Among several investors, AirAsia Group Bhd (AirAsia) which is the leading low-cost Malaysian airline group is likely to get the contract for the low-profile air service company, Malaysia Airlines (MA). Air France-KLM (Air France), a French airline holding company, was the one that proposed to invest heavily in MA by claiming to own around 49% shares of the debt-ridden airline company of Malaysia.
Investors for Malaysia Airlines
Malaysia Airlines Berhad or MA backed by the country’s government has been in search of finding a strategic partner over the years. The national airline has been struggling after the two tragic events that happened in 2014; one was the mysterious disappearance of flight MH370 and the other was the shooting down of flight MH17 over eastern Ukraine. Khazanah Nasional Bhd, the sovereign wealth fund group, had rescued the airline by investing 1.4 billion Ringgit ($345 million) which led to acquiring 30% of the airline share in 2014.
Many international and domestic investors have shown their interest in investing in the debt-ridden MA including Japan Airlines (JAL) apart from Air France, and from domestic airline companies including AirAsia and Indonesian Lion Air Group’s owned Malindo Air. The JAL has also made a proposal to own 25% shares of the ailing airline of Malaysia.
According to a source that refused to reveal its identity, JAL was looking to forge a partnership for a joint venture with MA. Both MA and JAL belonged to the Oneworld airline alliance, while Air France was with the rival SkyTeam alliance. Sources told to Reuters, “Air France had proposed setting up a hub for maintenance, repair and overhaul services in Malaysia, while Japan Airlines had offered to make the Southeast Asian country its regional hub, including for low-cost flights.”
AirAsia Emerging the Best Choice for the Deal
Malaysian Prime Minister (PM), Mahathir Mohamad said on Monday, the government received five investors for the proposed merger with the airline that started last year although he has declined to unveil the investors. As per the source, though there is no official deadline for the deal, the government expects to get the deal done in this quarter, 2020. The source further mentioned that there were many scopes for a massive hub in Southeast Asia and the investors saw the scope of the market and value in Malaysia Airlines.
According to the source, despite Malaysia’s government has welcomed the exciting offers from foreign investors, the sovereign wealth fund that owns Malaysia Airlines preferred domestic investors and had put first priority of the deal with AirAsia. Business news website, Focus Malaysia said on Monday, Khazanah wanted AirAsia to merge with Malaysia Airlines.
However, the PM, Mahathir, who is also chairman of the board at Khazanah, expressed his concern that he was “not completely happy” with the way the wealth fund evaluated the proposal. The PM claimed, “Unfortunately, Khazanah has got its own agenda so I have to check them.” A source revealed that AirAsia’s boss, Tony Fernandes had already proposed a three-way merger between the company’s long-haul unit AirAsia X and Malaysia Airlines.
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