SINGAPORE, March 20 — Malaysian Prime Minister Tun Dr Mahathir Mohamad’s remarks last week that the government is studying options for national carrier Malaysia Airlines Berhad, including shutting it down, sparked off debate in the country and even across the Causeway in Singapore.

While aviation experts interviewed by TODAY said there is a possibility that the airline could be shuttered, a likelier option is to restructure it to reduce cost.

In recent years, Malaysia Airlines has been trying to transform its operations and return to profitability after it was hit by two disasters in 2014 — first when flight MH370 mysteriously disappeared in what remains an unsolved case, and another was when flight MH17 was shot down over Ukraine.

Sovereign wealth fund Khazanah Nasional Berhad took over and privatised the airline in 2014. However, turning a profit by 2019 proved challenging as it was hit by increasing competition from other Malaysian carriers such as AirAsia, as well as rising fuel costs.

It was reported earlier this month that half of Khazanah’s RM7.3 billion impairments registered last year were from sustaining Malaysia Airlines.

TODAY looks at the future of Malaysia Airlines and the possible scenarios for the struggling carrier.

1. Selling the airline

Aviation experts and analysts said that selling the airline is an unlikely scenario because buyers and potential investors, whether domestic or foreign, have little to gain from buying it out.

Within the country, AirAsia has the resources for a buyout, the experts said. The Malaysian low-cost carrier is the largest airline in the country and accounted for nearly 55 per cent of all passenger traffic in Malaysia last year.

However, Mohshin Aziz, associate director of Maybank Kim Eng Securities, was of the opinion that there is a “next to zero” chance that AirAsia will buy out Malaysia Airlines after the failed collaboration between both airlines several years ago.

In 2011, AirAsia founders Tony Fernandes and Kamarudin Meranun joined the Malaysia Airlines board in a share swop deal. However, the deal soured due to disagreements over how to run the airline.

Mohshin said: “AirAsia has achieved almost everything it wanted to. It has the lion’s share in the market and it’s doing very well in penetration of the market. So for AirAsia to buy Malaysia Airlines, the incremental benefit or gain that they get is not much.”

While one option would be for Malindo Air, the smallest Malaysian carrier, to merge with Malaysia Airlines to fast-track its expansion into the Asia-Pacific and West Asia markets, it will be a “huge undertaking” for Malindo Air to absorb the national airline’s 12,000 employees, Mohshin said.

On the possibility of foreign investors buying over Malaysia Airlines, he pointed out that the regulations only allow foreign firms to invest up to 48 per cent in the airline. Even then, a foreign investor will not have full management control because the key management personnel will still have to be Malaysians, he said.

“Under this framework, I don’t think foreign carriers would be interested. I come in, I give a lot of money, but I have no control,” Mohshin said.

Brendan Sobie, chief analyst at the Centre of Asia Pacific Aviation (Capa), said that given the amount of debt that Malaysia Airlines is in, it is “not an option” to sell the airline now.

“They should invest in it first before considering selling it,” Sobie said.

2. Shutting it down

Several analysts also said that it is unlikely the Malaysian government will shut down the airline.

K Ajith, director of Asia transport research at United Overseas Bank Kay Hian Research, pointed out that there may not be a political will to go through with shutting down the Malaysia Airlines, given the number of jobs that will be lost.

Ellis Taylor, Asia finance editor at aviation news site FlightGlobal, said that it is unlikely the airline will be shuttered because it is “seen as the national icon of Malaysia”.

However, Mohshin disagreed with this view, saying that while the older generation of Malaysians viewed the national airline as a source of pride, younger Malaysians no longer saw the concept of a national carrier as relevant.

“Malaysia Airlines is not their choice (to fly) because of other cheaper airline options and better value for money available (elsewhere)... So what if Malaysia Airlines is a national carrier? It’s no big deal to them,” Mohshin said.

Taylor agreed that national carriers are a “hangover from the post-World War II era”, adding that they typically underperform when compared to commercial airlines, because they are forced to fly unsustainable routes and hire more employees than necessary.

He added that Singapore’s national carrier, Singapore Airlines, is an exception because it is run like a commercial business. This is despite Temasek Holdings, the state investment firm, being a major shareholder.

3. Restructuring

Malaysia Airlines could restructure to cut down its operating costs, several analysts said.

It could relook its strategy and reposition itself as a regional rather than an international airline to help lower its costs, Sobie suggested.

Taylor said that more focus could be put on attracting travellers to Malaysia, rather than competing with other Asian and Middle Eastern carriers that target traffic between the two regions.

While this could mean that Malaysia Airlines may no longer fly its current routes or act as the primary carrier for the country, it would allow other airlines to start new services to Malaysia. This would give passengers more choices and potentially give the tourism industry a boost.

4. Government bailout

Mohshin said that it was untenable for the Malaysian government to keep bailing out the airline.

Changes to the Malaysian aviation regulatory landscape in recent years, such as the upgrading of the Department of Civil Aviation to the Civil Aviation Authority of Malaysia in 2016, as well as the establishment of the Malaysian Aviation Commission in the same year, meant that Malaysia Airlines now have to comply with more stringent international rules and standards.

“When you take this into consideration, the compliance to international rules and standards becomes much more stringent. The International Civil Aviation Organisation and International Air Transport Association made it clear that subsidies or any form of non-competitive behaviour is wrong,” he said.

“So, I don’t think they can replicate what they have done in the past.”


1947: Malayan Airways Limited has its maiden flight from Singapore to Kuala Lumpur, with paying passengers on an Airspeed Consul twin-engine aircraft.

1960: It conducts its first long-haul international flight to Hong Kong on an 84-seat Bristol Britannia.

1963: It is renamed Malaysian Airways after the Federation of Malaysia is formed with Malaya, Singapore, Sabah and Sarawak.

1966: The carrier is renamed Malaysia-Singapore Airlines (MSA).

1972: Malaysia-Singapore Airlines breaks up to form Malaysian Airline System (MAS) and Singapore Airlines.

1997: MAS is badly affected by the 1997 Asian Financial Crisis.

2006: The airline implements a business turnaround plan to bring it out of financial crisis.

2007: The airline achieves a record profit of RM853 million

2014: MH370 disappears while en route from Kuala Lumpur to Beijing. MH17 is shot down while flying over Ukraine. Malaysia Airlines Berhad (MAB) is privatised by Khazanah Nasional Berhad.

2015: MAB’s chief executive officer Christoph Mueller announces that the airline is “technically bankrupt” and lays off 6,000 employees.

2017: MAB appoints former pilot Izham Ismail as its chief executive officer, its third in three years.

2019: Prime Minister Mahathir Mohamad says that the government is considering whether to shut down, sell, or refinance Malaysia Airlines and will make a decision soon. — TODAY