Global airlines such as Japan Airlines (JAL) and Air France-KLM have sought stake in Malaysia Airlines after the state sovereign wealth fund that controls the embattled airline said it was looking at significant stake sale. While Japan Airlines is looking to buy a 25 percent stake, Air France-KLM is seeking a 49 percent stake in the Malaysian airline, Reuters reported citing sources.
While foreign airline companies are the frontrunners, domestic carrier AirAsia Group and Malindo Air, which is the Malaysian arm of Indonesia's Lion Air, have also expressed interest in buying stake in Malaysian airline, the report 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," a source told the agency.
What do JAL and Air France-KLM offer?
Malaysia's sovereign wealth fund Khazanah Nasional had taken the airline private in 2014. "While there have been several proposals in this regard, a review of the options available to us is still ongoing," Khazanah, in a statement.
A day earlier, Prime Minister Mahathir Mohamad said that five companies had proposed stake purchase in Malaysia Airlines. There are about five proposals but of course, some of them are just no go. We need to listen to everybody to find out what is the best solution," Mahathir said.
Both Air France-KLM and Japan Airlines have made attractive pitches for Malaysia Airlines, which did not recover from the impact of two back-to-back mishaps -- the disappearance of MH370 and the shooting down of flight MH17 over eastern Ukraine in 2014. While Air France-KLM is willing to set up a maintenance hub Malaysia, JAL is offering to make Kuala Lumpur its regional hub.
Southeast Asia hub
The report says that Khazanah, the controlling shareholder, was likely to prefer an alliance with an international airline as it would boost Kuala Lumpur's prospect of becoming an international hub in the Southeast Asia. "An international solution is probably better in this situation as AirAsia would have competition concerns ... 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," a source was quoted by Reuters as saying.
Government spending fails to save airline
The 2014 crashes had followed a series of losses for Malaysia Air System Bhd, which controlled the airline. The company was delisted majority investor Khazanah Nasional paid 1.4 billion ringgit to buy shares it did not own. The recovery plan slashing of around 6000 jobs, and the hopes were that the company would turn profitable by 2019, Airline Ratings had reported.
However, the recovery does not seem to have taken place. An article in Malaysian business news portal Edge said the government injected as much as RM31 billion to keep the airline afloat. The amount spent in 2019 alone was RM800 million, the report said.