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Prime Minister Mahathir Mohamad said he’s studying options for flag carrier Malaysia Airlines, including whether to invest more funds, sell it off or even shut the company down.
“It is a very serious matter to shut down the national airline,” he told reporters at parliament. “We will nevertheless be studying and investigating as to whether we should shut it down or we should sell it off or whether we should refinance it. All these things are open for the government to decide. We have to decide soon.”
Malaysia Airlines has sought to turn itself around since being taken private by sovereign wealth fund Khazanah Nasional in 2014. That followed tragic incidents involving one of its planes disappearing over the Indian Ocean and another being shot down over Ukraine. Khazanah is demanding the carrier come up with a strategic plan to compete in the industry, after pouring in 6 billion ringgit ($1.5 billion) into the airline to make it profitable.
A representative for Malaysia Airlines didn’t immediately respond to requests for comment.
While the carrier has no Boeing 737 Max aircraft in its fleet, it expects to receive deliveries of that model in 2020. The government has asked Khazanah and Malaysia Airlines to revisit that agreement with Boeing Co. to ensure the safety of passengers, Minister of Economic Affairs Azmin Ali said, adding that they’re closely monitoring the investigation into the Ethiopian Airlines crash.
Malaysia Airlines is facing increased pressure to revive its performance after its parent Khazanah swung into a 6.27 billion ringgit pretax loss last year. The carrier accounted for about half of the impairments that weighed on the wealth fund’s portfolio, Khazanah’s Managing Director Shahril Ridza Ridzuan said earlier this month.
The options for the airline were discussed at the last board meeting involving the carrier and Khazanah, who are “taking up this matter seriously,” Azmin told reporters in parliament on Tuesday. He added that the airline could explore new markets from Indonesia and Thailand to support its turnaround strategy.
(Updates with comments from Khazanah and economy minister in sixth and seventh paragraphs.)
©2019 Bloomberg L.P.