Malaysia Airlines: We don't need extra funding from Khazanah

KUALA LUMPUR: Malaysia Airlines Bhd (MAB) does not need extra funding from its sole shareholder, Khazanah Nasional Bhd, said its CEO Peter Bellew.

“We’re not looking for anymore funding. We have an agreed programme with Khazanah. We’re meeting all the targets Khazanah set. If we can, I’m going to try to get the plan executed a little bit earlier than we had planned,” he told reporters at the announcement of a partnership with Liverpool Football Club (FC) yesterday.

Under the 12-point MAS Recovery Plan (MRP), Khazanah is to inject up to RM6 billion into MAB on a staggered basis subject to the fulfilment of restructuring conditions.

Recall that the delisting of MAS OldCo was done at a cost of RM1.4 billion and the restructuring and retrenchment costs amounted up to RM1.6 billion while the remaining RM3 billion capital is to be injected progressively from 2014 till 2016.

Bellew said the turnaround plan is going well and it is aiming to increase its load factor to 80% in the next 18 months. The airline’s load factor was 71-73% in the last few months.

MAB, which aims to increase flight frequencies to Beijing and Shanghai as part of its expansion plans in China, expects to double its average seat kilometres (ASKs) to China in the next 18 months.

“We’re in the process of applying for more slots (to those airports). We will be announcing significant expansion to China in the next month or so,” Bellew said, adding that China contributes 5-6% to its overall ASK.

Commenting on oil prices, Bellew said they are expected to go well over US$60 per barrel in the next 12 months and move towards US$70.

He said MAB is currently hedging at about US$65. “We hedge 12 months in advance and we try to hedge at least for a quarter to 12 months in advance, about 60% (is hedged). That’s the target, 60-70%.”

As outlined under the MRP, MAB aims to return to profitability by the end of 2017 and to relist within three to five years, that is, between end-2017 and end-2019. It has been reported that Bellew is looking to relist sometime in March 2019.

MAB’s deal with Liverpool FC sees the carrier becoming the UK football club’s official global airline partner. The deal, for three years, initially, provides various benefits, including brand exposure, for MAB.
Bellew said the investment size for the deal is less than 10% of MAB’s annual advertising and promotion budget.