Ailing Malaysia Airlines May Sell Headquarters

KUALA LUMPUR, Malaysia_National carrier Malaysia Airlines may sell its headquarters and other assets to raise part of 3 billion ringgit (US$794 million, euro678 million) it needs to revamp the organization and return to the black, a media report said Thursday.

The airline's new managing director Idris Jala told a group of senators earlier this week that the sale would raise 1.5 billion ringgit and help trim losses, Senator Sharipah Aminah Syed Mohamed was quoted as saying by the New Straits Times newspaper.

But senators disagreed with the proposed sale of the building housing the airline's headquarters in central Kuala Lumpur, the country's largest city, saying it would seriously hurt the carrier's image.

They urged Idris to carry out independent financial audits to investigate if the company's losses were due to mismanagement of funds and fraud.

"We told him to clean up the national carrier," said Senator Kamarudin Ambok, according to the report. "It's not possible for a company to suffer such losses if there was no mismanagement."

Airline officials were not available to confirm the report.

Idris, who joined the airline Dec. 1, has said the carrier needed 3 billion ringgit to restructure after posting two straight quarters of losses. He said he will submit details of a turnaround plan to the government by late February.

It is unclear if the 3 billion ringgit is in addition to the company's cash balance of 1.42 billion ringgit (US$376 million; euro319 million) as of Sept. 30.

Prime Minister Abdullah Ahmad Badawi earlier this month said the government - which owns 69 percent of Malaysia Airlines - is prepared to lend money to the carrier but that any financial help should not be considered a handout.

The carrier posted its second straight quarterly loss of 367.7 million ringgit (US$97.53 million; euro82.65 million) in the quarter through September, a sharp reversal from a net profit of 132.7 million ringgit (US$35.1 million; euro29.74 million) in the same period a year earlier.

Results were also worse than the 280.7 million ringgit (US$74.45 million; euro63 million) loss in the quarter through June.

Analysts said the airline - which operates one of Southeast Asia's biggest passenger plane fleets with about 100 aircraft - has been hit by poor management, escalating operating and fuel costs, and stiff competition in the region.

Malaysia Airlines recently raised fuel surcharges aggressively and has deferred indefinitely plans to fly to six new Indian and Chinese destinations. Reports said it may raise airfares next month on all routes to cover its losses but the airline has declined to comment.