Malaysia's state-backed media began following the story in July when reports surfaced that Qantas was talking about taking a shareholding from aviation holding company Naluri. Although flatly denied by Naluri in a statement to the Kuala Lumpur Stock Exchange (KLSE), it was later confirmed by Malaysia's transport minister, Ling Liong Sik, and by Qantas.
MAS has been considering membership of a strategic alliance for some time and earlier this year there was speculation that KLM would take a stake to bring the carrier into the so-called "Wings" alliance which groups the Dutch carrier with Northwest Airlines.
The Malaysian carrier is known to have reconsidered a tentative decision to join Wings after KLM and Alitalia severed a partnership and KLM opened merger talks with oneworld's British Airways.
Naluri is heavily in debt, and has promised to sell unspecified assets over the next two years as part of a 1 billion ringgit ($263 million) debt restructuring agreed with key creditors.
Headed by entrepreneur Tajudin Ramli, Naluri is the biggest single investor in MAS, although the Malaysian Government has a dominant shareholding by way of a number of investment vehicles.
Government companies, such as state oil firm Petronas, have been named by analysts and local media as potential new investment partners, and such talk has prompted questions about Malaysia's willingness to allow MAS to become part-owned by a foreign airline.
The story is further complicated by confirmation from MAS that the government has given it permission to increase its foreign shareholding allowance to 45% from 30%. At present, foreign concerns own 16.57% of MAS, the largest single shareholder being the Brunei Investment Agency with 9.l%.
Like its parent, MAS is heavily in debt and has posted losses for several years. Money-losing domestic operations are costing it dearly and there are proposals for the government to spin off the national carrier's domestic operations.
Reports have suggested that deregulation in the local industry may lead to more operating rights for carriers Air Asia, Pelangi, Berjaya and Transmile, possibly to allow MAS to eventually quit the routes and focus entirely on international operations.
Source: Airline Business