Malaysia Airlines turns to Morgan Stanley in recovery scramble
Malaysia’s sovereign wealth fund has hired Morgan Stanley to explore strategic options for Malaysia Airlines, including a potential stake sale, as part of a recovery plan for the country’s struggling flag carrier. The move is the latest in a scramble to turn around the loss-making airline as speculation on potential buyers and conflicting views regarding how the carrier’s woes should be dealt with continue.
In an address to the Malaysian parliament on July 24, 2019, Deputy Minister Mohamed Farid Md Rafiq confirmed that the sovereign wealth fund of the government, Khazanah Nasional, has brought in global investment bank Morgan Stanley as an independent advisor in Malaysia Airlines recovery efforts.
The bank will assess possible options for the carrier’s future, including privatization. Khazanah is reportedly looking to finalize a deal by the end of the year, although the timeline is subject to change, Bloomberg writes citing people familiar with the matter.
“Khazanah is working with Malaysia Airlines Group Berhard to reassess its strategy and evaluate all strategic options, including proposals from external parties, to steer the company towards financial sustainability,” a spokesperson for the fund was quoted as saying by the Financial Times. “The role of any external advisory… would be to independently review and assess those proposals.”
According to Prime Minister Mahathir Mohamad, who has spoken out on the issue many times to Malaysian press, “all options” are on the table. “We have changed the management of the airline many times. Everyone promises that they can turn around the company, but in the end they all failed”.
“This time around, we don’t want to give [control of the airline] without really studying the capabilities of the people who may want to take over the airline,” the premier was quoted as saying by The Edge Markets on July 11, 2019. Mahathir also added that there was no time limit for the government to make a decision on the national carrier’s future.
Sell, refinance or shut down?
Since the Prime Minister initiated a review of options for the revival of the struggling Malaysia Airlines earlier in 2019, the possibility of another restructuring plan, an injection of funds, a potential sale and even a shutdown of the airline altogether have all been floating around, with many prominent Malaysian observers calling for the government not to close the national carrier and speaking out against another cash injection.
By July 2019, the prospect of saving the airline with the help of a strategic partner seemed to have solidified, however, on the condition that Malaysian Airlines retains its identity as the national carrier. Mahathir has also stressed that the state would be willing to give up its “majority” stake in the carrier, as long as it “has a say” in how it is run.
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