MAS revival plan to be ready within a year, says Khazanah
KUALA LUMPUR: Khazanah Nasional Bhd ( Khazanah Nasional) will come up with a plan to restructure troubled Malaysia Airlines (MAS) within a year, said managing director Tan Sri Azman Mokhtar.
Speaking to reporters here, he said all options were being considered at the moment, reflecting the seriousness of the current situation and the importance of MAS to the country.
“At this moment, we are not prepared to say which option yet. But suffice to say, a lot of work has been done,” he said on the sidelines of Invest Malaysia 2014 here.
Meanwhile, MAS was the top actively traded counter yesterday with more than 47.3 million shares exchanging hands. The share closed 0.5 sen higher.
Azman said a sustained turnaround of MAS would need a strong improvement in its internal work culture and discipline, external support, as well as leadership and management.
“All three areas obviously need to be consolidated.
“Where the question of leadership and management is concerned, this area too we will seek to improve over time,” said Azman.
He also said there is a possibility of the national carrier downsizing its flights in the near-term until a restructuring plan is formulated, given that MAS has a reasonable leeway in making choices over its network plan.
At this moment, we are not prepared to say which option yet.But suffice to say, a lot of work has been done. Tan Sri Azman Mokhtar, MAS managing director
“Last year, despite losses, MAS’ load factor breached 81 pct due to the One World alliance, which gave more options in terms of connectivity,” he added.
Azman said Khazanah Nasional’s divestment programme was still ongoing, whereby, it would divest its stake in companies that are non-core, nor competitive.
When asked where MAS would fit into this picture, he said the airline is a core business as it is the national carrier and part of the national development agenda.
However, he added, the dilemma lay in its struggle to be competitive, which is a similar story with most airlines today.
Azman said on the question of whether Khazanah Nasional would still be the major shareholder of MAS would ultimately depend on the airlines’ special shareholder, the Malaysian government.
“The final decision will be made by the government.Our job is to give proper advice on what needs to be done,” he added.
Khazanah Nasional has injected RM5 billion into MAS to date and asked if this money has been effectively used, he said: “Looking at the way it has been spent, the short answer is ‘no’, because from the financial standpoint, MAS continues to make losses.
“However, from the national viewpoint, the answer to this is less obvious as MAS, like all carriers, brings other economic impact and intangibles to the country, as in terms of connectivity and bringing the world to our shores.”
On the recent resignation of MASKargo chief Mohd Yunus Idris and if this is the start of more heads rolling at the national carrier, Azman emphasised that it was normal for perople to come and go in the industry.
On Khazanah’s semi-conductor wafer maker, SilTerra Malaysia, Azman said in the last nine to 10 years, earnings before interest, taxes, depreciation, and amortisation (EBITDA) and operating profit had been mildly profitable. — Bernama KUCHING: KKB Engineering Bhd’s (KKB) prospects have been greatly enhanced following the discovery of natural gas offshore Sarawak.
This followed SapuraKencana Petroleum Bhd on Monday announcing four significant discoveries of non-associated natural gas in its SK408 Production Sharing Contract (PSC) area offshore Sarawak by subsidiary SapuraKencana Energy Sarawak Inc.
Analysts at AmResearch Sdn Bhd (AmResearch) said this latest development bodes well for KKB as its oil and gas associate Oceanmight Sdn Bhd (Oceanmight) is targeting fabrication works for offshore structures of below 10,000 tonnes and up to 20,000 tonnes.
KKB holds a direct 43 per cent stake in Oceanmight and an indirect 20 per cent (effective eight per cent) stake via 40 per centowned associate Edisi Optima Sdn Bhd.
The other shareholder is Kuala Lumpur-based Annexe Fair Sdn Bhd, with a 37 per cent interest.
“Oceanmight is reportedly the seventh fabricator licensed by Petronas, and the second in Sarawak after state-owned Brooke Dckyard & Engineering Works Corporation,” AmResearch said.
“We understand that it is bidding for relatively small projects with a price range of between RM100 million and RM300 million, eyeing jobs involving general structures such as wellheads, jacket and drilling platforms, leading eventually to topsides.”
To note, the SK408 Block is located in shallow waters about 120km offshore Sarawak covering an area of approximately 4,480 square kilometres in the Central Luconia Gas Province.
These are the first four wells of a 10-well commitment in the SK408 PSC.SKE is the operator with a 40 per cent working interest with partners Petronas Carigali Sdn Bhd (30 per cent) and Sarawak Shell Bhd (30 per cent).
“We maintain out hold on KKB with an unchanged fair value of RM2.50 per share share – a five per cent discount to our sum of parts value of RM2.63 per share,” AmResearch said in view of the slow progress in the securing of projects in its conventional activities of building engineering and pipe manufacturing.