Malaysia Airlines (MAS) is planning to take complete control of struggling third-tier operator Pelangi Air, absorbing its route network and aircraft.
Under a proposal now before Pelangi's shareholders for approval, MAS would take a stake of to 70% in the local carrier. MAS' controlling parent company, Malaysian Helicopter Services (MHS), already holds 18%.
MAS refuses to disclose details of the discussions which are still taking place with Pelangi's shareholders, but sources close to the talks say that MAS would also acquire the 45.5% held by the regional governments of Selangor, Perak and Melacca. Terengganu would reduce its holding from 36.5% to 12%.
Tajudin Ramli, chairman of MAS and MHS, confirms that "-Pelangi will be integrated into our scheduling". He adds, however, that Pelangi will retain a separate identity, with emphasis on lower cost domestic and regional operations.
Several of MAS' existing domestic services will be passed to Pelangi, along with some of its Boeing 737s, says Tajudin. The move will allow MAS to cut costs on its domestic services, many of which are now losing money as the result of regulated air fares.
The restructuring will also finally clear the way for Pelangi to take delivery of the first of three new Bombardier de Havilland Dash 8-300 turboprops in mid-May. It originally ordered six aircraft for delivery in 1996, but a lack of financing delayed the deal. A fourth aircraft is held on option. Pelangi's three Fokker 50s will be retained, along with one of its Fairchild Dornier 228s, while a second will be sold.
Meanwhile, MAS is looking at ways to take advantage of the new open-skies agreement reached with the USA. "We're looking at the US East Coast, as well as Canada," says Tajudin. The airline is in codesharing discussion with several US carriers to gain more access to the North American market.
Source: Flight International