Malaysia Airlines briefed top local, foreign banks on relisting plan – CEOAugust 14, 2017
Malaysia Airlines Bhd (MAB) has briefed 12 banks including several foreign and top local banks on its proposed share relisting aimed for 2019, its chief executive said to Nikkei Markets.
“The airline needs to post a net profit by the second half of next year to meet the initial public offering (IPO) target,” Peter Belew told Nikkei.
The airline was delisted from Bursa Malaysia on Dec, 31 2014, following the implementation of a 12 points restructuring exercise initiated by Khazanah Nasional Bhd. Its last trading day was on Dec 12, 2014 when it closed at 26.5 sen. The counter was suspended on Dec,15.
But Nikkei said a weakening of the ringgit against the dollar would risk derailing the company from its relisting plans.
However, the local currency has made gains against the greenback in the past few months, staying between 4.25 and 4.30 per dollar since the end of May, compared with 3.85 to 4.49 last year.
It is expected to remain at the stable rate of 4.30 per dollar for the rest of the year, and this could boost MAB’s chances for a relisting.
If not for the ringgit substantial decline against the greenback, Malaysia Airlines could even have turned profitable earlier than estimated, Bellew said.
Nevertheless, Belew told Nikkei the weak ringgit has made Malaysia more attractive as a destination to foreign tourists, giving the airline an opportunity to expand abroad.
Nikkei said almost three years after the carrier moved to exit most non-stop long haul routes and eliminated as much as 6,000 jobs as part of broad restructuring effort to improve efficiency and mend its finances, it is now readying to start more than 30 new international routes.
“We will hire an additional hundred pilots in 2017,” Bellew said. “And add about two hundred engineers, sales and support staff.”
Bellew said the company intends to avoid “a most incredible price war” between low-cost rival AirAsia – Asia’s largest budget carrier by fleet – and Indonesia’s Lion Group associate Malindo Air, which have squeezed yields by offering discounts as high as 45%.
The airline has been in the red since 2010, as low-cost AirAsia started eating into its domestic market share and Gulf carriers attracted significant chunk of passengers in many of the Malaysian national airline’s international routes especially to Europe and to the Middle East.
Two aviation disasters – the disappearance of MH370 and shooting down of flight MH17 over eastern Ukraine – deepened its losses, prompting majority shareholder Khazanah Nasional, Malaysia’s sovereign wealth fund, bailing out the carrier through a 6-billion ringgit cash injection in 2014 and taking it private.
While Malaysia’s aviation market grew 7% last year to approximately 68 million passengers, it was Malindo that captured most of the growth, according to the Center For Asia Pacific Aviation.