MAS recovery plan not a bailout, says Khazanah

The RM6 billion investment funds injected by Khazanah Nasional Berhad (Khazanah) into the Malaysia Airlines (MAS) Recovery Plan is not a bailout but will be recovered with the re-listing of a more profitable and sustainable national carrier.

This was stressed by Khazanah managing director Tan Sri Azman Mokhtar to reporters at a press briefing during the unveiling of the 12-point restructuring plan for the airline entitled "Rebuilding a National Icon: The MAS Recovery Plan" in KL City Centre here today.

He said the plan aims to return the carrier to profitability within three years.

"We have modelled this (plan) and we believe that MAS will be able to recover and make profit, provided they take the 'medicine' prescribed by Khazanah," said Azman. He reminded MAS that if they did not undertake the strict conditions Khazanah provided in the recovery plan, the RM6 billion will not be given.

Commenting on the recovery plan itself, Azman said he was confident that the plan will work as it involves starting over with a completely new slate.

He said the reset contracts could sustain a competitive business structure as well as the structure for MAS to compete properly.

“Ironically and sadly, the recent tragic events and the ongoing difficulties in MAS had created the perfect storm to allow this restructuring to take place.

“We need to have a fresh start because the current MAS, unfortunately, has a core structure that does not work and the revenue has been consistently below its cost,” said Azman.

Azman also said Khazanah was looking to hire either a Malaysian leadership talent or a global aviation specialist to helm the new MAS as CEO.

When asked if whether Khazanah would use a new name for the new MAS, he said that was something beyond Khazanah. He did, however, suggested MAS to keep its old name.

“The name for the new Malaysia Airlines is something that is beyond Khazanah, and so it should be. I can say that as far as Khazanah is concerned, we recommend that the name stays,” he said.

Meanwhile, Azman also explained that the aviation commission listed under the recovery plan was envisaged to the economic regulator of the aviation industry.

“For example, in the electricity field there’s an energy commission… in telecommunications there’s the MCMC (Malaysian Communications and Multimedia Commission),” he said.

He added that the matter had already been mentioned by Prime Minister Datuk Seri Najib Razak during the 2014 Budget speech, and this time it involved a comprehensive change in the aviation industry for MAS to recover.

On Friday, Khazanah announced that under its RM6 billion recovery plan for MAS, some 6,000 of the airline's 20,000 staff would be laid off. While some of those exiting could opt for a voluntary separation scheme (VSS), others could be absorbed into other companies under the Khazanah stable after undergoing a reskilling programme.

The 'new MAS' company, which will commence by July 1, 2015, will see a reset of the operating business model to incorporate a lower cost structure – among the savings coming from renegotiated and improved supply contracts and labour practices as well as refocusing more on profitable regional routes rather than loss-making long-haul destinations.