Jump to content
MalaysianWings - Malaysia's Premier Aviation Portal
Mohd Suhaimi Fariz

MAS Privatisation

Recommended Posts

Malaysia Airlines chairman says privatisation of MAS possible

By LEONG HUNG YEE

hungyee@thestar.com.my

 

 

PETALING JAYA: Malaysia Airlines (MAS) does not rule out the possibility of taking the company private or spin off its other divisions,

according to chairman Tan Sri Dr Munir Majid.

 

“No options are off the table. It's the shareholders' call. We can put the option on the table but it is still the shareholders call,”

he said after the company AGM that lasted for three hours yesterday.

 

On Monday, StarBiz reported that Maybank Investment Bank suggested that MAS be privatised but list Firefly Sdn Bhd, MAS Engineering,

MasKargo and even its terminal services.

 

Source

 

Personally, if they were to spin off subsidiaries, the best has got to be MASkargo. They've managed to gain a profit throughout Q1 & Q2 (albeit reduced) and have the strength of having few competitors to worry about.

Share this post


Link to post
Share on other sites

Personally, if they were to spin off subsidiaries, the best has got to be MASkargo. They've managed to gain a profit throughout Q1 & Q2 (albeit reduced) and have the strength of having few competitors to worry about.

 

The last time MAS was privatised, MAS almost went bankrupt. Don't think it will be privatised anytime soon. MAS Kargo can be spin off as a separate subsidiary. However, MH is quite a small player in cargo market compared to SQ, CX and KE Cargo. KE Cargo remains the world's largest with 36 B744F and more B777F to come. O.O

 

Spinning of non core activities can allow MH concentrate on its main activity which its competitive advantage is. Its p/l won't look so bloated as well. :)

Share this post


Link to post
Share on other sites

MH will never be privatised, simply because it cant survive in the adverse market it's in with competition from AK/D7. MH is simply in a league of its own as it calls itself a "5-star value carrier". It probably won't survive as a full-fledged 5-star carrier like CX, SQ, TG, QR and now the threat from GA, without getting loads of g'ment subsidies. Furthermore, M'sia isn't a premium traveler destination yet. KL is not a world-financial hub like S'pore, HK or even Bangkok for that matter. Then again, MH could attract premium transit travelers thru the Kangaroo route, but again, it's saturated with other carriers. The asian market is simply saturated with such airlines. Truth is, the real competition is from AK. Unfortunately, MH has been unable to break that premium oligopoly from other carriers in the asia-pacific market and in some ways has missed the opportunity to do so, and again, it's rather saturated making it even more difficult. Even SQ feels the AK threat and is trying to grab those LCC travelers, but can still cling on to its solid premium market. Then again, MH adopt a low-cost no frills model, which is quite far-fetched.

 

To make myself clearer, MH survives because it can offer cheaper rates than its 5-star competitors, which come from its g'ment subsidies. This will always be the case unless it breaks itself into the 5-star stratosphere, which is quite a bleak prospect.

Share this post


Link to post
Share on other sites

Does it mean privatisation is not good after all for a carrier like MH? (Sorry, I'm not really good in business management)

But will it at least reduce government intervention into their operations?

Share this post


Link to post
Share on other sites

Personally, MAS should not be privatise for the second times. MAS should be belongs to government as one of social responsebility medium for Malaysian. The last time during ex CEO Tan Sri Dato (Dr.) Abdul Aziz lead, MAS very strong but when MAS was privatised for the first time MAS almost went bankrupt.

Share this post


Link to post
Share on other sites
But will it at least reduce government intervention into their operations?

 

 

True, though MH seems to be making decisions by itself, independent of g'ment. It's clinging on to g'ment to get a hold of its goodiees (subsidy, etc.) Correct me if I'm wrong.

 

Pardon me for the failed quote

Share this post


Link to post
Share on other sites

If MH is delisted and taken private, there will be less public scrutiny and even lesser accountability.

 

Where is the $$$ coming from to buy back the shares in the open market??? If it is taken private, looks like another bail out! :angry:

Share this post


Link to post
Share on other sites

Remember, MAS will NEVER be allowed to fail (not my words, just echoing a sentiment expressed here in yet another MH bashing thread)

So, if anyone with money (and with the necessary clout obviously ;) ) deem it viable to sink in money to take her private, it's a rather safe investment really. Look at the last chap who took the plunge (and eventually failed it must be remembered) - worked out quite well, all things considered :p

Share this post


Link to post
Share on other sites

http://biz.thestar.c...83&sec=business

 

I came to understand from my network that this issue is doing the rounds again, albeit more serious than previous times.

If one looks at the stock price, hovering around the RM 1. mark, this could be the right time..

On the other hand, it would be interesting to see how a private owner would tackle the various uhm.. wheelings and dealings, which are still doing the rounds in MAS HQ.

