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Malaysia Airlines’ fate hangs in the balance

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Government seeking options for struggling carrier: PM Mahathir

KUALA LUMPUR The Malaysian government is considering whether to shut, sell or refinance national carrier Malaysia Airlines (MAS), Prime Minister Mahathir Mohamad said yesterday.

The government was studying options for MAS and a decision should be made "soon", Dr Mahathir said when asked about analysts' suggestions that the airline be shut down or spun off, Reuters reported.

"It is a very serious matter to shut down the airline," Dr Mahathir told a news conference in Parliament.

"We will nevertheless be studying and investigating as to whether we should shut it down or we should sell it off or we should refinance it. All these things are open for the government to decide."

The airline has been trying to transform its operations and return to profitability this year as it recovers from two disasters in 2014, when flight MH370 disappeared in what remains a mystery and flight MH17 was shot down over eastern Ukraine.

Sovereign wealth fund Khazanah Nasional, which took MAS private in 2014, said the government needed to decide on its investment in, and level of support for, the struggling airline.

The fund added that it was waiting for MAS to present a review of its business strategy.

Dr Mahathir also said that the government is looking into the feasibility of privatising parts of the "bloated" public sector.

He said the civil service, which now counts 1.7 million employees compared to 1 million in 2003, is a drain on the government's coffers.

"The size of the civil service has grown too big and become worrisome for a long time as it continues to increase the government's financial burden and at the same time, reduces the allocation for development purposes," he was quoted as saying in Parliament by The Star.

Citing the example of Telekom Malaysia (TM), which was corporatised in 1987, Dr Mahathir said privatisation would save the jobs of civil servants.

"(TM's) employees were transferred to a private company, reducing the number working in the public sector.

"At the same time, the employees received better salary packages.

"We believe this strategy is still relevant to address the issue of the size of the civil service."

The Prime Minister said if the situation was not controlled, the high cost of management expenditure will continue to take a big chunk from the national budget each year and will slow down economic growth.