Loading

Malaysia Airlines set for growth

Direct News Source

25-Jan-2010 Malaysia Airlines set for growth with shareholder approval for rights issue & aircraft acquisitions

Malaysia Airlines has received shareholders' approval for a proposed rights issue to raise an expected amount of RM2.67 billion to fund its future fleet growth and expansion.

At RM1.60 each, the rights shares are priced at approximately 32.1% discount to the theoretical ex-rights price of about RM2.36 based on a five-day volume weighted average market price up to and including 21 December 2009. The rights shares will be offered to shareholders on the basis of one rights share for every one share at a date to be announced later.

At the EGM, shareholders also approved the proposed acquisition of 6 A380s and the proposed Boeing aircraft bundling comprising 4 aircraft from Penerbangan Malaysia Berhad for a consideration of about RM3.19 billion.

Malaysia Airlines Chairman, Tan Sri Dr Munir Majid said, "We are delighted with the mandate given by our shareholders which demonstrates their confidence in MAS' growth and expansion plans.

"Proceeds from the rights issue will be used for MAS' fleet renewal programme and working capital. This gives us a strong and sustained platform for growth as we transform from a 100% leased fleet to owning at least a third of our aircraft."

He added, "Leasing provides flexibility but imposes additional costs. Typically, airlines do not need to have management flexibility for more than two thirds of their fleet. With the new strategy of owning and leasing our aircraft, we will be able to improve our cost structure."

MAS' new fleet will comprise up to 55 B737-800, 25 A330-300 and 6 A380s. The national carrier will start receiving its new aircraft this year, with the delivery of 3 B737-800s. By 2016, all the aircraft ordered will be in, and MAS expects to have one of the youngest, most fuel efficient and environmentally friendly fleets in Asia.

The rights issue will improve MAS' liquidity and financial flexibility. It will optimize the MAS Group's capital structure by significantly strengthening its balance sheet and optimizing its future gearing levels.

The rights issue and aircraft acquisitions are expected to be completed by the first quarter of 2010.