MAS, AirAsia share swap only option

MALAYSIA - The Finance Ministry said the government had no choice but to go ahead with the share swap between AirAsia and Malaysia Airlines (MAS) to allow the national carrier to move forward.

Deputy Finance Minister Datuk Dr Awang Adek Hussein said it was part of efforts to improve the financial standing of MAS which was moderately successful, but needed a boost to face new challenges.

Furthermore, he said, MAS lost RM770 million (S$316 million) in the first half of this year.

"We had no choice. If it makes more losses, the government will have to inject funds and we will face more anger," he said in reply to a question from Datuk Ismail Kasim (BN-Arau).

Awang Adek said the share swap was based on the guiding principle that both parties would benefit. He said AirAsia had proven to be a success in other developing countries such as Thailand and Indonesia.

"MAS can learn from their experience to move forward."

He said the deal would also see both airlines expanding their businesses.

Awang Adek said state investment arm, Khazanah Nasional, was undertaking due diligence before deciding whether to take a stake in AirAsia X.

The deal on Aug 9 involved Khazanah Nasional swapping a 20.5 per cent stake in MAS for 10 per cent in the budget carrier.