NICHOLAS IONIDES SINGAPORE
Malaysia Airlines (MAS) has unveiled another wholesale restructuring that will see its loss-making domestic operations split from more healthy international operations, and a new firm taking over long-term.
MAS announced the plan at the end of January, saying a company, tentatively known as Newco, will be given an exclusive concession to sell passenger and cargo capacity on MAS international routes, as well as its cargo capacity on domestic routes. Newco will be a subsidiary of heavily indebted MAS - but MAS will transfer its Stock Exchange listing status to the new company.
After the revamp, existing public shareholders will not be exposed to huge losses from domestic passenger operations, although they will also not have any ownership of the carrier's subsidiaries or associate companies. Mahathir Mohamad, Malaysia's prime minister and finance minister, says the new company will only lease aircraft from government-controlled MAS. He describes the planned new operation as being "like a hotel operator which operates the hotel but does not own it".
MAS says: "The separation of international passenger service and cargo operations from domestic operations is a true rationalisation that clearly differentiates the geographic focus, and draws a clear demarcation of role and function based on the respective core competencies."
It claims the re-organisation will allow private investors to be immediately exposed to more healthy international operations, while the domestic arm "will be able to build on domestic policy imperatives and continue to upport government policy and the national interest".
MAS has been in financial difficulty for years, and is on course for a fifth consecutive loss in its financial year to the end of March. It has a debt of more than $2.5 billion.
Last year, the carrier was re-nationalised in a controversial deal which left the Ministry of Finance with 29%, other government agencies with 54% and the public with 17%.
Source: Airline Business
