Government says MAS-AirAsia share swap only option left

By Shannon Teoh

October 04, 2011

KUALA LUMPUR, Oct 4 — Putrajaya insisted today it had “no choice” but to implement the controversial share swap with AirAsia to avoid having to bail out Malaysia Airlines (MAS) after Barisan Nasional (BN) lawmakers questioned the deal in Parliament today.

The Finance Ministry told Parliament that efforts to turn around MAS had only been “moderately successful” as seen from the flag carrier’s loss of RM770 million in the first half of the year.

“We had no choice. If it continues to make losses and the government has to inject funds, then there will be even more anger,” said Deputy Finance Minister Datuk Awang Adek Hussin.

Tan Sri Azman Mokhtar, Tan Sri Md Nor Yusof, Tan Sri Tony Fernandes and Mohd Rashdan Mohd Yusof during the signing ceremony of the share swap between MAS and AirAsia in Kuala Lumpur on August 9, 2011. — file pic

He said this in response to a question by Arau MP Datuk Ismail Kasim who said there was no reason for the 64-year-old airline to “learn from a chief executive officer from the music industry,” referring to AirAsia boss Tan Sri Tony Fernandes.

“Who is using who?” the Umno lawmaker asked.

His BN colleague Datuk Dr Marcus Majigoh also called on the government to explain how MAS had racked up such massive losses.

“MAS used to be a great company. Whoever has abused power must be punished,” the Putatan MP said.

Fernandes, who now sits on the MAS board to ostensibly help turn it around, has faced strong opposition from the right-wing Malay ground and Malaysia Airlines (MAS) staff since the swap was agreed two months ago.

Critics have accused the budget carrier’s ambitious boss of taking advantage of the loss-making national airline to fuel his 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 in a “multi-million pound” deal.

The August 9 deal allowed state investment arm Khazanah Nasional to swap a 20.5 per cent stake in MAS for 10 per cent in Asia’s top money-making budget carrier.

Awang was forced to repeatedly assure Parliament today that the deal “is based on the guiding principle that no one loses out and it will benefit all parties.”

The share swap is part of a Comprehensive Collaborative Framework between MAS, AirAsia and also low-cost international airline, AirAsia X, which will last for five years with an option to double the time span.

Awang also said that Khazanah was currently undertaking due diligence before deciding whether to take a stake in AirAsia X.