Foreign, local carriers make bids for Malaysia Airlines: Report

Proposals to invest in ailing Malaysia Airlines include one from Air France-KLM which wants as much as 49 percent while Japan Airlines is looking at a 25 percent stake, sources with knowledge of the matter told Reuters news agency.

Domestic carrier AirAsia Group Berhad and Malindo Air, the Malaysian arm of Indonesia’s Lion Air, have also submitted proposals, the sources said.

“The bids from the foreign carriers are more comprehensive and strategic as both plan to capitalise on the strategic location of Malaysia for their operations,” said one of the sources.

The Malaysian government has been seeking a strategic partner for its national airline, which has struggled to recover from two tragedies – the mysterious disappearance of flight MH370 and the shooting down of flight MH17 over eastern Ukraine – in 2014.

Later that year, it was taken private by Malaysian sovereign wealth fund Khazanah Nasional Berhad, which paid 1.4 billion ringgit ($345m) for the 30 percent of shares it did not already own.

The sources declined to be identified as the discussions are confidential. Representatives for Air France-KLM, Japan Airlines (JAL), AirAsia and Malindo did not immediately respond to requests for comment by Reuters.

Malaysian Prime Minister Mahathir Mohamad said on Monday five proposals had been received as part of a review that started last year but declined to name the suitors.

The National Union of Flight Attendants Malaysia (NUFAM) urged the Malaysian government to be transparent regarding plans for the future of the loss-making national carrier.

“Each time we ask about the progress of Malaysia Airlines, all seem silent but deals are already happening [in the background] quietly,” said Ismail Nasaruddin, president of NUFAM, in a statement sent to Al Jazeera.

Malaysia Airlines last year signed a joint venture agreement with JAL covering flights between Malaysia and Japan, which the Japanese airline said could be expanded in the future to cover flights to the United States.

Malaysia Airlines and JAL are members of the Oneworld airline alliance, while Air France-KLM is part of the rival SkyTeam alliance.

Khazanah, which appointed Morgan Stanley last year to advise on potential options for the airline, said it was working closely with the government.

“While there have been several proposals in this regard, a review of the options available to us is still ongoing,” Khazanah said in a statement.

Sources said Air France-KLM had proposed setting up a hub for maintenance, repair and overhaul services in Malaysia, while JAL had offered to make the Southeast Asian country its regional hub, including for low-cost flights.

Business news website Focus Malaysia said on Monday, citing an official document, that Khazanah had been pushing for AirAsia’s long-haul unit AirAsia X to merge with Malaysia Airlines.

“An international solution is probably better in this situation as AirAsia would have competition concerns,” one of the sources told Reuters.

“This is still a work in progress, but the story is around the potential for a massive hub in Southeast Asia and it’s clear that international airlines see value in Malaysia Airlines because of this,” the source said.

NUFAM expressed concern that no consultations on potential mergers or takeovers have been held with employees and members of the union, whose welfare are at stake should a merger go through.

“Many people in these airlines need to prepare for the worst if there were to be … news on any mergers, voluntary separation schemes or even retrenchment,” the union told Al Jazeera.