Malaysia Airlines needs good proposal for more funding

TheEdge Tue, Feb 19, 2019 10:10am - 5 years View Original


KUALA LUMPUR: Malaysia’s over RM100 billion national sovereign wealth fund Khazanah Nasional Bhd is waiting for the strategic proposal from Malaysia Airlines Bhd to convince additional funding is worth to support the latter’s turnaround plan.

“I think we are quite clear from what I had mentioned in The Edge [Malaysia weekly]’s interview, we are waiting for Malaysia Airlines to come back to us with their own strategy,” Datuk Shahril Ridza Ridzuan told reporters on the sidelines of the Nomura Islamic Asset Management 10th Anniversary Investment Forum here yesterday.

In his first interview as a managing director with The Edge Malaysia weekly last week, Shahril commented Khazanah was waiting for the national carrier’s proposal.

“We are waiting for them to come back to us. The onus is on the management and board to come back to the shareholders and say, ‘Look, we think this is going to be a more viable strategy going forward,’ then we will look at it and see whether we agree or not.”

Shahril noted that Malaysia Airlines’ management is in the midst of reviewing its strategic plan and will provide the feedback to Khazanah “hopefully in a very short period of time”.

The national sovereign fund, which took Malaysia Airlines private in 2014, has injected RM6 billion into the business in an effort to revive the national carrier.

Last September, Malaysia Airlines told The Edge Malaysia weekly that more than half of the RM6 billion funds for its turnaround attempt had been used.

The company blamed the weak ringgit and rising jet fuel costs that had derailed its turnover plan, causing it to miss two profitability deadlines since the initial plan was set to make money by 2017.

More than RM1 billion dividend from Khazanah in 2019

Shahril commented that Khazanah would declare more than RM1 billion of dividend to the government in 2019, adding that its commitment to delivering steady dividends to the nation’s coffer remains intact.

“If you look at the budget, they [the government] assumed roughly RM1 billion plus [from Khazanah],” said Shahril.

At over RM1 billion, it would be around the same as what Khazanah declared for the government in 2017, when Khazanah announced that the value of its investments climbed for the first time in three years, hitting an all-time high of RM115.6 billion, boosted by surging stock prices at home and abroad.

In December last year, Khazanah divested a 16% stake or 1.4 billion shares in IHH Healthcare Bhd to Mitsui & Co Ltd for RM8.42 billion or RM6 a share, citing the divestment formed an important part of the restructuring of its portfolio, and the proceeds raised would be utilised for new investments and capital requirements.

Besides IHH Healthcare, Khazanah’s core investments in the listed companies include CIMB Group Holdings Bhd, Axiata Group Bhd, Telekom Malaysia Bhd, Malaysia Airports Holdings Bhd, Tenaga Nasional Bhd and UEM Sunrise Bhd, Astro Malaysia Holdings Bhd, UEM Edgenta Bhd and Time dotCom Bhd.

For more details on what Shahril has said on plans that are in store for Khazanah and companies in its portfolio, pick up the latest issue of The Edge Malaysia weekly.

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