Thursday 28 Mar 2024
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KUALA LUMPUR: Khazanah Nasional Bhd managing director Tan Sri Azman Mokhtar trashed some of the 34 “business proposals” it received on the restructuring of Malaysian Airline System Bhd (MAS), saying some didn’t even have credible sources of funding.

When asked about his thoughts on Jentayu Danaraksa Sdn Bhd, Azman said Khazanah’s RM6 billion, 12-point recovery plan was to restructure MAS as a whole. Thus, he reiterated what he said when revealing the plan last August: there is no intention to break up MAS’ assets and sell them.

“No, Firefly (FlyFirefly Sdn Bhd) is not for sale. Penerbangan Malaysia Bhd (PMB) is not for sale. MAS Engineering (Malaysian Aerospace Engineering Sdn Bhd) is not for sale. Nothing is up for sale,” he stated.

Jentayu Danaraksa, headed by former merchant banker Feriz Omar, recently came out claiming that it could help save the 6,000 MAS employees about to be sacked from the national carrier. It also sought to purchase 82 aircraft, PMB, FlyFirefly Sdn Bhd and MAS Engineering from MAS for RM8.75 billion.

However, reports surfaced that Khazanah cancelled its meeting with Jentayu, after the latter had held several press conferences to talk about its plans for MAS. In the meetings with the press, Feriz said the company had secured funding from overseas, but didn’t elaborate.

“We don’t even know where the source of fund is. We believe in ‘KYC’ (know your counterparty) when doing business,” Azman said.

He said Khazanah is committed to realising the 12-point restructuring plan, where it projects MAS — under a new company (NewCo) named Malaysia Airlines Bhd (MAB) — will be profitable in three to five years and halve its gearing level to around 1.2 times.

There are 34 business proposals related to MAS that Khazanah has received to date. However, the investment fund will only entertain those that complement the restructuring plan it laid out on Aug 29, 2014.

“I can’t give you the numbers now, but some of those proposals were credible, but some, ‘incredible’,” said Azman. He mentioned the proposals that made sense to Khazanah’s 12-point plan were the ones tabled by the likes of Scicom Bhd and Tech Nahindra Ltd, where they would help reskill the 6,000 axed employees and be redeployed.

Aer Lingus Group plc’s outgoing chief executive officer (CEO) Christoph Mueller will officially begin his stint with MAB effective March 1, just a day after his contract with Ireland’s national carrier expires.

“In fact, Mueller had his first board meeting yesterday (Tuesday) and was joined by [non-executive director]Datuk Seri Shazalli Ramli. I believe the meeting went well,” Azman said.

Mueller will be CEO of the NewCo, said by many to be “the world’s most undesirable job” as it involves turning around the financially beleaguered national carrier. Current CEO Ahmad Jauhari Yahya, meanwhile, will stay with the existing MAS until July to ensure a smooth transition of operations to the NewCo.

One of the integral reasons for MAS’ streak of unprofitability is its high costs, which then translates into poor yields. Thus, Khazanah had suggested forming NewCo so that it could break all the existing contracts and negotiate for new ones, to ensure the pricing would be more acceptable to market standards.

Khazanah delisted MAS last month by buying back and cancelling the shares it did not previously own. However, in three to five years’ time, Khazanah expects MAB will be profitable and be suitable for relisting.

 

This article first appeared in The Edge Financial Daily, on January 15, 2015.

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