MAS looking into buying out other airlines ?

[Gavin Andrew David 6]

MAS needs to focus on recovery programme

By LOONG TSE MIN

 

PETALING JAYA: Weaker economic conditions and a growing number of distressed airlines globally have prompted many to ask if Malaysia Airlines (MAS) plans to buy up airline assets that are now going cheap or consider entering into a merger.

 

But, while the scenarios are interesting, the airline and the Government may not be ready for such a move.

 

Recently, there was talk of MAS joining in the high profile British Airways (BA) and Qantas merger talks, but earlier there had even been suggestions that MAS could acquire AirAsia Bhd that is seeking to go private itself.

 

An analyst covering the airline sector said it might be better for MAS to focus on continuing its recovery before contemplating a merger so soon.

National carrier is now a viable business and a merger would mean some loss of ownership and control to foreign parties

 

 

“Having just only completed its restructuring, MAS is still digesting the changes in its operations and has yet to see all the benefits materialise,” he said.

 

Furthermore, MAS was still quite far away from the profitability of benchmark regional operators like Cathay Pacific and Singapore Airlines (SIA).

 

“MAS should get closer to those levels (of profitability) before going out and spending money and restructuring operations again,” he said.

 

At at Sept 30, MAS had about RM5bil in cash in its balance sheet.

 

It has been said that MAS, with this RM5bil cash, could buy over AirAsia whose market capitalisation was RM2.17bil at Friday’s close.

 

However, any purchaser of AirAsia or any regional airline would need to be able to finance the purchase of aircraft and daily operations which go many times beyond the carrier’s market capitalisation.

 

“It’s not just buying the shares, and a single aircraft costs hundreds of millions,” the analyst said.

 

Another analyst said the RM5bil on MAS books could be “sales in advance of carriage” and so was part of the airline’s working capital and not for use in acquisitions.

 

Sales in advance of carriage is cash collected from the time the passenger buys the ticket but before he or she takes the flight.

 

A three-way merger of MAS with BA and Qantas would also be fraught with political hurdles.

 

The second analyst said: “If it is possible to merge the balance sheets of the three airlines while retaining separate brand and national identities, there might be some benefits.”

 

However, with MAS having turned profitable last year and still profitable for the nine months ended Sept 30 (with a net profit of RM198.1mil), the national carrier was now a viable business and a merger would mean some loss of ownership and control to foreign parties.

 

“I don’t think the Government would want to concede control especially of what is now a profitable business to foreign owners,” the analyst said.

 

“While one such merger, that of Holland’s KLM and Air France has been successful, for many other national airlines in Europe and elsewhere, there have been no takers (for similar proposals),” he pointed out.

 

Also having streamlined its balance sheet by selling its planes to Penerbangan Malaysia Bhd, MAS has the best balance sheet of the three airlines.

 

“This means MAS could be at the losing end of a balance sheet merger,” he said.

[Y C LEONG 1]

might be wrong but isnt CX has been losing money for the last quarter...

[Jessnor Arif 1]

MAS has the best balance sheet of the three airlines.

 

“This means MAS could be at the losing end of a balance sheet merger,” he said.

 

If BA-MH-QF "merger" goes through

 

Yes, MH could be at the losing end of a balance sheet for a while. but

Comparative operation cost might be lower than today, once operation cost lower, profit may be higher, yes it has to be shared three ways but it will definitely higher. KUL can expand with more connection.

in the end it will benefit Malaysia as more wealth created.

 

 

If I were the minister.... I would have ask the particular airlines board and if necessary my British and Australian counterparts to work it out. Yeah everybody say it is impossible.

 

But if they know and serious of what they are doing, the impossible could be a wonder. Just like what IJ and TF did.

Edited December 10, 2008 by Jessnor Arif

[fendy 2]

this is only the view of the analysts....

[Jen Hau 0]

Takeover ?

Then they should merge these two big company. With Idris Jala and Tony Fernandes, they can work something out for sure

[Mohd Suhaimi Fariz 2]

AK & MH merging would be a disaster! Firstly AK crewmember's salary have to be raised to match MH level, so the low cost factor is out of the window. Then there's the case of incompatible equipment, A320 vs. 737. It would be a mess.

[Gavin Andrew David 6]

MH Engineering crew can maintain the 320

The crews will remain on their very own fleet , with the AXM crew being able to operate both the 32x and 33x after conversion

[BC Tam 2]

AK & MH merging would be a disaster!

Agreed ! In the absence of competition, we will more than likely revert back to "we tell you how much you want to pay us" days

[Ahmad M 1]

AK & MH merging would be a disaster! Firstly AK crewmember's salary have to be raised to match MH level, so the low cost factor is out of the window. Then there's the case of incompatible equipment, A320 vs. 737. It would be a mess.

 

 

 

I heard AK's Captains are earning more than MH's Airbus Captains. Of course their workload is way higher.