As the Malaysian government mulls the sale of their flag carrying airline, speculation about which carrier Qatar are looking to invest in is growing. Malaysia Airlines seem an ideal acquisition for the Middle East carrier, but would it be allowed, and are MAS even for sale?
The future of Malaysia Airlines hangs in the balance. With the airline making a massive loss last year, the government has been considering where it should go next. Should they throw more money at it, or cut their losses and close it down entirely? Or, like so many others, should it be sold off to a rival airline?
With a big fleet of aircraft and a foothold in one of the fastest growing aviation markets in the world, the prospect of a sale has clearly attracted attention. The Malaysian Prime Minister is quoted as saying that there are ‘local and foreign firms expressing interest’ in the airline. Could one of those foreign firms be Qatar?
What’s the problem at MAS?
The Malaysian government is currently considering the future of their flag carrying airline. Prime Minister Mahathir Mohamad has said he is considering whether to invest, sell or close the airline, after another year of failing to turn a profit.
The airline has had a troubled few years, with one aircraft vanishing over the Indian Ocean and another shot down over eastern Ukraine. Subsequently taken over by Khazanah Nasional, a sovereign wealth fund, the airline is still suffering losses and failing to show themselves as a sustainable business.
Khazanah had injected investments amounting to RM6bn ($1.47bn) in 2014, with a view to making the airline profitable by 2017. However, last year they reported losses of RM6.27bn ($1.5bn), demonstrating that their five year turnaround plan is failing.
Malaysia Airlines Chief Revenue Office, Ignatius Ong, said the carrier had been working on its efficiencies, and had made improvements, despite what it says on paper. Speaking to the Malaysian Reserve, he said:
“We are still doing the best we can, and we are still expanding as you have heard. We are reaching new destinations — possibly two routes will be introduced along the road…”
With their future in jeopardy, could Qatar Airways step in with an acquisition offer for the carrier?
Why would Qatar want to acquire Malaysia Airlines?
Both Qatar and Malaysia Airlines are Oneworld members, but as we know, Qatar have been making noises about leaving the alliance for quite some time. Should they indeed split, having an airline like MAS on their books would give them a firm footing in the rapidly growing Southeast Asian market.
Already, Qatar have holdings in IAG, Cathay Pacific and LATAM, giving them some standing in Europe, Asia and South America. With Malaysia Airlines’ proximity and slots in the antipodean region, it would be a huge benefit to the airline to get a piece of that action.
The two airlines already cooperate relatively closely. In September last year, MAS expanded their codesharing agreements with Qatar to cover the Middle Eastern airline’s service between Penang and Doha as well as from Doha to North America.
However, analysts expect any sale of MAS to be met with stiff political resistance. They believe there is too much ‘baggage’ with the airline, citing issues such as labor requirements and attached conditions as potential hurdles to any sale.
Whether Malaysia Airlines will indeed be for sale, and whether Qatar will see it as an opportunity, remain to be seen. Right now, MAS are still working on a further turnaround plan, under the direction of their new CEO, Izham Ismail. Until the details of this are finalized, likely a month or more away, we’ll have to wait to see what the future holds for the carrier.