Khazanah will decide on what to do with MAS in 6 to 12 months

10 Jun 2014 / 21:18 H.

KUALA LUMPUR: Khazanah Nasional Bhd will consider all options when deciding on a restructuring plan for beleaguered Malaysian Airline System Bhd (MAS) in the next six to 12 months.
"Whether bankruptcy, selling (MAS) or injecting more funds, we (will) study all options," its managing director Tan Sri Azman Mokhtar said today.
"At this moment, we are not prepared to say which option yet....but we have not ruled out any option. When the time comes, (the) decision will be made," he said on the sidelines of the Invest Malaysia 2014 conference here.
Azman said three factors that will determine the eventual restructuring plan for the airline are internal discipline, external support and management leadership.
For a sustained turnaround, he said MAS would need:
> strong improvement in its internal work culture and discipline;
> to ensure the Malaysian public is clear about what kind of carrier the country wants; and
> good leadership and management.
He added that there is a possibility of MAS downsizing its flights in the near-term until a restructuring plan is formulated, given that the airline has a reasonable leeway in making choices over its network plan.
Asked if Khazanah Nasional's injection of over RM5 billion into the airline to turn it around over the past 10 years had been well used, he replied: "Looking at the way it has been spent, the short answer is 'no', because from the financial standpoint, MAS continues to make losses.
"However, from the national viewpoint, the answer to this is less obvious as MAS, like all carriers, brings other economic impact and intangibles to the country, as in terms of connectivity and bringing the world to our shores," he added.
On whether Khazanah Nasional would still be the major shareholder of MAS, he said it would ultimately depend on the airline's special shareholder, the Malaysian government.
"The final decision will be made by the government. Our job is to give proper advice on what needs to be done," he added.
Commenting on speculation that MAS CEO Ahmad Jauhari may step down following the MH370 incident, Azman declined to comment.
"We appreciate that Ahmad Jauhari and his team have been working very hard, but clearly the leadership challenge is also there to deliver, whatever restructuring we will do eventually," he said.
Asked if more changes in the management team are expected to follow the departure of Malaysia Airlines Cargo Sdn Bhd (MASKargo) CEO Mohd Yunus Idris earlier this month, he said it is normal for people to come and go in the industry.
Meanwhile, commenting on the issue, Public Accounts Committee (PAC) chairman Datuk Nur Jazlan Mohamed said the time has come for the government to decide whether to continue protecting MAS or let it "fly on its own".
He said with the emergence of low-cost airlines and the "Open Sky" policy, the National Aviation Policy (NAP), which has been protecting MAS all these years is now irrelevant.
"The NAP is no longer suitable ... MAS's future depends on that government policy," he told reporters after chairing the PAC meeting in Parliament here today.
Nur Jazlan said from PAC's point of view, it is not necessary for the government to continue spending the rakyat's money to revive MAS without getting positive and permanent returns.
"How many years have we supported MAS? ... Although MAS is a listed company (on Bursa Malaysia) and does not use government funds (directly), the main investor is Khazanah, and Khazanah is funded by the government," he said.
For the first quarter ended March 31, 2014, MAS posted a net loss of RM443.39 million, higher than RM278.83 million net loss in the corresponding period.
As at March 31, 2014, MAS's total borrowings stood at RM11.81 billion. Year-to-date, MAS's share price has gone down 43.55%.
"Whether bankruptcy, selling (MAS) or injecting more funds, we (will) study all options. We have not out ruled any option."
Khazanah Nasional Bhd MD Tan Sri Azman Mokhtar
"With the emergence of low-cost airlines and Open Sky policy, the government policy which has been protecting MAS all these years, is no longer relevant."
PAC chairman Datuk Nur Jazlan Mohamed

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