Malaysia Airlines: Finding the Final Solution

Oleh A Kadir Jasin

 

SOMETHING curious happened at Khazanah Nasional Berhad, when on September 18, quite out of the blue, it issued a statement denying that it was contemplating selling its shares in Malaysia Airports Holdings Berhad.

The Malaysian Reserves business newspaper quoted the Malaysian sovereign fund as describing a report in the Umno-owned newspaper, Utusan Malaysia, as “baseless”.

In my Facebook response to the Khazanah denial, I wrote: “Let’s hope that the Khazanah’s denial is the truth and nothing but the truth.”

Since then nothing more is heard about it and I assume that the Utusan story was incorrect.

It would be a big irony if Khazanah contemplates on selling its stakes in MAHB, which a profitable monopoly, when the urgency lies with solving the haemorrhage at the Malaysia Airlines.

The Khazanah managers should have taken the queue from a recent statement by the Prime Minister, Tun Dr Mahathir Mohamad, to speed up the resolution to the MAS issue.

He was quoted as saying that the flag carrier does not have to be owned by the government.

That statement could not have been stronger and clearer as it was made in an interview with the airline’s own onboard magazine, Going Places.

Dr Mahathir, who is also the Chairman of Khazanah, said the airline could still retain its national identity even if it's privately owned. 

He referred to British Airways and Lufthansa as being no longer owned by the British and German governments respectively but are still treated as national carriers. 

It is worth adding that these privatised national carriers are so successful that they in turn bought control of other European national carriers.

Lufthansa of Germany for instance now owns Swiss Airlines, Austrian Airlines and Belgium’s Brussel Airlines while Air France has merged with Dutch national carrier, KLM to form Air France-KLM Group.

Spanish flag carrier Iberia is owned by an Anglo-Spanish holding company called International Consolidated Airlines Group with its registered office in Spain and operational headquarters in the United Kingdom.

The Prime Minister’s statement could be seen as an unequivocal message that the government is considering the sale of the money-losing national carrier. 

Any sale, no matter how market-driven it may be, will certainly come with conditions in order to safeguard the various stakeholders - among them the government itself, the Khazanah Nasional Berhad, the remaining staff of the airline and the travelling public. 

The government would have to make sure that as much money as possible is recovered bearing in mind that tens of billions ringgit of taxpayer money had been spent to keep the airline flying. 

Whoever the bidders may be, they must be willing to put their money down and not to expect to get the airline for free.

MAS still has a lot of value. Even after being stripped of its key assets in the infamous asset unbundling by the Idris Jala-led management team back in the mid-2000, MAS still has some good assets and its brand name is almost priceless. The goodwill it enjoys is considerable. 

No freeloaders should be entertained and whoever that the government chooses to take it over must have strong financial and management capabilities. 

The suitors’ business model must be compatible with MAS and can guarantee that the "Wau Bulan" will remain high in the skies for a long time to come. 

It's understood that a handful of local, regional and international aviation companies had expressed interest in buying the airline and the decision as to who the winner is would not be far off.

The front runners are said to comprise a local company, a regional operator and a European-based airline conglomerate.

May the best man win.

Thank you.