Aviation commission should not protect Malaysia Airlines, says Umno MP

The proposed aviation commission should not solely favour cash-strapped Malaysia Airlines (MAS) as the national carrier undergoes a massive revamp to turn itself around, said an Umno lawmaker.

Pulai MP Datuk Nur Jazlan Mohamed (pic) said the commission, which was proposed by state sovereign fund Khazanah Nasional Berhad as an economic regulator under a plan to revive the national airline, should not disrupt the operations of other players in Malaysia's aviation industry.

"I hope the commission is not used solely in favour of MAS to the detriment of other players. The commission must be for the betterment of the aviation industry and for the benefit of the people.

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"The commission should also act in the interest of the nation by improving more routes and connectivity between domestic and international markets to make it accessible for all Malaysians," he told The Malaysian Insider.

Khazanah unveiled a 12-point comprehensive exercise for MAS yesterday to return the airline into profitability, the earliest by 2017.

Under the plan, Khazanah will invest up to RM6 billion on a staggered and conditional basis over three years.

It will also see the setting up of a new company to house the carrier, rationalise routes, renegotiate current contracts, cut 30% of the 20,000-strong workforce and move its operations from Subang to Kuala Lumpur International Airport.

Nur Jazlan said the plan seemed like a financial rather than business restructuring, with the main aim of cleaning up MAS's balance sheet.

The parliament's Public Accounts Committee (PAC) chairman said there should be more details to address the airline's business restructuring, given that MAS is facing intense competition not only from global airlines but from other domestic players as well.

"How is MAS going to compete with other premium airlines and low-cost carriers with the Open Skies Policy and a highly-competitive globalised environment?

"MAS is no longer the main player in the domestic market, so how are they going to up their presence to fit into the international network?" he asked.

He pointed out the Asian market is suffering from over capacity and competition is fierce, and as such there are questions on how MAS can grow given these challenges.

"These are more business issues that needed more clarity," he said, adding that the new management hired to turnaround the carrier must be experienced in restructing airlines as a business.

MAS is to be taken private by Khazanah, which owns over 69% of the carrier.

Earlier in August, it had announced its plan to buy out shares it does not own at 27 sen for each MAS share, amounting to nearly RM1.4 billion, to take the troubled airline private.

A total of RM1.6 billion will be spent on restructuring and retrenchment costs, while RM3 billion will be injected progressively into the new company.

CEO Ahmad Jauhari Yahya will continue to lead until July 2015 when the new company comes into force, while Khazanah will announce his successor before the end of this year.

If everything goes as planned, MAS will be relisted within three to five years, or between the end of 2017 and 2019, and Khazanah will embark on a sell-down or partial sell down of its stake.

MAS announced its second quarter results yesterday which recorded a net loss of RM307 million, which brings the total loss to RM750 million for the first six months of this year.

The carrier had undergone three restructuring exercises since 2007 which had failed to yield any results due to a bloated workforce, changing market demand, stiff competition and high overhead costs.

MAS troubles was further affected by two major aviation disasters this year.

Flight MH370 from Kuala Lumpur to Beijing vanished in March with 239 people on board, while flight MH17 from Amsterdam was shot down over Ukrainian air space on July 17, killing all 298 people on board. – August 30, 2014.

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