Dr M says fed up with MAS, backs AirAsia swap deal

By Debra Chong

September 27, 2011

KUALA LUMPUR, Sept 27 – Tun Dr Mahathir Mohamad threw his weight today behind the controversial share swap deal between the national carrier and AirAsia despite strong opposition from the right-wing Malay ground and Malaysia Airlines (MAS) staff against Tan Sri Tony Fernandes’ involvement.

Critics have accused the budget carrier’s ambitious boss of taking advantage of the loss-making national airline to fuel Fernandes’ personal ambitions, the latest being the acquisition of English Premier League club, Queens Park Rangers.

The national carrier will sponsor QPR’s home jersey for the next two seasons, while AirAsia’s logo will be emblazoned on the team’s away and third kits.

The still-influential former prime minister said today he was “fed up”with MAS’ management over the years.

“Government had supported MAS with funds and protection but MAS had never done well,” thecountry’s longest-serving prime minister of 22 years wrote in his blog today,comparing the two airlines.

In contrast, he observed that AirAsia being a “newcomer” into the aviation industry had defied the odds and grown from a two-plane operation covering four routes into Asia’s biggest budget carrier.

“All I wanted to see is Air Asia’s management playing a role, indirectly or directly in the management of MAS,” said Dr Mahathir (picture).

The 86-year-old appears to be pushing AirAsia to the forefront in recent months,including suggesting, during this year’s Langkawi International Dialogue at Putrajaya last June, the budget carrier open up new routes from Malaysia to several African countries.

MAS and AirAsia inked the deal on August 9, which allows the loss-making national carrier to swap a 20 per cent stake for 10 per cent in Asia’s top money-making budget carrier.

The swap enabled AirAsia bosses Fernandes and his partner Datuk Seri Kamaruddin Meranun to sit on the MAS board and ostensibly help turn it around.

MAS hadannounced in August a net loss of RM527 million for the second quarter of 2011 due to higher fuel costs despite recording a better yield and a nine per cent growth in passenger revenue from the same period last year.

This brings total losses in the first half of the year to RM769 million even as the airline said that profit outlook for the second half of the year appears bleak.

MAS had been doing well until the Asian financial crisis hit in 1998, which later led to its assets being sold off to resolve its balance sheets.