With no buyers or merger offer, financially plagued Malaysia Airlines will be taken over by the Malaysian government, it was announced this morning.
The airline's stock will be delisted from the Malaysian Stock Exchange as one of the government's private wealth funds, Khazanah Nasional Berhad, offered to buy out minority shareholders in a $429 million restructuring plan for the national carrier.
Malaysia Airlines had been in financial straits for at least three years prior to the dual tragedies that beset the carrier this year. In March, Flight MH370 from Kuala Lumpur to Beijing veered dramatically off course and disappeared. Despite exhaustive search efforts from multiple countries, the plane still hasn't been found. In July, Malaysia Airlines Flight 17 was shot down by a surface-to-air missile over Ukraine as it flew from Amsterdam to Kuala Lumpur.
More than 500 passengers and crew died on both flights. Capacity has been falling as a result, as the airline filled 77 percent of its available seats in June, down from 84 percent in June of 2013.
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Khazanah Nasional Berhad will buy out the remaining 30.6 percent of the airline that it doesn't already own, and most airline and financial experts agree that delisting Malaysia Airlines and taking it private will help in its restructuring plan.
In a statement, Khazanah said that in June it was "in the midst of undertaking a comprehensive review of MAS, in consultation with the Special Shareholder, the Minister of Finance Incorporated." Khazanah further clarified that subject to the necessary approvals from the relevant authorities, it would announce the proposed restructuring scheme within a period of 6 to 12 months.
The statement continued, "We reiterate that 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."
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