Malaysia Airlines still eyes foreign partner - but not now

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Malaysia Airlines said Wednesday it was still keen to find a foreign partner following the announcement of a massive restructuring but this would not occur in the near future.

The troubled airline Tuesday unveiled a plan to accelerate its return to the black by 2003, a year earlier than anticipated, after five consecutive years of losses.

The proposal includes splitting its domestic and international operations, and scrapping plans to delist from the stock exchange.

Under the plan to wipe out debts of some RM8.55 billion, the carrier will issue new shares to government entity Penerbangan Malaysia Bhd (PMB) to give it a 69.33 percent stake.

PMB will take over 73 aircraft together with associated liabilities and lease back the aircraft to Malaysia Airlines. The carrier will also sell 70 percent of its catering arm and property assets worth RM1.48 billion.

Managing director Mohamad Nor Yusof said Wednesday PMB may eventually sell some of its shares to a foreign investor.

"Certainly, there's a possibility but not now," he told reporters.

Implementing a counter plan

Nor Mohamed Yakcop, Prime Minister Mahathir Mohamad's special adviser and who is overseeing the restructuring, added: "Not in the near future."

On whether Malaysia Airlines was seeking to join an aviation alliance, Mohamad Nor said the carrier has 26 code sharing partners and preferred to stick to such bilateral agreements based on specific mutual needs.

"We're not a member of any clear alliance at this stage... we have been approached by several alliances and we are closely monitoring," he said.

Asked if the airline has plans to counter cheap domestic air fares offered by no-frills airline Air Asia, Mohamad Nor said the flag carrier has the capacity to do so if it wishes.

"We have the capacity to implement a counter plan. Air Asia has done well and spurred us to think of options in the market... we have more planes and we can improve our products," he added.

He said the airline's 20,000-strong workforce would not be affected by the restructuring as the airline was still expanding its regional operations, particularly to China, Hong Kong and India.

A company official told AFP that the carrier was not threatened by Air Asia as its domestic flights were near full capacity, despite suffering losses of some RM300 million last year.

Following the restructuring, Malaysia Airlines has forecast a net profit of RM94.2 million for the financial year ending March 2003.

It said its debt-to-equity ratio of more than 700 percent on its eight billion debt as of March would reverse to a projected net cash position of more than 670 million by March 2003. AFP



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