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Posted on : Thursday 6th August 2020 04:27 PM

Malaysia Mulls Merging Airasia And Malaysia Airlines, As Coronavirus Crisis Hits Industry

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Merging money-losing state carrier Malaysia Airlines with budget airline AirAsia Group is one of the options to “save” them as the coronavirus pandemic batters the industry, Malaysia’s second-most senior minister said on Friday. 

The pandemic has killed more than 150,000 people around the world and led to many lockdowns, bringing air travel to a virtual halt and leaving airlines battling for survival.

Mohamed Azmin Ali, Malaysia’s minister of international trade and industry and the government’s designated second-in-command, said deliberations would soon take place on various options to help out the country’s airline industry.

He said a possible merger between Malaysia Airlines and AirAsia, a private low-cost airline based in Malaysia and operating in multiple countries, was considered even last year.

“That discussion took place even last year, even before this pandemic came. But we need to continue the discussion,” he said in an interview. “We need to see how best we can save those airlines, and it’s not going to be a very simple answer. Things are very bad, the aircraft are not flying. We need to sit down and discuss how to address these issues.”

Neither airline provided any immediate response to a request from Reuters for comment.

"The situation is becoming more complex because of this pandemic. We are looking at all options.

Mohamed Azmin Ali

Azmin said that even before the pandemic crisis it was “no plain sailing” for the airlines industry. Since last year, Malaysia has been looking for a strategic partner for Malaysia Airlines.

“We were also looking at some of the proposals coming from international players,” he said. “Now the situation is becoming more complex because of this pandemic. We are looking at all options.”

He did not say from whom the proposals had come for Malaysia Airlines.

The Malaysian government has been seeking a strategic partner for its national airline, which struggled to recover from two tragedies in 2014 – the mysterious disappearance of flight MH370 and the shooting down of flight MH17 over eastern Ukraine.

Sources have said AirAsia and Japan Airlines had earlier shown interest in buying a stake in Malaysia Airlines. Privately held Malaysian group Golden Skies Ventures said this month it had made a US$2.5 billion offer to fully take over the holding company of Malaysia Airlines.

AirAsia said last week it had no incoming revenue and 96 per cent of its fleet was grounded, having suspended most of its flights since March and its long-haul arm, AirAsia X, had also parked most of its aircraft at its Kuala Lumpur hub.

On Friday, the airline said it planned to resume domestic flights starting with Malaysia on April 29, Thailand and the Philippines on May 1, India on May 4 and Indonesia on May 7. Some of those would be subject to governmental approval.

Malaysia is in the middle of a March 18-April 28 partial lockdown. It has so far reported 5,251 patients, 86 of whom have died.

The country said it may extend its travel curbs beyond April 28, but with more sectors open for business, minister Azmin said on Friday as government was trying to balance health and economic requirements.

“Based on our discussions, the movement control order may still be in place but we may have to see what are the areas that we can relax and open up, to strike a balance between the requirements of the health of the people and also the economic priorities,” Azmin said.

Its central bank forecast this month that the economy could shrink by as much as 2 per cent or grow 0.5 per cent, in what would be its worst economic performance in more than a decade. The economy grew 4.3 per cent last year.

Azmin, 55, said much would depend on the health of Malaysia’s major trading partners, notably China and the United States.


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