File picture shows a MAS aircraft lands during a test at KLIA2. MAS is aiming to break even this year after three years of red ink but analysts expect losses to widen.— EPA:-

SINGAPORE: Malaysia Airlines (MAS) and its key stakeholders are in talks with banks for a strategic overhaul that could include the partial sale of its engineering unit and an upgrade of its ageing fleet, sources involved in the discussions said.

Even before the loss of its flight MH370 from Kuala Lumpur to Beijing on March 8, there was talk that loss-making MAS might need a financial rescue from Khazanah Nasional Bhd, which owns 69% of the company.

“They are sending all these feelers to banks to try and test the waters,” said a banking source familiar with the situation.

“The most imminent move looks to be on the engineering business, an IPO (initial public offering) or trade sale,” said the source, who declined to be identified as the talks are private.

MAS is aiming to break even this year after three years of red ink, but analysts expect losses to widen as the airline cuts fares to spur demand shaken by the disappearance of its MH370 flight over the Indian Ocean.

It was already facing stiff competition from AirAsia Bhd on local and short-haul routes and from AirAsia X and Gulf carriers in the medium and long-haul market.

“The next step will be to kick off a formal auction process for the engineering unit. They have been wanting to cut down the stake for many years, but from all the other options now, this might be one of the easier things to do,” the banking source said. —

– Reuters