KUALA LUMPUR, Aug 11 — The privatisation of Malaysia Airlines (MAS) could be the best available option for the national carrier to undergo a major restructuring and similar to what Japan Airlines underwent back in 2010.
Kenanga Research said in a research note today that post-privatisation, MAS’ operations would likely remain ““business as usual”.
However, the research firm anticipates a reduction in MAS’ workforce (abolishment of workforce unions) and unprofitable routes and renegotiation of contracts to achieve a leaner structure.
Kenanga research said it was not surprised with the plan to privatise MAS as the move had been anticipated since the third quarter.
“We opine that the selective capital reduction (SCR) offer price of 27 sen per share by Khazanah to the minority shareholders is decent, given that the offer price implies a 2.4 times Price-to-Book to our financial year 2014 book value per share of 11 sen, representing 100 premium to the industry average.
“Hence, we would strongly advise that shareholders of MAS accept Khazanah’s offer to make way for the privatisation. This is given that its reserves might not last till the end of financial year 2015 due to the staggering losses,” it added.
Meanwhile, Hong Leong Investment Bank said the outlook for MAS is of great concern, given that the national airline has been suffering core losses since financial year 2009.
“The upcoming second quarter performance is expected be the worst, due to the after-effects of the MH370 incident (March 2014) in lowering load-factor and passenger yields.
“The recent MH17 incident (July 2014) has further worsened passenger demand,” it said in a different note.
Following the privatisation, the investment bank expects MAS to cut long haul routes – as MAS can still leverage on the Oneworld Alliance – and concentrate on shorter regional and domestic networks, as well as downsize the aircraft fleet and staff number.
“A likely beneficiary of the restructuring is AirAsia X, while losers are AirAsia, MAHB and Brahim. However, we would like to reiterate our positive view on MAHB’s long term prospects on the growing demand for air travel,” it added. — Bernama
