Malaysia Airlines shareholders approve nationalisation plan

By David Flynn, November 6 2014

Malaysia Airlines' shareholders today voted to approve a takeover bid by Khazanah Nasional, paving the way for the nationalisation of the airline.

However, the proposal still needs to be vetted by the High Court of Malaysia before the buyout can proceed.

The move comes as part of an upcoming dramatic restructure of MAS including a 30% cut to its workforce – representing 6,000 workers – in a drive to return the airline to profitability by 2017.

Cuts to international routes are on the cards, with MAS rationalising its network towards a regional focus while relying on partners, including fellow members of Oneworld, for connections further afield.

The carrier will now focus on its local Asian routes and rely on its Oneworld partners to fly passengers in from Europe and elsewhere.

Once the transaction takes place, MAS will also disappear from Malaysia's stock exchange, with the company being delisted by the end of 2014 if the motion receives High Court approval.

The 'new MAS' will receive A$2 billion from 2014 to 2016 for the ambitious transformation.

The overhaul follows a A$104.3 million quarterly loss posted by the airline earlier this year.

PREVIOUS | Malaysia Airlines will be taken into full private ownership as part of a plan to turn the airline around in the wake of the MH370 and MH17 disasters.

The proposal could also see Malaysia Airlines rebranded to help rebuild public confidence.

MAS' state-run parent Khazanah Nasional already holds 69.4% of the airline, and will buy the remaining 30.6% of shares for an estimated $470 million in an effective state take-over.

The airline would then be radically restructured to improve cash flow.

"We reiterate that the proposed restructuring will critically require all parties to work closely together to undertake what will be a complete overhaul of the national carrier on all relevant aspects," Khazanah said in a statement.

"Nothing less will be required in order to revive our national airline to be profitable as a commercial entity and to serve its function as a critical national development entity."

Malaysia Airlines was in dire financial straits before the loss of flights MH370 and MH17.

The airline has racked up debts approaching $1.5 billion since 2011 and earlier this year analysts were not expecting Malaysia Airlines to break even until 2016.

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David

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

Qantas - Qantas Frequent Flyer

01 Oct 2013

Total posts 93

It sure will be an interesting few weeks to see what direction Khazanah Nasional takes to restructure the company. A transformation to an LCC model? Courting a merger with AirAsia? Or will they double down on the full service flag carrier model using govt funds (highly unlikely)?

It seems like AusBT has plenty of MH loyalists - let's see if the airline will still be appealing after the restructure.

Qantas - Qantas Frequent Flyer

19 Nov 2011

Total posts 246

Speculation:

  1. International Operations
  2. Domestic Operations
  3. Enrich Program

Thinking this could be the option, based on what we've seen in lots of airlines structure. They could even consider bringing Enrich to be on par with American Airlines style of winning loyal members, international partnerships and earning money on their frequent flyer program as funding for operations.

Qantas - Qantas Frequent Flyer

17 Aug 2012

Total posts 2221

Aha, I see it's Turnaround Plan time.

MH has had so many turnarounds it's going around in circles. Hopefully this will be the one to set it free.

Qantas - Qantas Frequent Flyer

20 Sep 2013

Total posts 469

The appear to be going the way QANTAS.

Sheeesh, its not that bad is it?!?!?!  :)

QF Plat

14 Jul 2014

Total posts 19

I thought it was past it's Point of No Return.

Who will invest?

Qantas - Qantas Frequent Flyer

17 Aug 2012

Total posts 2221

Expect a lot of two things: the Malaysian government getting the debt written/paid off (think BA when HM Government flogged it off), and/or everything being shunted sideways into a regional subsidiary that 'becomes' a new carrier (think Swiss when they went under and came back as SWISS).

Virgin Australia - Velocity Rewards

06 Dec 2012

Total posts 168

Swiss to SWISS, it's brilliant!

Qantas - Qantas Frequent Flyer

01 Oct 2013

Total posts 93

SWISS is an interesting case study, especially compared to MH's potential future. While SWISS did get back up their feet financially, it's a completely different airline through and through - it could be argued that the airline lost a lot of its soul during the rebirth.

Qantas - Qantas Frequent Flyer

01 Oct 2013

Total posts 93

SWISS is an interesting case study, especially compared to MH's potential future. While SWISS did get back up their feet financially, it's a completely different airline through and through - it could be argued that the airline lost a lot of its soul during the rebirth.

Qantas - Qantas Frequent Flyer

20 Sep 2013

Total posts 469

Are you serious.Why would any carrier invest in Qantas.The carrier is of no value other than flying  P class Tranpacific.

Qantas - Qantas Frequent Flyer

17 Aug 2012

Total posts 2221

This is about MH, not QF!

SWISS is a good case study of how to revive an airline that has had a stake run through it. MH can be fixed, and the crashes won't stain them forever - look at all the carriers that have had brutal crashes and still fly today, e.g. all three big stateside legacies, KL, AF...

But this is the time for them to do the 'deep clean' they've needed for decades.

QF Plat

14 Jul 2014

Total posts 19

What about Pan Am? rest it soul

17 Feb 2012

Total posts 121

Robert, QF made a domestic profit last year, Virgin didn't.  Their FF program isn't being sold off - Virgin's is... I know which airline I would stand behind...   

