Shut down, sell off or bailout — what’s next for Malaysia Airlines
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. — Reuters pic
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. 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.
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.
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”. 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.Malaysia Airlines could restructure to cut down its operating costs, several analysts said.
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.
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