Malaysian Airlines set to restructureComment on this story
Kuala Lumpur - A plan to restructure Malaysian Airlines could be announced as early as the end of August, two sources with knowledge of the matter said, after one of its planes crashed in Ukraine in the second disaster to hit the carrier this year.
State investor Khazanah Nasional said in June it would unveil plans within 6 to 12 months to restructure Malaysian Airline System, as a slump in business since the disappearance of Flight MH370 in March left the carrier set to exhaust its cash reserves by mid-2015.
Already squeezed into three years of losses by intense local and longer-haul competition, the airline turned in its worst quarterly performance in two years in January-March.
The carrier, 69 percent owned by Khazanah, lost its second flight in five months after flight MH17 was shot down over Ukraine this month, killing all 298 people on board.
The sources, who declined to be named because the matter is confidential, said the restructuring plan was expected to be unveiled after the airline releases its second-quarter results in the middle of next month.
The same sources told Reuters this month that Khazanah, which has injected more than 5 billion ringgit ($1.58 billion) into Malaysian Airlines over the last 10 years, plans to take the carrier private as the first step.
A spokesman for Khazanah said: “We do not comment on speculative reports.” Malaysian Airlines declined to comment.
The airline is set to post another weak performance in the April-June quarter as it continues to struggle with flight cancellations, weak passenger yields and high overheads, according to analysts.
Mohshin Aziz, an equity analyst from Malaysian broker Maybank IB Research, has said he expects the carrier's second-quarter results to be its weakest quarterly results ever.
“Besides being a seasonally weak quarter and the industry continuing to be plagued by weak yields, flight cancellations at MAS will weigh on fixed overheads,” he wrote in a June 23 note.
Shares in Malaysian Airlines, rated “sell” or “strong sell” by 11 of 13 analysts according to Thomson Reuters data, have dropped 35 percent this year so far. - Reuters