KL government may lend money to MAS

KL government may lend money to MAS

Eileen Ng, Associated Press/Kuala Lumpur

The government may lend money to loss-making national carrier
Malaysia Airlines, but any financial help should not be
considered a handout, the prime minister said on Friday.

Prime Minister Abdullah Ahmad Badawi said the government has
given the airline up to February to give an estimate of the
financial help needed, and to present a detailed plan on how to
turn around the company.

The airline "must earn the right to survive and it must earn
the right to succeed," Abdullah said.

He said he told the carrier it must rationalize its loss-
making domestic routes and work together with its rival, budget-
airline AirAsia, so that they can both benefit from code-sharing.

Malaysian Airline System Bhd., the company that runs Malaysia
Airlines, on Wednesday reported its second straight quarterly
loss, of 367.7 million ringgit (US$97 million), in the quarter
through September, a sharp reversal from a net profit of 132.7
million ringgit in the same period a year earlier.

The government owns 69 percent of the airline, which analysts
said has been hit by poor management, escalating operating and
fuel costs, and stiff competition in the region.

The national carrier, which operates one of Southeast Asia's
biggest passenger plane fleets with about 100 aircraft, posted a
net loss of 280.7 million ringgit in the previous three months to
June.

MAS chairman Munir Majid has said the airline's moves to
improve efficiency and cut costs will trim expenditures by more
than 400 million ringgit in 2006.

Munir said the airline hasn't decided whether it will replace
its 39 aging Boeing 737 planes, and that a decision will depend
on how the management wants to restructure its network of
destinations.

There are also no plans at the moment to downsize its 9,000-
strong work force, he said, adding that any such measures will be
decided by new managing director Idris Jala, who joined the
airline on Thursday.

Malaysia Airlines has raised fuel surcharges aggressively in
recent months to bring them roughly in line with those of its
regional rivals.

It recently deferred indefinitely plans to fly to a total of
six new Indian and Chinese destinations. It is also considering
raising fares and selling some assets.