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MAS extends losses after Etihad Airways denial

Publication Date : 20-06-2014

 

Malaysian Airline System Bhd's (MAS) share price continued to lose ground on Friday after Abu Dhabi's Etihad Airways said it was not taking an equity stake.
MAS was down 1.5 sen to 22 sen. Turnover was 71.18 million shares done at prices ranging from 22 sen to 24 sen ON early Friday morning.

On Thursday, Etihad Airways denied taking an equity stake in it, quashing investors' hopes of a quick turnaround.

Prime Minister Najib Razak said Thursday that there was no probability that the airline would be closed down for now.

Interest in MAS perked up on June 10 after major shareholder Khazanah Nasional Bhd said it was working on a rescue plan that it hoped to unveil in six months to a year's time.

This boosted the counter, which had languished at a record low of 15.5 sen on May 19.

On Wednesday, MAS saw its shares rising to a record high in over a month to 25 sen, following a report by Australian newspaper The Age that it might form a partnership with Etihad.

Troubled national carrier Malaysia Airlines’ (MAS) share price hit a speed bump yesterday after Abu Dhabi’s Etihad Airways denied taking an equity stake in it, quashing investors’ hopes of a quick turnaround.

Separately, Prime Minister Datuk Seri Najib Tun Razak said that there was no probability that the airline would be closed down for now.

Centre for Aviation was quoted as saying MAS had told its oneworld alliance members about the potential partnership.

It added that this followed speculation at the International Air Transport Association annual meeting in Doha, Qatar, earlier this month that talks between the two airlines were underway.

CAPA said MAS would first form a comprehensive code-share partnership with Etihad, building on the limited code-sharing already in place. It added that an equity stake was always a possibility.

“Etihad may ultimately not be interested in investing in (MAS), particularly if the government is reluctant to relinquish control or allow the deep restructuring the carrier needs to be viable over the long term,” it said.

However, Etihad firmly denied such plans were in the works in a statement issued yesterday.

“Etihad would like to confirm that it is not in talks with MAS about the possibility of an equity investment in the carrier,” it said.

Najib said in arliament that there was no probability of the government closing down MAS for now.

Najib said although MAS was incurring losses, the direction of the airline was yet to be determined, and that the financial implication to the government would depend on the outcome of the due diligence being undertaken by the main shareholder, Khazanah.

“The Government has discussed MAS’ dismal financial performance and has asked that the due diligence be carried out soon to identify the reasons behind the losses and the best options to solve them.

Khazanah, as the biggest shareholder of MAS, has also undertaken studies to evaluate the airline company’s past performances and its current status.

The findings of the study will be presented to the Khazanah board as soon as it is finalised in order to decide on the future direction of the company,” he said in a written reply in Parliament.

For the first quarter ended March 31, MAS posted a net loss of 444 million ringgit (US$138 million), plunging 72 per cent from the preceding quarter and 28 per cent year-on-year.

Revenue came in at 3.53 billion ringgit ($1.10 billion), up 4.2 per cent from 3.39 billion ringgit ($1.05 billion) last year.


 

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