Khazanah Nasional Berhad, the investment arm of the Malaysian Government and the majority stakeholder in Malaysia Airlines, has issued a proposal to buy all of Malaysia Airlines’ outstanding shares and remove the carrier from public trading.
In a statement, the organization said de-listing the carrier is the first step toward restructuring Malaysia Airlines. The group said it is in the “final stages” of creating the restructuring proposal, and that more details will be made public by the end of August.
“We reiterate that the proposed restructuring will critically require all parties to work closely together to undertake what will be a complete overhaul of the national carrier on all relevant aspects of, inter alia, the airline’s operations, business model, finances, human capital and regulatory environment,” it said. “Nothing less will be required in order to revive our national airline to be profitable as a commercial entity and to serve its function as a critical national development entity.”
Malaysia Airlines said it will bring the proposal to its shareholders during an as-yet-unscheduled general meeting. It also issued a series of statements to reassure customers that the airline is still operating.
“Malaysia Airlines will continue to operate all our current flights, schedules and reservations. Our focus remains on delivering the world class customer service that we are known for around the world.”
During the first quarter, Malaysia Airlines recorded a RM443 million loss ($138 million), compared to a RM279 million loss in the same period in 2013.
Commenting on the numbers, the airline said “commendable traffic growth and cost savings efforts [were] overshadowed by pressure on yields, under-performing non-core activities and negative sentiment on the airline.”
The negative sentiment came from the loss of MH370 in March; Malaysia Airlines MH17 was shot down on July 17. The carrier hasn’t released second-quarter results, but analysts in June were reporting that the carrier’s second-quarter results were to be the airline’s worst ever.
In July, Malyasia’s cargo subsidiary reorganized its management structure “with the objective to streamline MASKargo’s daily operations,” according to a note from Ahmad Luqman Azmi, MASKargo’s senior vice president of global sales and government affairs. The new structure included the introduction of the Cargo Corporate Services and Cargo Strategic Management departments.
At the time, he explained that “the re-alignment and re-assigning of certain tasks and functions will enhance efficiencies and effectiveness within the company towards achieving greater revenue growth and ultimately providing better services to our customers.”
In the second quarter, MASKargo saw its cargo activity drop by 3.7 percent, as its capacity increased by 3.6 percent, compared to the second quarter of 2013. Cargo load factor fell during the time period by 5.1 points. The biggest activity hit during the quarter came from an 11-percent, year-over-year, decline in freighter activity, even as MASKargo reduced its freighter capacity by 5 percent. Belly cargo activity rose by 0.7 percent during the period, but capacity increased by 9.1 percent.
MASKargo’s second-quarter belly cargo numbers were much more muted than those measured in the first quarter, when the carrier saw a 14.2-percent increase in belly activity on a 15-percent capacity increase. Freighters also took a hard hit in the first quarter, though, with activity and capacity falling by 24.1 percent and 21.6 percent, respectively, year-over-year.
Malaysian government plans purchase of Malaysia Airlines
