KHAZANAH Nasional, the Malaysian government’s investment arm that holds a 69 per cent stake in Malaysia Airlines (MAS), has facilitated a share swop deal between MAS and AirAsia as a means of turning round the national carrier.

Among the driving factors for the deal were MAS’s first-quarter loss of 242 million ringgit (US$80.2 million) (TTG Asia August 5 issue) and the forecast of operating losses for the full year. In contrast, AirAsia recorded a first quarter profit of 172 million ringgit.

As part of the deal, Khazanah has offered Tune Air, the holding company for AirAsia, a 20 per cent stake in MAS, in exchange for a similar stake in AirAsia.

AirAsia CEO, Tony Fernandes, and co-founder partner, Kamarudin Meranun, hold slightly more than 26 per cent of AirAsia, and are likely to become among the largest shareholders in MAS if the deal goes through.

Malaysian Minister for Transport, Kong Cho Ha, said the deal would add synergies between the two airlines and help rationalise their operations. “The resulting synergies will especially be obvious in the routes both airlines are flying and will also reduce their operating costs,” Kong was quoted by The Star as saying.

AirAsia has a market capitalisation of 11 billion ringgit, which is more than double that of MAS’s 5.3 billion ringgit.

Believed to have been negotiated over the past year, the deal has already received government approval and is expected to be signed this week, possibly even as early as today.