Khazanah sets up aviation group to house, reorganise Malaysia Airline's biz

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KUALA LUMPUR (May 19): Khazanah Nasional Bhd has set up a global aviation group, named Malaysia Aviation Group (MAG), to house and reorganise the subsidiaries and businesses of the national carrier, Malaysia Airlines Bhd.

In a statement today, Malaysia Airlines said MAG will have four distinct business segments: air transportation services (ATS), ground services, aircraft leasing, and talent development.

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"The group structure will drive better transparency and focused managementacross the respective operating subsidiaries, creating profit centre subsidiaries of the company's separate businesses.

"This will ultimately ensure P&L (profit and loss) accountability and unlock the value of the various assets by driving new levels of operational efficiency. The more process-oriented group will also have beneficial effects for customers being more focused on their specific needs," the statement added.

The largest contributing business segment in the group will be ATS, which houses Malaysia Airlines, FlyFirefly Sdn Bhd, MASwings Sdn Bhd, and MAB Kargo Sdn Bhd.

"This division will apply for its own Airline Operating Certificate and will operate as (a) separate company as of 2017," Malaysia Airlines said.

Meanwhile, the ground service and engineering segment houses AeroDarat Services Sdn Bhd, which provides ground handling services in KL International Airport and 15 other airports across Malaysia, including ramp and cargo services, and MAB Engineering Services Sdn Bhd, which is involved in aircraft maintenance, repair and overhaul.

Separately, the aircraft leasing segment will house MAB Leasing Sdn Bhd and MAB Pesawat Sdn Bhd. Both provide aircraft leasing services.

Lastly, the talent development division will house MAB Academy, which provides education and training, and is expected to commence operations as an independent company in late 2016.

Malaysia Airlines said the new group structure will drive better transparency and focused management across the respective operating subsidiaries, creating profit centre subsidiaries of the company's separate businesses.

Further, Malaysia Airlines said the new structure will increase individual companies' flexibility to explore collaborative opportunities and agility for capital raising opportunities, making the subsidiaries more competitive and responsive, strengthening the position of the group in its various markets and business segments.

Notwithstanding the reorganisation, Malaysia Airlines said its team of board members will remain unchanged, and will also sit on MAG's board.

"This will align structures and processes more consistently to the needs of our customer groups and raise the group's overall efficiency and focus, reduce complexity and increase decision-making speeds," said Malaysia Airlines chief executive officer (CEO) Christoph Mueller, who is also now MAG's CEO.

"Looking forward the new structure will support every business unit's capability to access the capital market with its own value proposition," Mueller added.