PETALING JAYA: A transport expert has urged Khazanah Nasional Bhd to consider diverting funds to Malaysia Airlines subsidiary Firefly even if this means driving the final nail into the national carrier’s coffin.
Roger Teoh, an aviation specialist, said this would be like giving a hard reset to a national carrier.
He noted that many aircraft were available in the second-hand and lease markets at low rates and said Firefly could immediately adjust its fleet and employee counts to match current air travel demands.
“This is certainly an advantage at a time when airlines around the world are still burning cash and are faced with no choice but to downsize with a significant financial penalty, given that air travel demand is not expected to recover in the short term,” he told FMT.
Firefly could scale up as the industry recovered, Teoh said.
Last week, Malaysia Aviation Group (MAG), the holding company for Malaysia Airlines, warned leasing companies that the state fund would stop funding the group and force it into a winding down process if restructuring talks with lessors were unsuccessful.
The warning raises the stakes in negotiations for a financial shake-up known as Plan A and sets out an alternative plan to divert funds to sister airline unit Firefly.
Reuters reported that under a Plan B scenario, Khazanah would “inject funds into Firefly directly to start new jet operations in Kuala Lumpur on a much smaller scale, focusing first on domestic services”.
Low-cost carrier Firefly, which operates a fleet of 12 twin turboprops, mainly within the country, is currently a fully-owned subsidiary of MAG.
According to Reuters, Firefly will obtain narrow-body planes and subsequently wide-body aircraft from the market.
Teoh said the decision would “be the nail in the coffin for MAS”, but added it would give Malaysia Airlines an opportunity to rebrand itself and to improve its operational efficiency.
This could be achieved by simplifying the airline’s fleet by flying fewer aircraft types, he said.
Another transport consultant, Goh Bok Yen, said Firefly should disassociate itself from Malaysia Airlines if Khazanah intended to divert funds to it.
He said this would provide Khazanah a new platform, one that could focus on the domestic market.
“You don’t want to be attached to Malaysia Airlines,” he said. “It is excess baggage. You don’t see light at the end of the tunnel.”
Goh also said there was no shame in shutting down a national airline, noting that many international airline firms were winding up because of Covid-19.
“It’s better to spend money on something more profitable,” he added.
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