MAS: privatisation gone bad

Malaysian Airlines is a classic case of privatisation gone bad. It all started with its flotation exercise in 1985 resulting in the govt offering its shares to the public while retaining control. Following the flotation exercise the company was able to reduce its debt and obviously quite attractive for a takeover. A new owner bought it from the govt at RM 18 per share and a few years later it accumulates sufficient debt to go under. The govt has to bail it ought by buying back the shares at the same price it was sold. Nobody in the financial market understand the business logic of the Malaysian govt: many attribute it to cronyism at its best. The Minister of Finance then argued in Parliament that the rescue is necessary because of national interest and the company's future prospect justify the value paid for by the govt. In Malaysia, the culture is, the govt action is always in the interest of the public, and if they have been wrong they would not have been reelected.....so it goes on and on with criminal practise with impunity.

MAS has always presented the view that the domestic operations is a loss contributor until Air Asia emerged in the domestic aviation scene.

Suddenly they sing a differenttune.