Khazanah Nasional Bhd., Malaysia’s sovereign wealth fund, is considering providing as much as 5 billion ringgit ($1.2 billion) to the national flag carrier to see it through the coronavirus-induced slump in bookings, according to people familiar with the matter.
Malaysia Airlines Bhd. would use the fresh capital to resume some operations it has suspended, the people said. If it is approved, the cash infusion could happen in the coming weeks, said the people, asking not to be named as the information is private.
A representative for Malaysia Airlines said that it is in ongoing discussions with Khazanah, which has been supportive of its efforts to cope with the impact of the Covid-19 pandemic, but that no specific amount of funds has been committed to the carrier. A Khazanah representative declined to comment.
Malaysia Airlines, which has been struggling to turn around since it was taken private by Khazanah in 2014, would join carriers around the world in receiving a lifeline from their respective shareholders. Governments worldwide have pledged more than $85 billion to prop up airlines after the coronavirus pandemic wiped out travel demand and grounded fleets.
The Malaysian carrier is hoping to rebound from the near-halt in air travel brought on by Covid-19, and will undoubtedly look different when it emerges. It has named a new chairman, the president and CEO of national energy company Petroliam Nasional Bhd., whose appointment will be effective July 1. Wan Zulkiflee Wan Ariffin has already turned around one national champion in Petronas, which faced a commodity price rout beginning in 2014.
Malaysia Airlines has canceled flights, deferred non-critical spending and cut costs since the onset of the crisis. In March, Malaysia’s government explored the possibility of bailing out its domestic airlines, people with knowledge of the matter told Bloomberg News.
Last year, Khazanah asked the flag carrier to come up with a strategic plan to help it compete and deliver better returns after it failed to meet deadlines for two profitability targets. Khazanah also hired Morgan Stanley to explore strategic options for the airline.