By Chan Quan Min
Malaysia Airlines is exploring options leading to a possible business restructuring, just as the national airline appears almost certain to announce tomorrow yet another unprofitable quarter.
“The company is aware of the intense speculation on the possible course of actions to be undertaken by the company,” Malaysia Airlines said in a statement.
“The management would like to put it on record that at this juncture, a thorough review of the business plan is being undertaken and all avenues are being explored to ensure the long term sustainability of the company.”
Speculation has been rife that Malaysia Airlines will soon unveil plans for a strategic overhaul that could include the partial sale of its engineering unit and an upgrade of its ageing fleet.
According to a Reuters report Monday, the airline and its key stakeholders, one of them likely to be 69% owner Khazanah Nasional, have been holding private talks with banks. One of the banks is CIMB Group Bhd.
“They are sending all these feelers to banks to try and test the waters,” Reuters quoted an unnamed banking source as saying. “The most imminent move looks to be on the engineering business, an IPO (initial public offering) or trade sale.”
Malaysia Airlines has been unprofitable or barely breaking even for five years now, in the aftermath of the Global Financial Crisis of 2008.
Tomorrow, Malaysia Airlines is expected to post another loss-making quarter for its 1Q14 financial results, according to Maybank IB Research.
Ahmad Jauhari Yahya
Meanwhile, CEO Ahmad Jauhari Yahya’s is running out of time. His three-year contract ends in September and it is increasingly likely he will not see Malaysia Airlines return to profit before he leaves his post.
On the yet to be revealed plan, Malaysia Airlines claimed, “as always, the plan will be shared with the relevant stakeholders at the appropriate time when the necessary approval and endorsement have been obtained.”
Malaysia Airlines hinted that recent tragedy has prevented it from concentrating fully on turning around the airline.
“Since the disappearance of Malaysia Airlines flight MH370 on March 8, 2014, the airline’s focus has been in supporting and caring for the needs of the families and loved ones of the passengers and crew onboard,” the airline said.
“More than two months have passed since the tragedy, the airline continues to work hard to return the company to recovery and to support a sustainable future albeit a more challenging outlook.”
Following the MH370 tragedy, the airline has added another goal to its business turnaround plan, which has to date focused largely on “relentless cost focus.”
Malaysia Airlines has found it necessary to also start “winning back customers” in order to “energise its recovery.”
A full privatisation and delisting of Malaysia Airlines has been estimated at RM1.18 billion for its parent company Khazanah Nasional.
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