United Places Big Bets on Intra-Asia Flying
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Malaysia Airlines has taken the next step in selling a stake of the carrier to another company in its quest to return to profitability. The country’s Prime Minister Mahathir Mohamad says that five bids have been received in hopes of selling part of the struggling carrier and keep it flying. Previously, the Government of Malaysia has threatened rebranding or shuttering the carrier should a new shareholder not be found.
Internationally, Japan Airlines has been mentioned as considering up to a 25 percent stake in the struggling southeast Asian carrier. A deal with the Japanese carrier would allow the airline to continue to be part of the oneworld alliance. Furthermore, JAL has made numerous deals with carriers in the region, including a joint business venture with MAS that is expected to start this year in hopes of increasing traffic between the two countries.
Alternatively, the bidding war might see a domestic carrier take hold of a stake of its competitor. Both Air Asia and Lion Air subsidiary Malindo Air are rumored bidders but none of the details about these investment offers have been brought to light.
Air France-KLM group was also mentioned to have interest in a 49 percent stake in the carrier but the European parent company confirmed to Reuters that all talks about acquiring such a stake in the carrier had ceased. The two other offers the Prime Minister mentioned have yet to be announced.
Currently, the airline is 100 percent owned by the Khazanah Nasional Berhad, a sovereign wealth fund that was created by the Government of Malaysia in 1993. The firm took hold of the carrier in 2014 when the Malaysian government decided to privatize the carrier.
Following Malaysia Airlines’ victory in 2007 of Air Transport World’s Phoenix Award for the best financial recovery of an airline, the company has only turned two profitable years. It’s most recent year of profitability was 2009, with every year under Khazanah Nasional’s control coming up with losses. Although profitability looked feasible at one point, the crashes of Malaysia Flight 370 and Malaysia Flight 17 left the carrier racking up large sums of debt as it attempted to rebuild trust in the industry and fight off low-cost competitors like Lion Air and Air Asia.
The airline’s most recent annual financial report showed a loss of RM791.71 million (194.73 million) in 2018. And to make matters worse, the parent company has failed to turn a profit itself, losing over RM6.271 billion ($1.54 billion) in 2018 as the company looked to restructure some failing aspects of the brand, including Malaysia Airlines.
Although Ian McMurtry was never originally an avgeek, he did enjoy watching US Airways aircraft across western Pennsylvania in the early 2000s. He lived along the Pennsylvania Railroad and took a liking to trains but a change of scenery in the mid-2000s saw him shift more of an interest into aviation. He would eventually express this passion by taking flying lessons in mid-Missouri and joining AirlineGeeks in 2013. Now living in Wichita, Kansas, Ian is in college majoring in aerospace engineering and minoring in business administration at Wichita State University.
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