Report: Malaysia Airlines gets another RM300m injection from Khazanah

Chief executive Izham Ismail had last month unveiled a new long-term business plan that if if successful, would see Malaysia Airlines achieving financial break-even by 2022. — Reuters pic
Chief executive Izham Ismail had last month unveiled a new long-term business plan that if if successful, would see Malaysia Airlines achieving financial break-even by 2022. — Reuters pic

KUALA LUMPUR, Aug 19 — Malaysian flag carrier Malaysia Airlines Berhad (MAB) received yet another fund injection, amounting to RM300 million, from Khazanah Nasional Berhad via its parent company Malaysia Aviation Group Berhad (MAG), The Edge Financial Daily reported today.

This brings the total capital booster to MAG to RM800 million.

The report said that in March this year, Khazanah had pumped RM500 million into MAG, which also manages Firefly Sdn Bhd, MASwings and MAB Kargo Sdn Bhd.

Citing an unnamed spokesperson from Khazanah, the report said that the RM800 million capital injection into MAG is only part of the initial RM6 billion approved funding for the fledgling airline, under the MAS Recovery Plan (MRP) which was announced five years ago.

“In the interim, MAG will continue to require funding to operate on a business-as-usual basis while making efforts in enhancing its customer experience and containing losses,’’ the spokesperson said.  

However the spokesperson declined to reveal the overall sum which Khazanah has disbursed under the MRP.

The five-year recovery plan for Malaysia Airlines was unveiled in 2014, with the aim of turning around the loss-making entity into a profitable company by 2018.

However, the target was missed amid several setbacks, namely stiff competition, rising fuel prices, unfavourable foreign exchange rates, as well as crew shortage.

The Edge Financial Daily cited Malaysia Airlines’ filings with the Companies Commission of Malaysia (CCM) as showing an increment in net loss by 85 per cent year-on-year, to RM812.11 million for the financial year ended December 31 2017.

The report said that the airlines lost RM2.35 billion between 2015 and 2017, adding that despite its announcement that it ended 2018 with a lower year-on-year loss, it did not reveal the said amount, and is yet to file its financial statement for the 2018 financial year, with the CCM.

On the evaluation of parties interested to takeover Malaysia Airlines, the anonymous Khazanah representative reportedly said that several parties have expressed their keenness in MAG.

“Khazanah will evaluate all serious offers, specifically their capabilities financially and from the execution point of view. At this stage, we cannot comment on the process and progress of the evaluation,” the spokesperson said.

The Edge Financial Daily reported that MAB chief executive Izham Ismail had last month unveiled a new long-term business plan (LTBP) that is currently awaiting approval from Khazanah’s board of directors.

The plan, if successful, would see Malaysia Airlines achieving financial break-even by 2022 and generating enough income to cover the cost of capital for its operations two years later, the report said.

The Edge Financial Daily said that the LTBP consists of four pillars, which includes rightsizing the airline’s fleet of Airbus and Boeing aircraft and network expansion that is focused on the Asia-Pacific, with the three other pillars being the aim of providing a premium customer experience, having a partnership strategy and diversifying the airline’s revenue.

It was previously reported that Malaysia Airlines had attracted four suitors, comprising Najah Air Sdn Bhd (a six-man group led by former AirAsia Group Bhd chairman Datuk Pahamin Ab Rajab), tycoon Tan Sri Syed Azman Syed Ibrahim of The Weststar Group, Jentayu Danaraksa Sdn Bhd and a group comprising former employees of the now-defunct Malaysian Airline System Bhd, as well as several private individuals.

After continued chronic losses, Malaysia Airlines endured two major incidents in 2014 when it lost Flight MH370 in March and Flight MH17 in July.

The two disasters effectively doomed the previous revival of the airline and forced Khazanah Nasional into its latest rescue plan that included delisting Malaysia Airlines from the local stock exchange.

The new management then launched into a five-year plan to return the airline to profitability but did not ultimately stem its continued losses, resulting in the government’s current intention to sell it off to private buyers.

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