By Emmanuel Samarathisa
AS airlines white-knuckle to survive the Covid-19 pandemic, rumours of consolidation among certain players have been rife in the press. But market participants remain mixed over a possible bailout or merger among Malaysia-based carriers.
Newswire Bloomberg on March 25 reported that government officials had been studying a few ideas including setting up a special purpose vehicle to take over the debt of companies like Malaysia Airlines Bhd (MAB) and AirAsia Group Bhd (AAB), as a merger between some of the carriers.
Rakuten Trade vice-president Vincent Lau believes that the move bodes well for the industry. “In the current market scenario, it only makes sense to consolidate,” he told FocusM.
Lau added that while there might be worries over the lack of competition as a result of a merger, “when good times come, there will be competition as the government might issue licences for newer entrants.”
On the SPV, Lau said that while details are scant at the moment, there are ample “permutations” as to dealing with the debt.
But one fund manager, however, panned the idea. “The airlines have to be allowed to survive on their own and if some of them go bankrupt, so be it,” he told FocusM.
The fund manager noted that bailouts would not solve the long-term problem of these airlines and that “a reset in the industry is needed. So with the old horses gone, we will be able to see newer companies rise to the fore.”
Minister in the Prime Minister’s Department (Economic Affairs) Datuk Seri Mustapa Mohamed hinted that some kind of financial aid would be availed to airlines MAB, AAB and Malindo Airways Sdn Bhd.
“Companies like Malaysia Airlines, AirAsia and even Malindo Air are big employers. Certainly (it) requires a different action,” Mustapa said on March 29.
But, he did not elaborate on the timing and actions the government would take to help the companies. — March 31, 2020