(the catering contract springs to mind, for example)

As for TanSri Aziz, word on the street is that he still is a very tough cookie who would not let two negatives become a positive.

Interesting development, which begs the question, who is behind it?

 

Best regards

AvS.

Share this post


Link to post
Share on other sites

I thought MAS is already a "PLC" ........ and it is quite 'imposible' for umno govt to reliquish its golden share in it, no matter what happen, not in zillion years ......... too much interest in it ......... :cray:

 

 

:hi:

Share this post


Link to post
Share on other sites

KUALA LUMPUR, Jan 17 (Bernama) -- Khazanah Nasional Bhd has no plans to privatise Malaysia Airlines (MAS), its managing director Tan Sri Azman Mokhtar said.

"There are no plans to take it private. MAS has improved, with better numbers and products but there's still a lot to do because aviation is a tough industry," he told the media at a press conference here Thursday.

Responding to analysts' suggestion to privatise MAS, Azman said: "When you take something private you obviously have to pay above the market price. What it doesn't do is put money into the company, and the company needs money."

Privatisation, he added, would not solve MAS' problem.

"The plan didn't answer how to put in more money to the company. It probably cost more money and MAS may lose even more market discipline because now, even if it is bad news, it forces them to go and make the operation better because every quarter they have to pay the market.

"Indeed, they have been gradually showing better results, which we think is good," Azman said.

He said Khazanah is ready to help MAS and will back them in terms of recapitalisation.

"MAS is important to the country. Definitely strategic. Whatever they do, they need to get the operations better," he said.

Meanwhile on the divestment of Time Engineering, Azman said the process of selection is going on and has to be concluded this year.

"If they get it right, the sooner the better. Let the company do the announcement," he said.

-- BERNAMA

Share this post


Link to post
Share on other sites

......... What it doesn't do is put money into the company, and the company needs money

 

......... He said Khazanah is ready to help MAS and will back them in terms of recapitalisation.

 

-- BERNAMA

Ultra sweet music comforting words into ears of the profligate child coming straight from sugar daddy's lips :D

Share this post


Link to post
Share on other sites

In Malaysia, most plc were delisted when the share price is cheap but very profitable or undervalued assets are more than enough to pay for mandatory offer. MH is neither profitable or have enough undervalued assets.

Share this post


Link to post
Share on other sites

Note that it's also rumored that Syed Mokhtar is in on Malindo as well. If somehow MAS and Malindo can work together that would be fantastic.

Share this post


Link to post
Share on other sites

Businessman Syed Mokhtar Albukhary is proposing to the Federal Government to take over national investment arm, Khazanah Nasional Bhd’s 69.3 percent equity interest in ailing Malaysia Airlines, sources said.

While details of the businessman’s proposed takeover are not known, part of the deal may involve a long-term fuel subsidy by the government for as many as 60 years, they added.

However, one source close to Syed Mokhtar denied such a proposal to take over MAS. “We are strongly denying it….This is all just election play,” he said.

However two separate sources confirmed that such a deal is being contemplated at the moment although details are sketchy because it is still early yet. Khazanah did not respond to questions sent.

At present, Syed Mokhtar’s airline related assets include the Sultan Ismail Airport in Johor, which is owned by Senai Airport Terminal Services Sdn Bhd. This was acquired from Malaysia Airport Holdings Bhd, another Khazanah controlled entity, for RM80 million in 2003.

He also controls two ports, Port of Tanjung Pelepas Sdn Bhd and Johor Port Bhd, both under his flagship MMC Corp Bhd. He is also understood to be close to buying Penang Port Sdn Bhd.


MMC is also doing a due diligence of Keretapi Tanah Melayu, the state controlled train operator.

Syed Mokhtar controlled DRB-Hicom Bhd last year took over auto maker Proton Holdings Bhd, and postal services operator Pos Malaysia Bhd. This adds on to DRB-Hicom’s existing banking, property and automobile distribution and assembly business.

The businessman’s current thrusts seem to be hinged on entering into all the key transportation and logistic areas in Malaysia. But his reach extends far beyond that.

Many choice assets under Syed Mokhtar

Syed Mokhtar’s flagship company is MMC in which he has a 51.76 percent equity interest. MMC’s interests include power generation via Malakoff Bhd, the two ports and engineering and water distribution among a whole host of others assets.

Recently Puncak Semangat Sdn Bhd, a company believed to be linked to the businessman was awarded the lion’s share of the 2.6 GHz spectrum for 4G-LTE (long term evolution). Puncak Semangat bagged 40 MHz, while the other seven were only awarded 20 MHz.

Recent news reports have speculated that Syed Mokhtar is looking to take over NCB Holdings Bhd’s port operation arm Northport (M) Bhd, after he bid for Penang Port Sdn Bhd.

Other than MMC and DRB his other vehicle is Tradewinds (M), which has plantations, sugar distribution and a monopoly of rice distribution via Padiberas Nasional Bhd.

