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Malaysia Airlines needs 4 bln rgt to 'turn around'

28-Feb-2006

KUALA LUMPUR (XFNews) - Malaysian Airline System Bhd requires 4 bln rgt to "turn around" under its business plan, its managing director Idris Jala said.


At a press briefing to unveil the national carrier's results, Idris said Malaysia Airlines will be able to generate 1 bln rgt internally and will raise the remaining 3 bln through external funds.

Of the 3 bln, Malaysia Airlines has secured short-term borrowings of 1 bln rgt, and will ask assistance from the government for about 2 bln rgt for medium to long-term funding, he added.

He said the national carrier should be able to raise 800 mln rgt to 1 bln rgt from asset sales, such as sale of a building.

Asked when the carrier will seek assistance from the government, Idris said: "We have no timeline for that yet."

He said assistance could be in the form of soft loans or other variables.

Malaysia Airlines is in discussion with Khazanah, the Ministry of Finance and Penerbangan Malaysia Bhd on the 2 bln rgt funding.

Idris added that the forecast losses and earnings under the business turnaround plan assumes average fuel price of 83 usd per barrel.

"We are making a very dim assumption as we expect yield to be under pressure," he said.

The carrier has hedged 60 pct of its fuel requirements at 67 usd per barrel for 2006, he said, adding that the 83 usd per barrel assumption takes into consideration the fuel hedging in 2006.

Malaysia Airlines announced a net loss of 1.26 bln rgt for the nine months ended December, compared with a profit of 216.90 mln in the corresponding period a year earlier, mainly due to higher fuel costs.

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