KUALA LUMPUR: Malaysian Airline System Bhd (MAS) dropped the most since 1998 amid investor concern the government may let the company
fail.
The government should consider giving up its stake in the airline, local media reported, citing Malaysia’s Public Accounts Committee chairman Nur Jazlan Mohamed.
Bankruptcy may be an option to allow MAS to restructure, the Wall Street Journal said last week, citing an interview with Prime Minister Datuk Seri Najib Tun Razak.
“People believe that this time around, there would not be a bailout like before,” said Mohshin Aziz, an analyst at Malayan Banking Bhd in Kuala Lumpur. “It may be heading” toward bankruptcy, he said.
MAS fell 21.1 per cent to a record low of 15 sen during trading yesterday, the biggest retreat since the Asian financial crisis. The stock closed at 15.5 sen per share with 412.2 million shares exchanging hands.
The airline’s shares have dropped 63 per cent over the last year, compared with the 6.2 per cent increase in the FTSE Bursa Malaysia KLCI Index.
Government investment company Khazanah Nasional Bhd owns a 69.4 per cent stake in the airline, according to data compiled by Bloomberg.
MAS chief executive officer Ahmad Jauhari Yahya didn’t answer his mobile phone when called by Bloomberg News for comment.
The airline said last week the disappearance of Flight 370 has put additional stress on the company’s operations, forcing it to reexamine more urgently its business plan after reporting the biggest quarterly loss since 2011.
It had a net loss of RM443.4 million (US$138 million) in the three months ended March 31, compared with RM278.8 million a year earlier.
Flight 370 vanished from civilian radars with 239 passengers and crew on March 8 on a flight from Kuala Lumpur to Beijing. No physical trace of the aircraft has been found in what has become the longest hunt in modern aviation history.
Malaysian Air had been struggling with increased competition and higher costs even before the disappearance of the jet as rivals such as AirAsia Bhd flooded the region with planes and drove down fares.
The Subang, Malaysia-based company has lost a total RM4.57 billion since the start of 2011.
The company missed its target to be profitable last year as rising prices for items including fuel, maintenance and financing wiped out revenue gains, and pointed to an unfavorable foreign exchange rate environment as an additional challenge this year. — Bloomberg