The businessman had also attempted to buy PLUS Expressways Bhd from Khazanah, but that attempt was thwarted by Khazanah owned UEM Group Bhd and the Employees Provident Fund (EPF).

Many market watchers are questioning why so many choice assets are being sold to Syed Mokhtar. Hs aides defend the moves.

“But to his credit, he takes control of the assets via bidding higher than other players. For example about 10 years ago, Syed Mokhtar’s private company Restu Jernih (Sdn Bhd) bought 32 percent of Pernas (International Holdings Bhd which has since morphed into Tradewinds) for close to RM500 million (RM497 million) or about RM2.10 a Pernas share and 64 sen per Pernas warrant from Perbadanan Nasional Bhd. ….it was not a sweetheart deal, he paid much more than the market price for the company,” an aide of Syed Mokhtar says.

At that time he forked out more than a 200 per cent premium for the shares and warrants of Pernas.

Pernas was set up in 1969 to promote Malay capital ownership, but the lumbering giant corporation failed in its agenda, and bled losses for the longest time. As such the deal was viewed by many as a bailout.

Some bankers view Syed Mokhtar as a systemic risk, with his ballooning debts. While debt levels are high, his businesses are sustaining and performing well.

For instance, his flagship MMC, as at end September 2012, had RM17.72 billion in long term borrowings, while the company’s short term debt commitments stood at RM4.04 billion. Much of this debt level comes from 51 percent in power generation unit Malakoff Bhd.

DRB-Hicom meanwhile as at end September had non-current liabilities of RM4.07 billion and short term debt of RM2.27 billion.

Tradewinds (M) had long-term liabilities of RM2.04 billion and short term borrowings amounting to RM1.74 billion.

Mixed misfortunes

For the nine months ended September last year, Malaysia Airlines suffered a pre-tax loss of RM477.96 million from RM9.89 billion in sales, a loss per share of 14.48 sen.

However Malaysia Airlines in its notes which accompany its financials said that it recorded an operating profit of RM4 million for the third quarter ended Sept 30, 2012, compared to RM191.8 million in operating losses, for the quarter ended Sept 30, 2011.

An analyst from a bank backed research outfit said that Malaysia Airlines in the past, had several problems, such as aging airplanes, and legacy issues, such as flying to many unprofitable destinations.

He says that things however are picking up, and he highlights the break even in operating profit in September last year. “The management is doing something right obviously,” he said.


The analyst added that he expects the airline to post “convincing profits” in the final quarter of FY2012.

 

MAS’ story is a sad one riddled with cases of mismanagement. Last year former controlling shareholder and executive chairman of MAS, Tajudin Ramli settled out of court three lawsuits the national carrier had against him.

Tajudin who was closely linked to former Finance Minister Daim Zainuddin was the poster boy for Malay entrepreneurs, and was the airlines executive chairman from 1994 to 2001.

His entry into MAS in 1994 came about when the Government sold 32 percent of MAS to his vehicle Naluri for RM1.79 billion.

Then in 2000, the Government acquired Naluri’s 29 percent stake in MAS for RM8 per share, which was double its market price then.

After much legal wrangling, a High Court decision in December 2009 ordered MAS’ chief to pay Danaharta, the state asset management manager, RM589.14 million plus two per cent interest per year over the base lending rate backdated to Jan 1, 2006.

But eventually Tajudin settled out of court, for an undisclosed sum. Tajudin meanwhile has claimed that his purchase was forced “national service”.

- See more at: http://www.kinibiz.com/story/corporate/4660/syed-mokhtar-eyes-malaysia-airlines.html#sthash.CyZOgMJH.dpuf

Share this post


Link to post
Share on other sites

eh? Are we selling the national carrier as mention in this article by http://www.thestar.com.my/Search.aspx?q=%22leong+hung+yee%22

 

 

 

KUALA LUMPUR: Malaysian Airline System Bhd (MAS) should not be sold at a loss, says Minister in the Prime Minister's Department Datuk Seri Idris Jala.

 

The former managing director and CEO of MAS in December 2005, said on Tuesday there should not be a fire sale of the national carrier.

Idris, who is also head of Pemandu, said MAS should have been sold when he was there when the share price rose to about RM6.

MAS posted 10 consecutive quarterly profits during his tenure as the CEO between 2006 and 2008.

(The share price has since been adjusted following several corporate exercises including two rights issue).


Idris also said over time, the Malaysian Government should reduce a lot of its stakes.

Khazanah Nasional Bhd is the single largest shareholder in MAS with 69.37% or 11.59 billion shares while the Employees Provident Fund has a 1.04% or 174.21 million shares.

 

 

Share this post


Link to post
Share on other sites

The gov doesn't have to sell share in MH.. They can have as much as they want but just leave the management and leadership to do what needs to be done.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

×
×
  • Create New...