MAS’ RM1.3 bil losses show price paid for bailout: DAP
K Kabilan
1:45pm, Wed: The shocking pre-tax loss of RM1.3 billion suffered by Malaysian Airline System (MAS) - the highest in its history - showed that the government’s bailout of the national carrier is proving to be costly for Malaysians, said opposition leader Lim Guan Eng today.
The DAP vice-chairman said Malaysians have a right to ask whether the billions of ringgit of losses was the reward for the RM1.8 billion investment by the government in MAS late last year.
He was referring to the government’s decision to buy back shares from former MAS executive chairman Tajudin Ramli last December for RM1.79 billion.
The sale came under much criticism as Tajudin sold his controlling 29 per cent stake in the airline at RM8 per share even though the Kuala Lumpur Stock Exchange market price was at RM3.60 per share.
“Loss of confidence in the government’s financial integrity was complete when the RM1.8 billion was paid in cash even though the RM8 per share was at a 122 percent premium over the market price,” said Lim.
Public funds likely to be used
He added that the losses suffered by MAS was more than five times the previous year’s loss of RM237 million, adding that even shareholders’ funds have dropped 50 percent from RM3.5 billion to RM1.75 billion corresponding with the drop in net tangible asset per share from RM1.74 to 89 sen.
“This raises the possibility of further injection of billions of ringgit in public funds because long-term borrowings (of MAS) still remain high at RM7.9 billion,” added Lim.
“With the country going into an economic recession, the government should concentrate on spending money to help the 21 million Malaysians and not billions of ringgit to help selected individuals whose only qualification is that they are cronies of the country's top leadership.”
Yesterday MAS managing director Mohd Nor Mohd Yusof announced a pre-tax loss of RM1.3 billion for the financial year ended March 31, 2001. However, he expected the carrier to see profit in three years to come.
He said that MAS’ ongoing major turnaround programme was projected to result in a profit of RM341 million for the financial year ending March 31, 2004.