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Thursday, May 8, 2014

Malaysia

Tourism Minister says Malaysia Airlines will not get any more financial aid

The Star/ANN | Thursday, May 8, 2014

PETALING JAYA - Troubled Malaysia Airlines (MAS) will not be given any more financial support by the Government, said Tourism and Culture Minister Datuk Seri Nazri Aziz.

A report out of Dubai quoting Nazri yesterday said the Transport Ministry had been tasked with coming up with an action plan for MAS.

This news, coupled with the bleak outlook given by the MAS management to analysts on Tuesday, now raises questions about the airline's immediate-term financial performance.

The Gulf News in Dubai on Tuesday had quoted Nazri as saying that the Government does not want to put "any more money" into the airline after the MH370 incident.

"To inject new capital is certainly not an option," Nazri had said.

The Government, via Khazanah Nasional Bhd, holds 69.4 per cent in MAS. Last year, the airline had undertaken an RM3billion (S$1.15billion) rights issue, whereby Khazanah had pumped in RM2.7billion for its portion of the rights issue.

Its cash balance was RM3.87billion and total assets were RM21.86billion as at the end of last year.

But the MH370 flight incident has been an expensive search. Although the search has been funded mainly by insurers, comprising a consortium led by Lloyds, how that is going to translate into MAS' accounts is not clear.

Yesterday, TA Securities in its report said "we are worried about the hidden risks that might be associated with the missing flight, as well as the substantial cost involved in the search operations".

It added that the biggest risk at this juncture was how long the search operations would take and how costly it would become.

MAS has also had to cancel flights after the missing flight MH370 incident and ticket sales have been slow in China, a route that accounts for 10 per cent of MAS' total revenue.

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