Khazanah Nasional Bhd Sets up Holding Company for MAB and Subsidiaries

20th May 2016

Sovereign wealth fund Khazanah Nasional Bhd has set up a holding company under which Malaysia Airlines and its subsidiaries – MASWings, Firefly, MAB Kargo and MAB Engineering, among them – will come under the fund’s control.

The New Holding Company will Have Foure Business Segments

The holding company will be known as Malaysia Aviation Group (MAG) and will include four business segments: air transportation services, aircraft leasing, ground services and talent development. It will be headed by MAB’s outgoing Chief Executive Officer Christopher Mueller, with all current board members also getting a seat on the MAG board.

Mr Mueller said:

Looking forward, the new structure will support every business unit’s capability to access the capital market with its own value proposition.

In a statement, MAB said the new holding company will offer better transparency and focused management across its subsidiaries. The national airline of Malaysia also said this will create a profit centre subsidiaries for MAG’s separate businesses.

MAB said in a statement:

This will ultimately ensure profit and loss accountability and unlock the value of the various assets by driving new levels of operational efficiency.

MAG will also include two aircraft leasing companies – MAB Leasing and MAB Peasawat, whose goal will be to provide competitive and customized leasing solutions to it.

Malaysia Airlines said about this:

MAB Leasing’s and MAB Peasawat’s fleet include all owned and managed aircraft operated by the group, featuring a range of narrow-body and wide-body aircraft.

According to the new structure, MAB Kargo will apply for its own AOC (airline operating certificate) and will start operating as a separate entity starting from next year.

Finally, MAG will also include the MAB Academy, which will be used exclusively for talent development and will begin operations late this year. With it, the group will be able to offer education and training programs for not just MAG, but also other international carriers and organisations.

Some Questions Remain Unanswered, Analytics Say

According to Shukor Yusof of the Endau Analytics, this is a similar move to the one made just last Wednesday by Singapore Airlines. SIA then set up a holding company to manage and own its subsidiaries Tigerair and Scoot.

Mr Shukor said:

Like SIA Cargo, MAB Kargo will also be a standalone business. All with their own AOC and P&L. There’s also SIA Engineering, which seem similar to MAB Engineering, and ground services (AeroDarat Services), which seem similar to Singapore Airport Terminal Services.

He added:

I am unclear as to the reason behind the formation of MAB Leasing and MAB Peasawat. His is because Khazanah had already created PMB over a decade ago as a leasing company. Are MAB Leasing and MAB Peasawat replacements of PMB? What has happened to PMB which was set up at considerable cost?

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