Date
26 February 2020
Malaysia Airlines is said to have drawn interest from at least two major foreign carriers for potential stake acquisition. Photo: Reuters
Malaysia Airlines is said to have drawn interest from at least two major foreign carriers for potential stake acquisition. Photo: Reuters

Air France-KLM seeks to buy 49% of Malaysia Airlines: report

Air France-KLM has submitted a proposal to acquire 49 percent stake in Malaysia Airlines, while Japan Airlines is looking at buying 25 percent, according to Reuters.

Malaysia-based AirAsia Group and Malindo Air, the Malaysian arm of Indonesia’s Lion Air, are among the other entities that have submitted proposals for the ailing Malaysian Airlines, the news agency reports, citing sources with knowledge of the matter.

“The bids from the foreign carriers are more comprehensive and strategic as both plan to capitalize on the strategic location of Malaysia for their operations,” one of the sources told Reuters.

The Malaysian government has been seeking a strategic partner for its national airline, which has struggled to recover from two tragedies – the mysterious disappearance of flight MH370 and the shooting down of flight MH17 over eastern Ukraine.

In 2014, the carrier was taken private by sovereign wealth fund Khazanah Nasional, which paid 1.4 billion ringgit (US$345 million) for the 30 percent of shares it did not already own.

Malaysian Prime Minister Mahathir Mohamad said on Monday that five proposals had been received as part of a review that started last year but declined to name the suitors.

Malaysia Airlines last year signed a joint venture agreement with JAL covering flights between Malaysia and Japan, which the Japanese airline said could be expanded in the future to cover US flights.

Khazanah, which appointed Morgan Stanley last year to advise on potential options for the airline, said it is working closely with the government.

“While there have been several proposals in this regard, a review of the options available to us is still ongoing,” Khazanah said in a statement.

According to Reuters sources, Air France-KLM 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.

Business news website Focus Malaysia said on Monday, citing an official document, that Khazanah had been pushing for AirAsia’s long-haul unit AirAsia X to merge with Malaysia Airlines.

“An international solution is probably better in this situation as AirAsia would have competition concerns,” Reuters cited one of its sources as saying.

“This is still a work in progress but the story is around the potential for a massive hub in Southeast Asia and it’s clear that international airlines see value in Malaysia Airlines because of this,” the source said.

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