[QODLink]
Asia-Pacific

Malaysia Airlines to be nationalised

Crisis-hit airline suspends trading on stock exchange as state investment fund plans "complete overhaul" of carrier.

Last updated: 08 Aug 2014 18:42
Email Article
Print Article
Share article
Send Feedback

Malaysia's state investment fund has unveiled plans to make Malaysia Airlines fully government owned, as it prepares to carry out a far-reaching overhaul of the carrier that is reeling from double disasters.

In a proposal announced on Friday, Malaysia Airlines suspended its shares on the Kuala Lumpur stock exchange, as its majority shareholder, Khazanah Nasional, said it would purchase all minority shares and finalise a restructuring plan by the end of the month. 

Khazanah Nasional, which is chaired by Malaysia's Prime Minister Najib Razak, said the state takeover will represent the first stage of a "complete overhaul" of the lossmaking airline.

"The proposed restructuring will critically require all parties to work closely together to undertake what will be a complete overhaul of the national carrier," it said in a statement.

Years of losses

Malaysia Airlines has reeled from years of financial losses and its survival is now seen as in peril following this year's air catastrophes.

Flight MH370 disappeared mysteriously in March with 239 people on board, en route to Beijing from Kuala Lumpur . No trace of the plane has been found and the airline was widely criticised for its handling of the crisis.

On July 17, MH17 was shot down over Ukraine, with another 298 people killed.

Al Jazeera's Florence Looi, reporting from Kuala Lumpur, said the company was without money to last the rest of the year and in massive need of capital injection.

"It hasn’t yet said what the restructuring will entail, but an even more difficult task lies ahead - regaining consumers’ confidence in the Malaysia Airlines’ brand," she said.

The move to suspend shares confirmed growing speculation that Khazanah, which already owns 69 percent of the flag-carrier, planned to completely take over Malaysia Airlines to strengthen its hand in addressing the carrier's mounting problems.

Despite having a solid safety reputation, the carrier's association with tragedy has pummelled bookings, and analysts said it is burning through its cash reserves at a rate of around $2m per day as it struggles to survive.

The airline lost $1.3bn from 2011-13, and a further $137m in the first quarter of this year, blaming MH370's "dramatic impact" on bookings.

351

Source:
Al Jazeera and agencies
Email Article
Print Article
Share article
Send Feedback
Topics in this article
People
Country
City
Featured on Al Jazeera
At least 25 tax collectors have been killed since 2012 in Mogadishu, a city awash in weapons and abject poverty.
Tokyo government claims its homeless population has hit a record low, but analysts - and the homeless - beg to differ.
3D printers can cheaply construct homes and could soon be deployed to help victims of catastrophe rebuild their lives.
Lack of child protection laws means abandoned and orphaned kids rely heavily on the care of strangers.
Featured
Booming global trade in 50-million-year-old amber stones is lucrative, controversial, and extremely dangerous.
Legendary Native-American High Bird was trained in ancient warrior traditions, which he employed in World War II.
Hounded opposition figure says he's hoping for the best at sodomy appeal but prepared to return to prison.
Fears of rising Islamophobia and racial profiling after two soldiers killed in separate incidents.
Group's culture of summary justice is back in Northern Ireland's spotlight after new sexual assault accusations.