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.