By Clara Chooi
KUALA LUMPUR, April 25 — It was the powerful MAS unions and their political threats that had moved Putrajaya to unravel the MAS-Air Asia share swap deal, Singapore’s Business Times reported today, citing executives familiar with the decision.
The financial daily pointed out that union leaders had recently dangled their votes openly before the government by saying their over 20,000 members would back the opposition if the proposed tie-up materialised.
“Indeed, union leaders met with opposition leader (Datuk Seri) Anwar Ibrahim recently. Only later did they meet up with Mr Najib (Prime Minister Datuk Seri Najib Razak),” the daily reported in an article today.
The newspaper noted that the controversial share swap deal has drawn heavy criticism since it was announced last August, including some from the “right-wing elements” in Umno but largely from the ailing carrier’s unions.
Among others, AirAsia chief Tan Sri Tony Fernandes was accused of taking advantage of the loss-making national airline for his personal ambitions, the daily said.
“Since the deal was announced, for example, AirAsia has won approval from the government to fly two routes it has long coveted: to Seoul and Sydney,” it reported.
According to the business daily, Fernandes was also criticised when MAS suddenly agreed to part-sponsor Queens Park Rangers, the English Premier League (EPL) club that he had bought. AirAsia had previously agreed to sponsor the club.
But despite this, executives familiar with the government’s decision to unravel the airlines’ tie-up told the Singapore BT that it was the unions that finally made up Putrajaya’s mind.
This, the daily wrote, is a clear reflection of the political dimensions of the national airline.
Along with the controversies surrounding Lynas Corporation’s rare earth plant in Kuantan and the National Feedlot Corporation’s (NFCorp) alleged mishandling of the country’s national cattle farming scheme, said Singapore BT, the MAS-AirAsia share swap deal has been identified as one of three key issues that Najib must resolve before the 13th general election.
MAS has had a turbulent past decade after the government bought back the airline from former corporate high-flyer Tan Sri Tajudin Ramli at RM8 per share or about double the market price at the time.
It then had its books cleaned up in 2002 under the wide asset unbundling (WAU) exercise that was engineered by the BinaFikir consultancy, then led by current Khazanah managing director Tan Sri Azman Mokhtar.
The state-owned airline had two rights issues since the WAU, raking in RM1.6 billion in 2007 and RM2.67 billion in 2010 to fund its operations and fleet purchases.
It was also lacklustre financially, shocking the market with massive losses last year even as rivals such as Singapore Airlines reported profits, albeit reduced.
The national carrier also suffered the indignity of having its market capitalisation surpassed by younger upstart AirAsia, after its share price fell to record lows.
A share swap and accompanying collaboration framework with AirAsia unveiled last August was supposed to help put MAS, which posted its biggest ever annual loss in February, back on firmer footing amidst an increasingly challenging aviation environment.
Under the share swap, AirAsia’s main shareholder, Tune Air Sdn Bhd, exchanged a 10 per cent stake in the budget carrier for a 20.5 per cent share of MAS from Khazanah.
The idea was to have some of the business acumen that took AirAsia from a two-plane outfit to Asia’s largest budget airline in just 10 years, rub off on the national carrier.
Following the share swap, the management team led by new managing director Ahmad Jauhari Yahya put together a business turnaround plan last December to help propel MAS back to profitability.
The new management’s efforts to restructure the airline and put it in a more competitive position, however, caused friction with the unions and employee associations.
Sources also told The Malaysian Insider last month that Putrajaya was having a relook at the share swap and was considering a special entity to take MAS off the hands of its main shareholders, Khazanah Nasional Berhad and Tune Air.
According to Singapore BT, no details of how the deal would be unravelled have yet surfaced, not even from Fernandes.
“No one has talked to me yet,” he was quoted as telling Singapore BT in a text message. “There are lots of rumours. I am still doing my best.”