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Khazanah denies RM6 billion as bailout in MAS turnaround

Khazanah denies RM6 billion as bailout in MAS turnaround

The RM6 billion to be injected into troubled Malaysia Airlines (MAS) is not a bailout, said state national fund Khazanah Nasional Berhad, as it unveiled a massive revamp today to turn the national carrier around.

Khazanah managing director Tan Sri Azman Mokhtar said the money can be recovered when the flag carrier is projected to attain profitability by the end of 2017, and when it prepares for relisting between 2018 and 2020.

"The RM6 billion is not a bailout and can be recovered," he said after announcing details of the restructuring plan today.

Over the last ten years, Khazanah had pumped RM7 billion into the ailing airline, with RM5.7 billion alone in the last five years through three rights issues.

MAS had been in trouble for years but the twin disasters involving the missing MH370 in March and the shooting down of MH17 last month worsened its financial health.

The carrier announced its second quarter results yesterday which recorded a net loss of RM307 million, which brings it total loss to RM750 million for the first six months of this year.

Azman said the RM6 billion fund injection, to be given progressively over the next three years, is a "medicine" that comes with a conditional belief that MAS will return to profitability.

"We have diagnosed the problem and the medicine is linked to the money coming in. If you don't take the medicine, there's no money coming in."

Under the 12-point enabling plan, the state sovereign fund will invest up to RM6 billion on a staggered and conditional basis over a three year period.

Of the total, RM1.4 billion will be spent to delist MAS, which is expected to be completed by end of this year.

MAS is to be taken private by Khazanah, which owns over 69% of the carrier. Earlier in August, it had announced its plan to buy out shares it does not own at 27 sen for each MAS share, amounting to nearly RM1.4 billion, to take the troubled airline private.

Another RM1.6 billion will be spent on restructuring and retrenchment costs, while RM3 billion will be injected progressively into the new company.

Azman also said today among the routes to be reviewed are those to Europe and Turkey, but added that MAS will announce the details later. – August 29, 2014.