 per cent of its sales there.
This February, MAS announced a worse-than-expected fourth quarter result for 2013 that saw it rack up another RM343 million in losses, putting the airline RM1.17 billion in the red for the entirety of 2013.
In 2011, it chalked up a record loss of RM2.5 billion.
Analysts are increasingly raising the prospect of a bankruptcy or heavy restructuring of the group to stave off the looming disaster.
In April, a month after MH370’s disappearance, MAS chief executive Ahmad Jauhari Yahya said it could take the airline as long as six months to recover from the impact of the crisis, but indications are surfacing to suggest it is running out of time.