Founder and former Chairman of the AirAsia Group, Datuk Pahamin Ab Rajab, has submitted a takeover bid for Malaysia Airlines for 49% of the company. In his offer, he says there will be no job cuts and no rebranding, and MAS will remain a full service airline. He met with Malaysian Prime Minister this week to discuss his bid.
Datuk Pahamin Ab Rajab worked in the government from 1978 until 2001, and took part in the creation of AirAsia as a government owned entity in the 90s. He assumed the role of Chairman when it was privatized in 2001, and continued in this role until 2008 when he retired. His bid for MAS is therefore separate to AirAsia, who have previously ruled out a takeover of the struggling airline.
Pahamin will ‘save Malaysia Airlines’
AirAsia Group co-founder and former Chairman, Datuk Pahamin Ab Rajab, has reportedly expressed a desire to save MAS, and has submitted a takeover bid for consideration. Along with a consortium of five as yet undisclosed entrepreneurs, Pahamin has met with the Prime Minister this week to discuss their offer. He told The Star,
“We are looking at taking a 49 per cent stake in the airline and Khazanah Nasional Bhd 51 per cent,”
Pahamin has said if the proposal was accepted, there would be no job cuts, branding would stay intact, and no loans or guarantees would be requested from the government. Speaking to The Star, he said,
“We have assured the prime minister that we will not sack anybody at Malaysia Airlines. We will also not ask for financial support from (sovereign wealth fund) Khazanah or the government … The airline will have the same national branding and will not change name. It will remain as Malaysia Airlines and it will be an international airline,"
What the consortium does want, however, is rights to manage the loss making carrier without any interference from the Malaysian government. The takeover offer is being delivered via the consortium’s investment vehicle Najah Air Sdn Bhd.
Interestingly, Pahamin details that their vision for Malaysia Airlines is to keep it as a premium full service carrier. However, their regional subsidiary, Firefly, would be turned into an "ultra low-cost carrier focusing on millennials”. Great, because that idea went so well for Air France.
Considering the offer
In a recent report from The Edge Malaysia, they say that the government is currently studying a total of four proposals. Although Prime Minister Tun Dr Mahathir Mohamad did not name the companies, he did say that the proposals were mostly from local companies, and constituted a combination of stake buyouts or management offers. Dr Mahathir is quoted as saying,
“We must find somebody with experience,”
He’s not wrong, as the troubled airline needs a strong hand to change its fortunes. Its sole shareholder, Sovereign wealth fund Khazanah Nasional Bhd, has demanded that a strategic plan is put in place swiftly to make the business profitable. The wealth fund previously poured $1.5bn into the company in a bid to turn it around.
Running out of time?
Regardless of what the premier thinks of the offer, nothing is likely to happen fast. According to The Edge, due diligence is likely to take six to nine months, meaning we will be well into 2020 before any movement is seen.
Khazanah are reluctant to pour any more money into the struggling carrier, and are desperate for someone to step in with a feasible solution to the problems at MAS. According to reporting in FMT, Khazanah have spearheaded no less than four recovery initiatives, costing the Malaysian taxpayer around RM25bn ($6bn), none of which have succeeded in changing their performance. Some have been calling for the Prime Minister to cut their losses and shut the airline down rather than just watch it bleeding money.
As such, time is running out for MAS. Although this interest from the ex-AirAsia founder is a light at the end of the tunnel, could it be a case of too little too late for the national carrier?