**Update: 21/01/20 @ 16:02 UTC – Air France-KLM not involved. Details below**
Reuters is now reporting that Air France-KLM is not involved in an offer to purchase a 49% stake in Malaysia Airlines.
Air France-KLM has made an offer to purchase a 49% stake in Malaysia Airlines. According to NL Times, the Malaysian government is looking for an investor to keep the struggling flag-carrier running.
The airline has been facing financial difficulties ever since it suffered two tragedies in 2014: The disappearance of flight MH370 over the Indian Ocean, and the downing of MH17 over Ukraine. The Boeing 737 MAX crisis hasn’t helped the airline’s situation either. In recent times, the government has considered the sale, refinancing or closing of the airline.
A report came out last year speculating that three international airlines had put in bids for the purchase of a strategic stake Malaysia Airlines. Qatar Airways, China Southern, and Japan Airlines (JAL) were rumored to be the suitors. The airlines would not comment on the rumors. More recent reports suggest that ‘local’ airlines AirAsia Group and Malindo Air have also made offers.
However, according to The Star and its sources, JAL is indeed looking at investment – as much as 25% of Malaysia Airlines. A source said the following with regards to the potential deals:
“The bids from the foreign carriers are more comprehensive and strategic as both plan to capitalise on the strategic location of Malaysia for their operations,”
Sources speaking with The Star said Air France-KLM’s proposal includes setting up a hub for maintenance, repair and overhaul services in Malaysia. Those same sources report that JAL is offering to make Malaysia a regional hub, with the inclusion of low-cost flights.
The current environment
Currently, Malaysia Airlines is in the oneworld alliance, along with JAL. Malaysia Airlines also recently signed a joint venture agreement with JAL covering flights between Malaysia and Japan. The Japanese airline says that this agreement could expand in the future to cover U.S. flights.
The Air France-KLM Group, on the other hand, is part of the SkyTeam Alliance. In the Southeast Asia region, SkyTeam members include Garuda Indonesia and Vietnam Airlines. Would Malaysia Airlines remain with oneworld if Air France-KLM is successful in its bid?
While being in a different alliance, Malaysia Airlines also has a reciprocal agreement with the loyalty program of Air France and KLM. Air France/KLM’s Flying Blue members are able to earn miles, spend miles, and gain status on Malaysia Airlines flights. Members of Malaysia Airlines’ Enrich rewards program can also collect miles when flying on KLM and Air France flights.
Sources commented that an international solution would be more preferable in this situation as an airline like AirAsia would have competition concerns and a conflict of interest.
According to Malaysian Prime Minister, Mahathir Mohamad, five proposals have so far been received as part of a review that has been running since last year. However, the PM has declined to name the potential investors.
What do you think of the Air France-KLM Group investing in Malaysia Airlines? Can they inject enough money and expertise to turn the troubled airline around? Let us know in the comments!
We reached out to Air France-KLM with a request for comment but have not received a response.