Bloomberg predict that Malaysia Airlines (MAS) faces the prospects of being delisted following the second tragedy to hit the national carrier in less than five months.
In March, flight MH370 disappeared with 239 people on board and on Thursday, flight MH17 was shot down in eastern Ukraine, killing all 298 passengers and crew. The two disasters were likely to end the flag carrier’s days as a publicly traded company, Bloomberg said.
MAS plans to present a revival plan to its biggest stakeholder Khazanah Nasional Bhd this week, sources told the financial portal yesterday. The options range from privatising the company to bankruptcy, both of which involve a delisting from Bursa Malaysia.
“They don’t have the luxury of time,” Mohshin Aziz, an analyst at Maybank, was quoted as saying. “There’s never ever been an airline that had to go through two monumental tragedies in the space of four months.”
MAS shares closed at 20 sen yesterday with Khazanah owning almost a 65% stake in it. The airline reported losses of RM443.4 million in the first quarter of the year, from a net loss of RM278.8 million in the same period last year. Losses in 2013 amounted to RM1.17 billion.
MAS blamed the Q1 loss on the missing flight MH370, which saw high numbers of cancellations and a decline in long-haul travel after the March 8 incident.
The airline responded to queries about its revival plan by saying: “Our focus during this very challenging time is to work with the emergency responders and authorities and mobilise full support to provide all possible care to the family members of those on board MH17… This is not the right time to address this question.”
In June, the country’s longest-serving prime minister said MAS should be privatised and be run by those who can work with the unions to revive its fortunes following the MH370 disaster.
Tun Dr Mahathir Mohamad said Malaysians with experience in the aviation business and who can work with the national carrier’s powerful unions should help bring the airline back into profitability.
For Khazanah, privatising MAS means buying the 35% it doesn’t own in the company, at more than RM1 billion. Should MAS opt to file for bankruptcy, it could be the biggest for an airline in terms of assets since AMR Corp in 2011, said Bloomberg.
But the sources told Bloomberg that privatisation remained the preferred option, with a decision coming as soon as next month. The airline reportedly has enough funds to last about a year.
Analysts are projecting losses until 2016. It had cash and cash equivalent of RM3.25 billion at the end of March, 13% lower than the last quarter of 2013.
According to Bloomberg, MAS carried 3.1% fewer passengers in June from a year earlier, and filled 77% of its seats, down from 84% a year earlier.
MAS would also modify its future plane orders and had looked into ordering up to 100 planes from Airbus and Boeing. The newer planes are more fuel efficient and would allow MAS to compete with rivals such as AirAsia.