Financial markets have reacted with alarm to reports that Malaysia Airlines (MAS) chairman Tajudin Ramliat is considering a controversial fleet refinancing that would take aircraft off the airline's balance sheet, but also land him a major windfall.

Proposals have been put to the Malaysian Government under which MAS Capital, a new offshore company controlled by Tajudin, would carry out a sale and leaseback of the aircraft. This would be at the fleet's book value of RM9.2 billion ($2.4 billion), however. Following the devaluation of the ringgit, the fleet is now estimated to be worth up to RM16 billion.

This would leave Tajudin's company with a sizeable windfall that investors fear could go into other concerns, including Malaysia Helicopter Services, which has reported a net loss of RM115 million.

Investment house Salomon Smith Barney warns that the deal cannot go ahead "without substantially destroying shareholder confidence in the company".

Source: Flight International