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Nikkei Markets

Few parties interested in buying Malaysia Airlines

Analysts doubt prospects of outright sale of financially strained flag carrier

Folding Malaysia Airlines has always been politically untenable, and analysts wonder whether another cash injection is on the way. (Photo by Shinya Sawai)

KUALA LUMPUR (Nikkei Markets) -- Some local as well as foreign parties have shown interest in buying flag carrier Malaysia Airlines, Prime Minister Mahathir Mohamad said Wednesday.

"There are interested parties to buy Malaysia Airlines," Mahathir told reporters in parliament. "We will study whether it needs to be sold or not."

The comments come a day after state investment arm Khazanah Nasional's managing director said it would inject this year part of six billion ringgit ($1.47 billion) that was provided in 2014 to revamp the financially-strained national airline.

Malaysia Airlines has been struggling to turn in consistent profits over the years despite several attempts by the government to restructure the company grappling with volatile fuel prices and brutal competition from low-cost carriers such as AirAsia.

The most recent effort was launched in 2014--involving massive job cuts, rebranding, management changes, and buying out the then-listed airline -following losses of two of its planes that killed hundreds of people in that same year.

The company, now wholly-owned by Khazanah Nasional, however has missed a crucial target to return to profitability by 2018 despite axing thousands of jobs and disposing of some of its planes.

An outright sale of the airline appears unlikely in the near term, said analysts, noting potential hurdles that include resistance from its highly-unionized workforce of 14,000.

"The turnaround probably hasn't been successful," said Singapore-based Brendan Sobie, an analyst for Centre for Aviation. "In this case, selling the airline is going to be challenging because Malaysia Airlines still needs a major overhaul."

"It's a national carrier so national interest is involved," said Tan Kam Meng, an analyst who covers the aviation sector at brokerage TA Securities. "The company is also in a tough industry."

Earlier this month, Mahathir had said that the government would study and soon decide whether to shut, sell or refinance the flag carrier.

"We will consider whether we want to change (the airline's) management or to scale down or to expand," Mahathir said. "We have a lot of planes that are not use fully utilized."

--Sarah Nadlin Rohim and Gan Pei Ling

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