MAS faces privatisation ahead of major restructure

MAS faces privatisation ahead of major restructure
By admin

Malaysia Airlines will consult its shareholders following a proposal for a state-run investment fund to take full ownership of the troubled carrier, with it to be delisted in the first stage of a restructuring plan.

The Malaysian Government’s strategic investment fund Khazanah on Friday lodged a formal request to the airline’s board to “undertake a selective capital reduction and repayment exercise” of MAS shares. Shareholders will receive RM0.27 per share, with the sum representing a 12.5% premium on Thursday’s closing price.

Completion of the proposed repayment would see Khazanah become the airline’s sole shareholder, with it to be subsequently delisted.

According to the CAPA Centre for Aviation, the airline has lost US$1.2 billion in the past three years, and a further US$140 million in the first quarter of this year alone. The July shooting down of MH17 and the March disappearance of MH370 are expected to inflict further damage to its financials.

In June, Khazanah revealed it was undertaking a comprehensive review of MAS with the aim of devising a restructuring scheme, with today’s proposal representing the plan's first stage.

“We reiterate that the proposed restructuring will critically require all parties to work closely together to undertake what will be a complete overhaul of the national carrier on all relevant aspects of, inter alia, the airline’s operations, business model, finances, human capital and regulatory environment,” a Khazanah statement said.

“Nothing less will be required in order to revive our national airline to be profitable as a commercial entity and to serve its function as a critical national development entity.”

Additional details of the restructuring plan are expected to be revealed by the end of the month.

MAS will table the proposal to shareholders at an extraordinary general meeting to be scheduled at a later date.

"Malaysia Airlines will continue to operate all our current flights, schedules and reservations," a statement said. "Our focus remains on delivering the world class customer service that we are known for around the world."

Meanwhile, the airline confirmed it is working to support the families of those onboard flight MH17 through its provision of "caregivers", financial assistance to US$5,000 and the initiation of an advance compensation payment process.

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