Gov't won't pump in cash to rescue MAS

Tourism and Culture Minister Nazri Abdul Aziz said the government has ruled out cash injection to rescue Malaysian Airlines (MAS), which has not turned a profit in the last three years.

Gulf News reported Nazri as saying that the government is at a loss over what to do with MAS, the fourth largest Southeast Asia carrier, which has been struggling in a competitive environment, even before MH370 clipped its wings further.

"To inject new capital is certainly not an option," he had said at a tourism fair in Dubai.

The report also said that senior management at the government-owned airline could also be on the chopping block.

Nazri however told Gulf News that the transport minister will be the decision maker and refused to say whether the government remained confident in MAS’ senior management.

Even before MAS prompted the world's biggest aviation hunt with the loss of a Boeing 777 with 239 passengers onboard on March 8, the airline had issues.

Despite a 27 percent improvement in passenger traffic in 2013, the national carrier not only failed to turn a profit but more than doubled losses from the previous year. It suffered a net loss of RM1.2 billion.

Last month, MAS chief executive officer Ahmad Jauhari Yahya noted that an airline would need at least six months to recover from a market reputation issue after MH370, but stressed that MAS would do it sooner.

Shares of the Bursa-listed company had been trading at 70 sen/share in early 2013 before plummeting to 30 sen in July last year. After the MH370 incident, the share prices further eased to trade at about 20 sen/share.

The airline last raised funds almost a year ago through a US$1 billion rights issue. It also raised RM7.8 billion (US$2.36 billion) through Islamic bonds and a special purpose vehicle owned by the Finance Ministry to buy planes in mid-2012.

The rights issue was backed by Khazanah Nasional Bhd, which owns 69 percent of MAS.

Msiakini