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Malaysia Airlines Bhd grou chief executive officer Captain Izham Ismail personally welcomes strategic investors as they will help the airline navigate during this challenging market. NST picture by Salhani Ibrahim.
Malaysia Airlines Bhd grou chief executive officer Captain Izham Ismail personally welcomes strategic investors as they will help the airline navigate during this challenging market. NST picture by Salhani Ibrahim.

KUALA LUMPUR: Malaysia Airlines Bhd (MAB) welcomes strategic investors to navigate the national carrier from the current ‘irrational’ market, hampered by overcapacity, oversupply and the worsening United States and China trade war.

Group chief executive officer Captain Izham Ismail said fuel prices and foreign exchange had also eroded airlines' yields over the years.

“It, however, depends on MAB shareholders to have a strategic investor. In my personal opinion, I welcome strategic investors as they will help the airline navigate during this challenging market,” he told New Straits Times yesterday.

Captain Izham, however, declined to elaborate whether the airline was in talks with potential partners.

Earlier, he said Malaysia Airlines should not be closed down as he believed such a move would incur high costs and impact its 13,500 employees.

Izham, speaking at the 75th International Air Transport Association annual general meeting, said such a move would also affect the supply chain - the suppliers, vendors and aircraft lessors.

Meanwhile, former Malaysian Airline System Bhd (MAS) chief executive officer Tan Sri Aziz Abdul Rahman is also believed to lead a proposal by a Malaysian company to take over Malaysia Aviation Group’s (MAG) assets.

An aviation market analyst reported that the strategic partners comprise of international investors, world-class airline operators and an international maintenance, repair and operations (MRO) player.

However, the targeted majority or minority stake in MAB, depends on the financial books of the airline, which is not made publically available.

“Moving forward, Khazanah via MAG and MAB must allow their accounts to be shared for potential investors to evaluate the airline before making an offer,” he said.

Back in 2014, it was learnt that Aziz led a group of Malaysian professionals with vast experience in the global aviation industry backed by international investors, submitted a proposal to Khazanah Nasional Bhd, amounted to RM9 billion.

However, it was put aside due to political influence under the Barisan Nasional’s administration led by Datuk Seri Najib Razak, despite the full support of Malaysia Airlines Employees Union (MASEU) and National Union Flight Attendants Malaysia (NUFAM).

“If the exercise was successful, Malaysia Airlines could have avoided the problem that they are facing today”, said the analyst.

Izham said MAB had done well in turning around its segments, including consumer satisfaction index, on-time performance, technical dispatch reliability and net promoter score which has now reached +14 from -33 two years ago.

He said the airline's current unit costs were equal to or better than other full-service carriers, reducing about RM1 billion in operating costs after outlining the five-year 12-point MAB Recovery Plan in 2014.

“We managed to renegotiate all our contracts from 20,000 vendors to 2,000 vendors with competitive rates, and reset our operating business, backed by guidance from the board of directors,” he said.

Another industry expert said the market should be consolidated domestically and regionally with more coordinated capacity deployment (aircraft and seat offerings) among countries in the Asean through bilateral discussions.

“Policymakers should look at how the market is developing. We should welcome free trade but there must be a balance between the consumers and the organisation,” he said.

He said the current domestic and Asean markets are predominantly for leisure market, which are price sensitive. Hence, capacity need to be better regulated.

It is learnt that the low-cost carrier’s (LCC) domestic (Malaysia) and Asean has surpassed 60 per cent of the market share, while the full-service carrier (FSC) only dominates about 20 per cent of the market share.

“Not even MAB is suffering, but other five-star hotels and fine dining restaurants are also suffering,” he said anonymously.

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