By Doreenn Leong
EVERY now and then, there will be one or two firms which make known via the media their plans on taking over Malaysia Airlines Bhd (MAB) – no mean feat when MAB is bleeding badly and running out of cash. It needs a viable plan and fast.
The latest to join the list is little-known privately held firm Golden Skies Ventures Sdn Bhd (GSV), which has told the media it is looking to take over the beleaguered national carrier.
According to Reuters, GSV, which has made an RM11 bil offer for MAB, has obtained financing from an European bank as well as “a commitment from a Japanese private equity firm to inject immediate funds into the aviation group via an equity deal”.
But who are the people behind GSV? Do they have the expertise to run a huge airline operation? Do they really have the money? What about the earlier bids put forth for MAB?
The Covid-19 pandemic is a major spanner in the works and the airline’s owner, Khazanah Nasional Bhd, is not addressing the takeover issue for now but instead is putting its focus on dealing with the outbreak.
“Our immediate priority is to tackle the impact of the Covid-19 pandemic. We are currently supporting Malaysia Aviation Group Bhd’s (MAGB) efforts in responding to the disruption as best as we can,” a Khazanah spokesperson told FocusM. MAGB is the parent company of MAB.
It is easier said than done. Although there are purportedly financiers backing GSV’s takeover bid, not many are convinced this is the answer that MAB is looking for.
Endau Analytics founder Shukor Yusof said: “I know of them (GSV) but I don’t know them personally. For me it’s very simple: put money on the table and talk.”
For others, it’s not just about the money, but rather the right people to navigate MAB to calmer skies.
“It is not the money that we lack, but the expertise and experience. What do they know about running an airline? The airline business is unlike any other,” said Anton Ambrose, a former senior airline executive.
“We need someone who understands the nuts and bolts of the business. This whole thing has forced the airline to change and relook its strategies. Why not focus on MH cargo? Wasn’t it a cash cow for the airline in the past? So was its maintenance and repair business (MRO),” he added.
Ambrose said MAB should just focus on being a regional carrier like Air New Zealand and grow its logistics business.
“MAB needs to be creative. It’s not just the passenger business that fuels the bottomline,” he added.
In March last year, The Edge reported that a group of former Malaysian Airline System Bhd (MAS) employees and several others have formed GSV, which will be the vehicle to bid for MAB.
The GSV members include corporate lawyer Shahril Lamin; former Performance Management and Delivery Unit’s anti-corruption director Ravindran Devagunam; economist Dr Puvaneswaran Sanjivee; former MAS executive vice-president of group finance S Suppiah; former MAS vice-president of engineering Sitham Nadarajah and former general manager of flight operations (services and infrastructure) Shulhameed Marican.
At that time, Tan Sri Abdul Aziz Abdul Rahman, former CEO and managing director of MAS, was also an adviser to the group but he passed away on Jan 22 this year.
Strangely, GSV was supposed to have been incorporated last year but the company does not seem to be registered with the Companies Commission of Malaysia (CCM). A search on Google showed the company with an address at Kampung Datuk Keramat in Kuala Lumpur. This doesn’t exude much confidence on the credibility of the firm.
Adding to the confusion is the recent report in The Edge stating that GSV was set up earlier this year. So, when was it incorporated exactly – last year or this year? If not found on CCM, where was the company registered?
According to The Edge report, GSV has offered a capital injection of RM11 bil and to assume the airline’s full outstanding Islamic bonds or sukuk, its CEO Shahril Lamin was quoted as saying.
GSV is seeking 100% equity of MAGB, which includes MAB, MAB Kargo, MAB Engineering, Firefly and MASwings.
GSV said it will continue to position MAB as a premium airline, and it projects profitability within two to three years of the takeover, on the assumption that Malaysia contains the new coronavirus outbreak by June.
FocusM had reported in January that Air France-KLM, Japan Airlines Co Ltd and domestic carriers AirAsia Group Bhd and Malindo Airways Sdn Bhd were previously said to have shown interest in MAB.
It reported that Khazanah would need to inject some RM21.5 bil to keep MAB afloat until 2025 if the fund fails to find a strategic partner.
The sovereign fund had earlier said it expected to decide on a strategic investor including the execution of a term sheet by April. And, by June, the fund and strategic partner is expected to carry out the definitive agreements.
Khazanah said recently it will be finalising an appropriate strategic option for MAB this year. Khazanah, in a March 2 statement, said it evaluated options to resolve key issues facing the airline and said it received nine proposals, “of which four were shortlisted.”
Japan Airlines was said to be willing to commit a RM1.12 bil cash injection for a 25% stake in MAB, offer revenue management and turnaround expertise and turn Kuala Lumpur International Airport (KLIA) into an international hub to compete with the likes of Bangkok and Singapore.
Another proposal is for a three-way merger between MAB, AirAsia Group and AirAsia X Bhd. Khazanah believed this could be realised through “meaningful merger synergies” which the fund projects would bring in RM1.45 bil per year. – April 8, 2020
