KUALA LUMPUR: The decision on Malaysia Airlines Bhd’s strategic partner will most likely not be forthcoming in the next few months given the turbulence in the global aviation sector, analysts said.
They are skeptical about the national carrier’s outlook on finding a strategic partner among foreign parties as the sector was severely hit by the Covid-19 pandemic.
Some said investors were losing appetite in airlines due to potential losses in revenue and weak air travel demand.
Asian aviation consultancy firm Aer Mobi chief executive officer Michael Walsh said Malaysia Airlines might require a further injection of cash prior to any sale decision.
“I doubt that the government will move forward at this time over a foreign-led consortium or overseas buyer for Malaysia Airlines,” he told the New Straits Times.
Another analyst said potential buyers might leverage on the current distressed situation to get cheaper valuation for the airline.
Global airlines are already hit by cutthroat competition with slower air travel demand, prompting them to reduce capacities and initiate cost-cutting measures.
Khazanah Nasional Bhd managing director Datuk Shahril Ridza Redzuan recently said it was still too early to decide on the strategic options for Malaysia Airlines.
Khazanah is the sole shareholder of Malaysia Airlines through its holding company Malaysia Aviation Group Bhd.
Walsh believes a local partner solution would be the way forward for Malaysia Airlines.
On whether Khazanah could turn to AirAsia Group to take over Malaysia Airlines, he said the low-cost carrier had its own cashflow problem with long-haul unit AirAsia X Bhd.
“Otherwise the whole project will have to be pushed to 2021 perhaps but that level of delay will trigger a further bailout request and definite layoffs,” he added.
A source said a bailout to keep Malaysia Airlines afloat would not be viable as long as it involved strict terms including no further downsizing.
Singapore-based Sobie Aviation analyst Brendan Sobie said the change in government and coronavirus pandemic had made naming Malaysia Airlines’ strategic partner even more complicated.
“There is not much appetite to begin with and all the offers (currently on the table) are cherry picking and not meeting all the conditions,” he told NST.
Sobie said the current appetite would be even less as the new government would have to make a lot of compromises in selling Malaysia Airlines.
“This is not something to rush on and I will be surprise to see a sale in the near term,” he added.