During a media briefing on Monday, Malaysia Prime Minister, Mahathir Mohamed, said that the government have received 5 proposals from various airlines to help its national carrier.

The debt-laden Malaysia Airlines is still struggling ever since the two tragedies (MH17 and MH370) happened in 2014. During that same year, Malaysia Airlines was taken private by Malaysia sovereign wealth fund Khazanah Nasional.

According to the Prime Minister, of all the proposals that have been received some of them are just outright not within their consideration.

Who Are The Airlines Involved?

Domestic carrier AirAsia & Malindo Air

Airline Background: Malindo Air is a subsidiary of Indonesia’s Lion Air and AirAsia is a low-cost carrier of Malaysia who has a strong footprint in Asia.

According to Focus Malaysia, the sovereign wealth fund has been wanting Malaysia Airlines to merge with AirAsia X – the subsidiary of AirAsia targeting at the long haul market.

However one industry source pointed out that Malaysia Airlines should opt for an international solution, due to competition concerns. The source also pointed out that the proposal offered by foreign carriers are more comprehensive and strategic, which involved capitalising Malaysia as a strategic location for their operations.

Foreign carrier Air France-KLM and Japan Airlines

Airline Background: Air FranceKLM is under the SkyTeam alliance while both Japan Airlines and Malaysia Airlines are in the OneWorld alliance.

Just last year, Japan Airlines signed a joint venture agreement with Malaysia, involving joint operation, for flights between Japan and Malaysia starting April 2020. In the current proposal, an industry source said that Japan Airlines is seeking a 25% stake in exchange for making Malaysia its regional hub.

On the one hand, it was also mentioned that Air FranceKLM has proposed to set a hub for maintenance, repair and overhaul services in Malaysia. The airline is asking for a 49% stake.

Who Stands A Better Chance?

In my opinion, the government should be scratching their head over the proposals offered by Japan Airlines and Air FranceKLM. On the one hand, the offer provided by Air France-KLM could bring in job opportunities, skills transfer and government income. The future could be bright if Malaysia leverage this opportunity, but the asking stake is very high.

On the flip slide, Japan Airlines is asking a 25% stake for making Malaysia its regional hub. This could possibly boost traffic flow, efficiency and profitability, but the benefit seems to be not as great as what Air FranceKLM is offering.

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H/T: Straits Times

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