Today, Commerce International Merchant Bankers Berhad [‘CIMB”] on behalf of the Board of Directors of Malaysian Airlines System Berhad [MAS], announced that MAS propose to reorganise the operations of the MAS Group. This entails, inter alia and fundamentally, the separation of its international and cargo operations from its domestic operations.
The chief mechanism will be the exclusive concession agreement which MAS will grant to a newly incorporated company (“Newco”) to market the passenger capacity made available by MAS on scheduled international services and the cargo capacity made available on both international and domestic routes. Application will be made to transfer the listing status of MAS to Newco. MAS will continue to operate as an air carrier. Newco will be a subsidiary of MAS. The standalone Newco can pursue a dedicated strategy to realise immediate potentials, allowing the Group to take full advantage of new opportunities in the international aviation landscape following the tumultuous changes in the global industry post the September 11th attacks in the US.
MAS will be able to build on domestic policy imperatives and continue to support Government policy and the national interest. This reorganisation will allow the private equity investors to shift portfolio focus to the international passenger services and cargo operations whilst the Government will be the stakeholders for the domestic business.
The Group remains intact, but introduces the flexibility to allow a two-pronged attack on the market. The structure will ensure that the airline’s exemplary safety record and technical capability will be safeguarded.
The MAS brand will remain throughout the reorganization. This, in part, will be achieved by retaining such visible manifestations as the logo and the culturally expressive uniforms which are the familiar, highly recognisable face of the airline.
The Board of Directors of MAS is of the opinion that the proposed reorganisation is in the best long term interest of the MAS group. Due care has been carried out to secure its optimal implementation. Opinion has been sought from professional consultants outstanding in that field.
The needs of the staff are high priority. The strictest standards of corporate governance have been a guiding principle. The Company, together with its advisers, will finalise the last details, terms and conditions of the Proposed Reorganisation, and a detailed announcement will be made once the terms and conditions of the proposed reorganization have been approved by the Board of Directors of MAS and other relevant authorities.
At a press conference, held earlier today, Dato’ Md Nor Md Yusof, MAS managing director said, “We will look to Newco to promote MAS on a more coordinated basis with a fully integrated communications campaign. We are in the business of creating a market animal, attractive and powerful in the global arena. MAS will continue to fulfil more than commercial objectives. Malaysia always pursues socio-economic goals, and we are mindful of social responsibility.” In a statement issued at the same press conference, Dato’ Md Nor stressed, “The rights of minority shareholders will be scrupulously observed and there will be full disclosure. With the new proposal, it will be observed that minority shareholders may now have the opportunity to refocus their investment to Newco”.