Malaysia explores M&A, debt measures to bail out airlines

Bloomberg

Malaysia is exploring the possibility of bailing out domestic airlines that have been hit hard by the coronavirus outbreak, according to people with knowledge of the matter.
Officials have been studying ideas including setting up a vehicle to take over the debt of companies like Malaysia Airlines Bhd and AirAsia Group Bhd, the people said. The government is also considering encouraging mergers between some of the carriers, said the people, who asked not to be identified because the information is private.
They have been discussing whether to provide financial support to other parts of the economy affected by the pandemic such as the tourism, real estate and oil and gas industries, the people said.
Deliberations are at an early stage and the government hasn’t decided on a course of action. Malaysia Airlines has separately been in talks with lenders about modifying its borrowings, the people said. The country’s flagship carrier, which continues to wallow in the red since announcing its turnaround plan in 2015, has asked for support from the government.
Khazanah Nasional Bhd., Malaysia’s sovereign wealth fund, is the sole shareholder of Malaysia Airlines after taking it private in 2014 following two tragic incidents: one of its planes vanished over the Indian Ocean and another was shot down over Ukraine. Malaysia Airlines confirmed in an emailed statement that it has been in talks with the government on emergency measures to help airlines sustain through the crisis. The carrier isn’t in discussions with the government on mergers with other airline groups, it said.
“Solutions to address the industry over-supply situation and long-term sustainability need to be addressed holistically,” Malaysia Airlines CEO  Izham Ismail said.