Khazanah Nasional Bhd., Malaysia’s state investment company, said it has time to come up with a restructuring plan for loss-making Malaysian Airline System Bhd. as the national carrier has funds to last about a year.
An overhaul of the business model will take into account the airline’s need for higher productivity and the management’s ability to execute the plan, Azman Mokhtar, managing director of Khazanah told reporters in Kuala Lumpur today. Khazanah, which has pumped about 5 billion ringgit ($1.6 billion) into Malaysian Air, is exploring all options, Azman said today.
“The money put into MAS was not effectively used from a financial stand point given the company’s losses,” Azman said. He declined to elaborate on the restructuring plan and said the review should also take into consideration the type of carrier the airline wants to be.
Malaysian Air is speeding up an overhaul of its business as it reels from the disappearance of Flight 370 more than three months ago. The airline has lost a total 4.57 billion ringgit since the start of 2011, and the company has said the lost jet had put additional stress on operations.
Flight 370 with 239 passengers and crew vanished from civilian radar on March 8 en route to Beijing from Kuala Lumpur. The hunt for the aircraft has become the longest in modern aviation history and to date, no debris from the Boeing wide-body airliner has been retrieved.
A review of Malaysian Air may take about three months, and implementing the changes may require another six to nine months, Hugh Dunleavy, the airline’s director of commercial operations, said in an interview last month. Bankruptcy is not an “option at this stage,” he said.
Khazanah owns a 69.4 percent stake in the airline, according to data compiled by Bloomberg. The Subang Jaya, Malaysia-based carrier missed its target to be profitable last year as rising prices for fuel, maintenance and financing wiped out revenue gains.