PUTRAJAYA: Talk that Putrajaya has shot down a high-profile conglomerate’s attempt at taking over troubled national carrier Malaysia Airlines Bhd, owned by the government’s Khazanah Nasional, has been dominating informal chats and conversations among industry leaders since last week.
The merger proposal was submitted two months after Khazanah announced in October this year that its corporate restructuring plan for the airline had failed, an issue it blamed on an overabundance of players in the domestic travel market.
Khazanah’s Malaysia Aviation Group (MAG) fully owns Malaysia Airlines, which has reported billions of dollars in losses over the last five years.
Since taking over, Khazanah has implemented controversial shake-ups that saw thousands of people losing their jobs and the resignations of two foreign CEOs.
The latest proposal came on the heels of another controversial “merger proposal” between UEM Sunrise owned by Khazanah and public-listed property firm Eco World Sdn Bhd, in what critics say smacked of a bailout in favour of the latter.
Any similar attempt involving Malaysia Airlines, however, was bound to give ammunition to critics of Dr Mahathir Mohamad’s administration, who have relentlessly accused the Pakatan Harapan government of being too free with disposing of government assets in a bid to inject much-needed cash.
Sources spoke to FMT about what they described as a “highly questionable” proposal put forth to Khazanah, to merge Malaysia Airlines with another airline, adding that it was wrong on many counts.
They said the proposal had incensed top guns at the national carrier.
“They were caught unaware,” said one source.
“The board felt that it was not designed to assist Malaysia Airlines to be profitable, but an attempt to strip it of its assets and kill it,” he told FMT.
Specific details of the proposal have not been forthcoming, as Khazanah deliberates on its plans with government-sanctioned confidentiality.
Essentially, the plan was for the local airline to have some control over the merged entity with Malaysia Airlines, while absorbing the latter’s maintenance, repair and operations as well as cargo.
Critics said the proposal came with several “bizarre” conditions.
“One of which is that the local airline wanted the government to ensure that the merger gets the green light from the Malaysian Competition Commission,” another source said.
The local airline, the source added, also wanted Putrajaya to bear the compensation costs for the cancellation of contracts and any retrenchment of staff as a result of the merger.
“Thankfully, the government shot down this proposal,” it added.