REVIVAL PLAN: MAS units may be turned into standalone companies, says source
PROJECT Sapphire, which was abandoned three years ago, is highly likely to make a comeback in Malaysia Airlines’ (MAS) restructuring plan.
It is understood that the plan will be unveiled by August 29 the latest, and implemented next year after the airline’s delisting by the fourth quarter of this year.
“MAS plans to implement a project similar to Sapphire, with some adjustments to the original plan,” said a person familiar with the matter yesterday.
The new project will see the MAS group broken up into standalone companies. It is believed that the MAS subsidiaries will be held under a new holding company.
“A new holding company, perhaps called MAS Holdings Sdn Bhd, could be set up. All MAS units could be parked under it,” the source said, adding that the plan is similar to Singapore Airlines’ (SIA) recent restructuring plan.
Project Sapphire was created after the announcement of the controversial share swap deal between MAS and AirAsia in 2011.
Under the new plan, a full-service short-haul carrier will be set up to focus on short-haul routes, with MAS concentrating on being a long-haul airline.
The plan includes the separation of MAS subsidiaries, such as its maintenance, repair and overhaul (MRO) and ground handling units.
According to Maybank Investment Bank Bhd’s research note titled “What if MAS is privatised?”, SIA went through the evolution of breaking up its group into standalone public-listed companies.
“Among SIA’s notable listings and sell-off to third parties are SIA Engineering in 2000, Singapore Air Lease Enterprise (sold to Bank of China Aviation) in 2006 and Singapore Airport Terminal Services in 2008,” the research firm said.
Should MAS units be turned into standalone companies, some of the plans that could be put in place are a new business strategy for MAS and Firefly, as well as the airline’s MRO unit, MAS Engineering Sdn Bhd.
It is believed that Firefly will be in charge of MAS’ domestic and regional (Asean) network by reviving its jet operations while maintaining its turboprop operations.
The move will allow MAS to focus on being a full-service long-haul carrier.
MAS Engineering will tie up with another aircraft engineering company, such as aerospace company Airod Sdn Bhd, said the source.
The source added that the collaboration could boost Malaysia as an MRO player in the Asia Pacific.
“As of now, there is no clear-cut plan on whether only MAS Engineering will be in partnership with Airod or MAS group will work hand-in-hand with the latter to restructure the whole airline business,” the source said.
Meanwhile, it is believed that the current MAS management, including head honcho Ahmad Jauhari Yahya, will continue leading the airline for a few more years.
Ahmad Jauhari’s contract as chief executive officer (CEO) is believed to end next month.
“But there are also talks that a new CEO is being head-hunted to replace Ahmad Jauhari. There are some names on the table,” the source said.
The source added that talks of bankruptcy and contract renegotiation are highly likely to be brushed off as the more favourable option is the “revised” Project Sapphire.
MAS’ restructuring plan could include the trimming of 20 to 30 per cent of its workforce, said the source. However, the move may not be implemented immediately.
On Friday, the trading of MAS shares was suspended as Khazanah Nasional Bhd announced it will fork out RM1.4 billion to buy all MAS shares it does not own under a selective capital reduction and repayment exercise (SCR).
Upon completion of the SCR, MAS will be delisted and Khazanah will become MAS’ sole shareholder.
Khazanah holds 69.4 per cent of MAS while the government holds one golden share. Trading of MAS shares resumes today.