A deal doomed from the start

LETTERS: I read with great interest the letter titled "Share swap deal will rejuvenate MAS" published by the New Straits Times recently.

It is quite remarkable to see a suggestion to repeat the misjudgment by the Khazanah Nasional management in 2011.

Firstly, the reasons provided to push for the share swap are misplaced — that the exercise will bring financial stability to Malaysia Airlines (MAS).

This is highly presumptuous as AirAsia is mired in financial difficulties as it has fallen into the PN17 list of Bursa Malaysia Securities, a category for distressed business entities.

I doubt Prime Minister Datuk Seri Anwar Ibrahim, as chairman of Khazanah, would be willing to destroy MAS' reputation by associating it with a PN17 company.

Note that MAS is now known as Malaysia Airlines Bhd (MAB) after its successful reset in 2015 and it belongs to a bigger entity, the Malaysia Aviation Group (MAG).

Kudos to Khazanah and MAG for their perspicacity in reinvigorating our national airline with the 2015 recovery plan.

Secondly, the letter said AirAsia will bring a wealth of operational experience and bankable synergy to the table, while helping MAS embrace innovative technologies and adopt a customer-focused approach.

We as consumers simply cannot understand what these entail.

Will MAS passengers suffer the same fate as the many AirAsia passengers who have been outraged by frequent flight delays and cancellations and the many cases of late refunds?

I would rather talk to a human customer service employee over ticketing issues than rely on a robot like AirAsia's "live chat" feature.

What innovative technologies does MAS lack? From an operational point of view, the premium national airline must surely offer more than a low-cost airline?

Like how the exercise back in 2011 was doomed from the start, the share swap between a premium airline and a low-cost airline simply will not work — operationally and financially.

The MAS workers' union and the rakyat had rejected the share swap then. MAS employees and loyal customers will never warm up to any suggestion to revive this futile exercise.

Thirdly, any attempt to merge the airlines will be closely watched by the Malaysia Competition Commission.

In 2013, MAS and AirAsia were fined RM10 million each for breaching Section 4(2)(b) of the Competition Act 2010 over its share swap deal. Market sharing is considered a serious infringement under the act.

Last year, the Federal Court finally dismissed the penalty due to a technicality as the share swap agreement was signed a few months before the Competition Act came into force. Surely no one wants to risk more penalties.

Lastly, the letter extolled the leadership virtues of the co-founders of AirAsia as an asset that MAS should utilise.

But AirAsia still cannot escape the clutches of the PN17 category even after suffering losses upon losses.

The net loss for Capital A Bhd (the new name for AirAsia Bhd) in the third quarter of last year ballooned to RM901 million from RM887 million in the same quarter in the previous year.

Meanwhile, MAS is poised to report an unaudited net profit of RM600 million for the fourth quarter of last year and has been seeing positive cash flow since October 2021.

The reset in 2015 is finally coming to fruition. Since MAS is currently more financially stable than AirAsia, why should MAS give AirAsia a piggyback ride?

Furthermore, AirAsia bosses have had many controversies in the past, including paying millions in settlement to the Securities Commission for an insider trading offence, as well as bribery allegations over a business deal with Airbus. These reflect poorly on the company.

The share swap deal will not only spell disaster for MAS, but past experience suggests it would never be successful.


Kuala Lumpur

The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times

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