By REUTERS
Shares in Malaysian Airline System Bhd logged a second day of sharp declines to hit a record low on Monday, after the carrier posted big quarterly losses due to the disappearance of flight MH370 and the prime minister was quoted as not ruling out bankruptcy as an option for the carrier.
The slide could add urgency to talk that the loss-making airline might need a financial rescue from state investor Khazanah Nasional Bhd, which owns 69% of the company.
Bankruptcy might be one of several options for the airline to restructure after years in the red, the Wall Street Journal reported Prime Minister Najib Abdul Razak as saying.
“We have to look at it from all angles bearing in mind that MAS is a government-linked company,” Najib was quoted as saying by the newspaper in a report on Friday.
An official at the prime minister’s office said the comment was from an interview that took place in April, ahead of the airline’s quarterly results.
Shares in Malaysian Airlines fell to a low of 15 sen, equivalent to just 5 US cents, in heavy trade on Monday morning, adding to a drop of 9.5% on Friday.
“What the PM said was a big trigger – those are strong words and might have catalyzed some investors,” said an analyst from a local bank, declining to be identified.
Some 285 million shares changed hands in the first two hours on Monday, 8.9 times the average full-day volume traded over the past 30 days. The airline’s market value has plunged about 50% so far this year.
The airline and its key stakeholders are in talks with banks for a strategic overhaul that could include the partial sale of its engineering unit and an upgrade of its ageing fleet, sources involved in the discussions have told Reuters.
Bankers have said that while financing support for the carrier had weakened since the MH370 incident, it continued to have support due to the government’s backing of the airline.
The airline said on Thursday that the dramatic impact of the disappearance in March of its flight MH370 has pushed it to its worst quarter in over two years, with a sharp drop in passenger traffic likely preventing it from returning to profit this year.
Its first-quarter net loss expanded by nearly two-thirds to RM443.4 million from RM278.8
million a year earlier.
“It’s a bit drastic what’s happening to the stock, but I think it will struggle to make profit in the next year or two years and investors are cashing out now,” said Jerry Lee, an analyst with RHB Investment Bank.
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