MAS, AirAsia in share swap to rescue ailing flag carrier


KUALA LUMPUR, Aug 6 — State-owned Malaysia Airlines (MAS) will swap shares with Asia’s largest budget carrier AirAsia this week in a deal that will see Tan Sri Tony Fernandes help stop the ailing flag carrier from plunging any further into red ink, said industry sources. 


The Malaysian Insider understands that the share swap that could see Fernandes getting a 20 per cent stake in the national carrier, will allow both Malaysian carriers to rationalise their fleet, frequencies and destinations within the country and abroad while ensuring MAS returns to becoming a premier airline. 

“The deal is on and it should be signed Monday at the earliest,” a source told The Malaysian Insider. 

AirAsia’s main shareholders Tune Air Sdn Bhd, owned by Fernandes (picture) and Datuk Kamarudin Meranun, is expected to benefit most from the share swap with MAS as it hold 26.28 per cent of the budget carrier as of July 6, 2011. 

The budget carrier’s market capitalisation of RM11 billion yesterday is now two times more than MAS which stands at RM5.3 billion, a decade after Tune Air took over the two-plane operation. 

AirAsia closed at RM3.95 per share when the stock market closed yesterday while MAS was at RM1.60 per share. 

“This is a deal that has taken such a long time to get done but the current situation benefits Fernandes as MAS is in a bad shape,” another source said, adding that the MAS’s main shareholder Khazanah Nasional Berhad and the AirAsia boss have negotiated five separate times previously. 

It is learnt that while MAS moves to reclaim itself as a premier airline, AirAsia X will continue to ply as a long-haul budget carrier while domestic operations will be rationalised with MAS’s Firefly focusing on turbo-prop operations out of the Skypark terminal in Subang. 

Firefly began operations out of KLIA this January for flights to east Malaysia, competing with both MAS and AirAsia flights. It also launched a coach service this week for passengers looking for alternatives to the Express Rail Link. 

A MAS source also disclosed that the fate of company managing director Tengku Datuk Azmil Zahruddin remains unclear as Fernandes will likely change the management to pull the airline from the brink after its first quarter losses. 

It is understood that one of Khazanah’s executive director of investments, Mohd Rashdan Mohd Yusof, could be named as chief operating officer after the share swap. Popularly known as Danny, the former investment banker is the Khazanah representative in the MAS board. 

The flag carrier recorded a first quarter net loss of RM242.3 million against a profit of RM310.6 million in the same period a year ago. Azmil took over the reins of the company on August 28, 2009 after the previous chief executive Datuk Seri Idris Jala was made a minister in the Najib administration.