KUALA LUMPUR -- Malaysia could consider shutting down loss-making Malaysia Airlines, among other options, Prime Minister Mahathir Mohamad said on Tuesday.
"I think it is a very serious matter to shut down the national airline," Mahathir said in response to reporters' questions. "We will nevertheless study the situation, whether to shut the airline down. Or should we sell it off or refinance it?"
The prime minister's comments come as prospects for a return to profit at the national flag carrier appear to be receding. After more than a decade of financial struggles, the airline was taken private by sovereign wealth fund Khazanah Nasional in 2014. A restructuring plan was launched which targeted a return to profit within five years.
But the rise of budget airlines in Asia has put legacy carriers such as Malaysia Airlines under intense pressure. Rising fuel costs and foreign exchange volatility are also weighing down the industry.
In fiscal 2018, Malaysia Airlines suffered another loss, though "marginally lower" than that of the previous year, the airline announced on March 1.
Without reporting any financial details, the privatized company says load factor, an indication of how efficiently an airline fills its seats and generates revenue, was 76.6% during the final quarter of 2018.
According to Forbes, the average airline load factor in 2018 was 81.7%, up from 75.2% in 2005.
Malaysia Airlines' poor performance has pulled Khazanah, an important contributor to government coffers, into the red.
The fund, which also holds controlling stakes in Telekom Malaysia and IHH Healthcare, posted a pretax loss of 6.3 billion ringgit ($1.5 billion) in 2018 on higher impairment charges and lower dividend income. Khazanah said Malaysia Airlines accounted for half its 7.3 billion ringgit in impairment charges.
Responding to Mahathir's statement, Malaysia Airlines said it has been working on the next phase of its turnaround plan since September and will reveal details once they are finalized.
Analysts say the carrier is handicapped by legacy issues, including governmental interference in its operations.
"Khazanah does not know how to run an airline," said Shukor Yusuff, and aviation analyst who added that Malaysia's government has a say in selecting the carrier's routes and aircraft.
Shukor said Malaysian professionals should be allowed to restructure the airline and run it like a "true business." After the carrier was privatized, Irish businessman Peter Bellew of Ryanair and German Christoph Mueller of Emirates Group were headhunted to lead the transformation. Both would later leave without explanation and before finishing out their three-year contracts.
Brendan Sobie of the Sydney-based Centre of Aviation said shutting down Malaysia Airlines, which has been around in one form or another since the 1930s, is not politically tenable. Neither does a sale of the carrier make sense, he said, citing massive debt that foreign investors are unlikely to assume.
Malaysia Airlines has been suffering financially since the 1990s.
"Pumping more money in is always the favored option politically," Sobie said, "but the question becomes, of course, will yet another restructuring be successful?"