International Finance

Morgan Stanley to explore performance strategy for Malaysia Airlines

Khazanah has invested RM6 billion in the airline’s business in an effort to see profits in three years

Malaysia’s sovereign wealth fund Khazanah Nasional has hired Morgan Stanley to evaluate strategic options for the country’s flagship carrier Malaysia Airlines, media reports said. Morgan Stanley is expected to look at various options including a potential sale stake for Malaysia Airlines. 

Khazanah is the sole shareholder of Malaysia Airlines. The sovereign fund is planning to strike a deal by the end of the year, although the timeline and other relevant details could change, media reports said. 

Khazanah wholly acquired Malaysia Airlines in 2014. Ever since then, the airline has been seeking transformation. In an email to Bloomberg News, Khazanah said that it is actively working on means to put the airline to the forefront. This also includes assessing all strategic options to improve the airline’s performance, it added. 

Khazanah during the acquisition had invested RM6 billion in the airline’s business in an effort to see profits in three years. However, external factors such as weak currency and rising jet fuel costs weighed on the efforts, failing to meet two profitability deadlines. 

The trade war between the US and China is anticipated to dampen the airline’s growth, although its revenues have risen in the past year, media reports said. In February, the sovereign fund had urged Malaysia Airlines to devise a strategic plan to gain competitive advantage in the aviation industry and deliver better results. 

Malaysian Prime Minister Mahathir Mohamad said that the sovereign fund is reviewing four local investor proposals it received from the airline. Earlier this month, there was speculation that Air Asia co-founder and partners were seeking to raise RM1 billion to take over the struggling Malaysia Airlines. 

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