After disasters, Malaysia Airlines weighs government ownership

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Malaysia’s state investment company has offered to buy up all the airline’s shares. Malaysia Airlines is deliberating on the offer.

By Matt Wilson | Posted: August 8, 2014
Observers speculated that a name change might be in order for Malaysia Airlines following its two huge disasters this year, but what’s really happening is potentially much bigger.

Malaysia’s state investment company, Khazanah Nasional, which already owns 69 percent of the company, has offered to buy out all the airline’s minority shareholders at a price of 8 cents a share, which is actually almost 30 percent higher than the average stock price over the past three months. The whole deal would amount to $ 429 million.

Here’s Malaysia Airlines’ statement about the proposal:

We have received notice of Khazanah’s intentions to take full ownership and delist Malaysia Airlines. Our Board of Directors will be deliberating this proposal and an official response from the company will be issued later. During this period, our business operations remains [sic] unchanged.

We appreciate your patience and cooperation on this matter.

In its press release, Khazanah stated that it would develop a plan to restructure Malaysia Airlines:

The proposed restructuring will critically require all parties to work closely together to undertake what will be a complete overhaul of the national carrier on all relevant aspects of, inter alia, the airline’s operations, business model, finances, human capital and regulatory environment. Nothing less will be required in order to revive our national airline to be profitable as a commercial entity and to serve its function as a critical national development entity.

Even before the two disasters this year—the disappearance of Flight 370 in March and the shooting down of Flight 17 over Ukraine—Malaysia Airlines was facing big monetary losses and massive debt.

Much of this is still uncertain, but do you think a government takeover of Malaysia Airlines, with the promise of a “complete overhaul,” will salvage the flailing airline? 

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