Trivia of the day: When is Privatisation not Nationalisation?

It is when the buyer is not the government only in name! It's Salomon v Salomon all over again! Hurrah for the veil of incorporation!

N.B: 

  1. Nationalisation may occur with or without compensation to the former owners.
  2. Khazanah is the investment holding arm of the Government of Malaysia, incorporated under the Companies Act 1965 on 3 September 1993 as a public limited company.

Source: Wikipedia

Qantas - Qantas Frequent Flyer

20 Sep 2013

Total posts 469

I am glad you said Khazanah.and they have holdings in others carriers.Well done.And khazanah is alive and well.

Qantas - Qantas Frequent Flyer

02 Jul 2011

Total posts 1381

Khazanna is paying for the shares it doesn't own (and paying a premium to the current market value)...

A classic nationalisation is we are taking all of your shares and not paying you for them, and if you complain we will also lock up your management etc

Qantas - Qantas Frequent Flyer

13 Sep 2011

Total posts 182

I hope MH survive, privatised or not.  BA had massive restructuring after privatisation, as did most former nationalised companies.  However, MH are beyond bad luck as one media outlet put it.  To loose an aircraft is tragic and unlucky, to have another brought down by some of Putins goons less than six months later is just despairing as well as tragic.  MH surviving would be good and excellent for 1W.  But whatever happens my thoughts go to all the families of people on both aircraft and hope they find some way to assuage the anguish of their loss.

QFF

12 Apr 2013

Total posts 1446

And who told you that it is “Putins goons” fault? Perhaps Poroshenko goons? Up until now no-one knows what exactly happens to the plane and matter of fact that Ukrainian forces start fire effectively prevent commission to work. And matter of fact those “Putin goons” not benefits at all from disaster (actually quite on the contrary) and even if they shoot the plane (my odds they did it by mistake aiming on Ukrainian military plane that reportedly flying nearby), it was terrible accident and not planed act. From other hands Ukrainian forces indeed benefits from disaster because it became easier for them to take control over territory where the plane went down. For thinking mind it should arise quite a few questions.

But how you say it regardels what happens I am with you on one thing - all my condolences to families from both unfortunate planes. Also hope that MA eventually recovers.

Wow. You're buying the Russian spin on this? Interesting...

QFF

12 Apr 2013

Total posts 1446

I reading and listen to IN ORIGINAL English, Russian and Ukrainian news. Also I have plenty of relatives and friends in Ukraine and Russia to whom I am talking to. Believe me it is not as black and white as State Department like you to believe to.

Qantas - Qantas Frequent Flyer

13 Sep 2011

Total posts 182

Serg, just to clarify I never said in my statement that Putins goons deliberately brought down MH17. In fact, evidence suggests that it was a case of wrong aircraft wrong time but also the evidence suggests that Russian backed separatists were behind the disaster and Putin is supplying hardware to them, hence calling them Putins goons.  And while the state tempt is not squeaky clean, I will listen to them more than Russia Today, as does my lady friend originally from Donetsk, and her family. 

QFF

12 Apr 2013

Total posts 1446

Wogafan, my post was about that there is no evidence that “Putin goons” shoot it down. As well as no otherwise. However US order their civilian aircraft not to fly over Ukraine since the beginning of the crisis. You may call it coincidence.

PS it is funny to see minuses in my posts – zomby-box indeed zombing people. LOL.

Qantas - Qantas Frequent Flyer

19 Aug 2011

Total posts 155

It is being nationalised, not privatised.

It is being taken off of the stockmarket and its private shareholders bought out by a state owned investment firm.

Hardly surprising, as who would buy it on a commercial basis?

Qantas - Qantas Frequent Flyer

29 Jun 2013

Total posts 367

I wish them good luck during there restructure as they were a great airline and I think the fist 5 star airline or one of the first .it would be sad for them to disapare through no fault of their own!!

AA

14 Aug 2013

Total posts 28

fix your headline, please.    privatisation is when the government sells off a property, not when they take one out of private citizens' hands completely.

That is the spin the Malaysian Government is going with. Nationalisation sounds very bad and anti-business. But we all know what they're really doing.

Qantas - Qantas Frequent Flyer

26 May 2014

Total posts 405

If MH is going to quit their LHR and CDG routes, will they have 6 near new A380s on the market ?  QFi?  A shame that MH staff will be faced with job losses after the tragedies of 2014.

Qantas - Qantas Frequent Flyer

25 Sep 2013

Total posts 1137

I certainly hope they don't exit LHR and CDG!

British Airways - Executive Club

07 Sep 2012

Total posts 48

Its going to be hard for MH to rely on OW partners to fly passengers from Europe to KUL as BA/QF don't fly there, and although QR does, people may be more inclined to fly them through to/from Australia. It will be sad to see MH being relegated to a regional carrier. I think MH should keep at least LHR and CDG as these flights are quite full throughout the year and are best suited for the A380. Sad that AMS and FRA might go even though the former is generally full throughout the year.

Thai Airways International - Royal Orchid Plus

15 Jan 2013

Total posts 279

will Australian to Kuala Lumpur services be staying?

QantasFF Platinum

16 Feb 2012

Total posts 153

I should certainly hope so! However wouldn't be surprised if ADL gets dumped - the A330 is often very empty on both sectors.


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