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Published on Monday, September 30, 2019

Proposed Malaysia Airlines-AirAsia X merger facing opposition






Malaysia Airlines' owner Khazanah Nasional reportedly wants to merge the ailing national carrier with long haul budget carrier AirAsia X but is facing opposition from its own stakeholders.


The Malaysian Reserve reports there is resistance from fund stakeholders calling it a bad deal which is effectively a state funded bail out.


State-owned sovereign wealth fund Khazanah is sole shareholder of Malaysia Airlines and is looking to offload the airline.


There has been little improvement in its fortunes since a $US1 billion restructuring following two deadly air accidents in 2014.


For a merger to proceed, the government would have to inject more money to cover operations and then bankroll all debt repayments.


"Basically, AAX shareholders would get a 'cleaner' MAB. Why sell when the government has to clean it up prior to the sale? In fact, there is no single benefit for MAB to merge with AAX," a source familiar with the matter said.


"AirAsia X is not even profitable. The 'merger' would only benefit AAX's shareholders and not MAB or the Malaysian public."


A Comprehensive Collaboration Framework and share swap deal between Malaysia Airlines and the main AirAsia business was previously on the table but was scrapped due to a public outcry over monopoly concerns.


That deal also ensnared AirAsia co-founder and executive chairman Datuk Kamarudin Meranun who settled a fine with Securities Commission Malaysia for alleged insider trading.


 

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