Will A MAS Act Help Turn Things Around For Malaysia Airlines?

As part of Malaysia Airlines' RM6 billion restructuring plan, the parliament will soon table a new act to help the struggling national carrier.

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Putrajaya Will Soon Table The MAS Act, A New Law To Facilitate The Restructuring Of Malaysia Airlines

To facilitate the restructuring of the national carrier in a comprehensive, timely and holistic manner, the Government will table a new law in Parliament called the MAS Act.

Managing director Tan Sri Azman Mokhtar said Khazanah Nasional had started work on structuring the MAS Act with the Attorney General's office.

The MAS Act, Which Is Urgent, Is Expected To Be Tabled In The Next Parliament Session

The MAS Act, which is to facilitate the restructuring of ailing national carrier Malaysian Airline System Bhd (MAS) in a comprehensive, timely and holistic manner, is expected to be tabled in the next Parliament session, which is set to begin next week, said Khazanah Nasional Bhd managing director Tan Sri Azman Mokhtar.

“[The date of enactment of] the MAS Act would depend not just on Khazanah, but it’s more the domain of the government and the Attorney-General’s (A-G) Chambers. So, it would not be right for me to explain. Parliament will open next week, and it is a fairly long session to the end of the year,” he told reporters after the opening of the Khazanah Megratrends Forum 2014, yesterday. “We have some time to get the Act enacted. It’s urgent, but we can wait until the start of the new year after MAS is privatised,” he said.

Khazanah Nasional Bhd Managing Director Tan Sri Azman Mokhtar Called It "An Important Enabling Act" Once Malaysia Airlines Is Privatised

Khazanah Nasional Bhd managing director Tan Sri Azman Mokhtar.

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Khazanah Nasional Bhd hopes the Government will enact the "MAS Act" early next year, before Malaysian Airline System Bhd's (MAS) new company is set up in the middle of next year.

He noted that it is “an important enabling Act” once MAS is privatised and its assets and operations are transferred to a new company (NewCo).

Analysts Have Estimated That MAS Would Run Out Of Its Depleting Cash Reserve By The End Of 2015 If Nothing Is Done To Revamp The National Carrier

Analysts have estimated that MAS’s depleting cash reserves would eventually run out come the end of next year if something radical is not done to revamp the airline.

Last Month, Khazanah Unveiled A RM6 Billion Recovery Plan For MAS Which Includes Delisting It From Bursa Malaysia

According to the RM6bil recovery plan for MAS, the airline's shares will be delisted from Bursa Malaysia by year-end and a new company (Newco) will be created to carry on the airline's business.

Last month, Khazanah unveiled a RM6 billion, 12-step recovery plan for its 69.37%-owned MAS, which has been ridden with financial troubles for years, and was exacerbated further by two airline tragedies earlier this year.

Once MAS Is Privatised And It Can Break Up All Its Existing Contracts, The MAS Act Would Be Imperative For The Airline To Sign Competitive Contracts

One of the most important and earliest processes which Khazanah posited was to delist the current MAS and transfer a leaner workforce and operations into NewCo by the end of this year. This way, it would give the airline a chance to break up all existing contracts, which have been said to be lopsided and uncompetitive, and negotiate new ones for NewCo. This is where the MAS Act would be imperative, as it would put matters into law to sign competitive contracts.

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