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Khazanah hires Morgan Stanley to chart M'sia Airlines strategy: sources

Kuala Lumpur

KHAZANAH Nasional Bhd has hired Morgan Stanley to explore strategic options for Malaysia Airlines Bhd, the nation's loss-incurring flagship carrier, according to people familiar with the matter.

The investment bank will be responsible for looking at options for the airline, including a potential stake sale, said the people who asked not to be named as the discussions are private. Khazanah, Malaysia's sovereign wealth fund and the sole shareholder of the airline, aims to get a deal done by the end of this year, one of the people said.

Discussions are ongoing and details including timeline could still change, they said.

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Khazanah is working on the way forward for Malaysia Airlines, including evaluating all strategic options to revive its performance, the sovereign wealth fund said in response to Bloomberg News.

A representative for Malaysia Airlines declined to comment, referring the matter to Khazanah. A representative for Morgan Stanley declined to comment.

Khazanah asked Malaysia Airlines to come up with a strategic plan in February to help it compete in the aviation industry and deliver better returns after it missed two profitability deadlines.

Prime Minister Mahathir Mohamad said this month that the government is studying four proposals it received for the airline from local investors.

While Dr Mahathir has said the carrier still faces the possibility of being shut down as the government seeks to save money, he also emphasised that he wants the airline to recover and keep "Malaysia" in its name.

He also acknowledged that turning the company around without laying off staff - a key issue for the government - is difficult. BLOOMBERG