Khazanah still figuring out best solution for MAS, not confirming or denying AirAsia X tie-up

KUALA LUMPUR (Jan 20): Khazanah Nasional Bhd says it is still in the midst of identifying the best solution for Malaysia Airlines Bhd (MAB), neither confirming nor denying speculation that the proposed merger of the national carrier with AirAsia X Bhd (AAX) is back on the cards.

"Khazanah Nasional continues to work closely with the government and Malaysia Airlines in finding the most appropriate solution for the airline to achieve sustainable growth and profitability.

"While there have been several proposals in this regard, a review of the options available to us is still ongoing," a Khazanah spokesperson told theedgemarkets.com in a query.

Besides the marriage with AAX, other proposals that were on the table were from Japan Airlines Co Ltd which proposed a RM1.12 billion injection of funds for a 25% stake, Air France-KLM SA and Malindo Airways Sdn Bhd.

The offers related to AAX and Japan Airlines are said to be frontrunners in the consideration.

In September last year,The Malaysian Reservereported, quoting sources, that Khazanah was already pushing for the merger but had strong resistance from the fund’s stakeholders due to the lopsidedness of the deal.

The deal was seen as MAB bailing out AAX, which continues to post huge losses.

The report added that the proposal would require the government to inject money to recapitalise Malaysia Airlines and settle all outstanding debts prior to the merger. AAX will then make a bid to acquire or merge with the leaner Malaysia Airlines.

Prime Minister Tun Dr Mahathir Mohamad was reported today to have acknowledged that Khazanah has received five proposals for MAB. Dr Mahathir is Khazanah's chairman.

In December, Economic Affairs Minister Datuk Seri Azmin Ali said the proposals received by the sovereign wealth fund were not “attractive” and therefore, the final decision was likely to be made only later this year.

Azmin, who reiterated this today when speaking to reporters, added: "I'm hoping we will be able to conclude the whole exercise as soon as possible, as we want Malaysia Airlines to be on the growth path to reduce Khazanah’s financial burden."

MAB is wholly-owned by Khazanah Nasional, while AAX is owned by AirAsia Group Bhd.