Swissair in race to buy Malaysia Airlines

Aviation analysts said talks with foreign buyers focused on the 29 percent stake held by MAS chairman Tajudin Ramli’s heavily-indebted Naluri Bhd. Daim did not name the parties and government and MAS and Swissair officials declined to elaborate on Daim’s comment.

MAS is in need of foreign money and know-how to help it tide over cash flow problems, stemmed mainly from loss-making domestic operations and soaring fuel costs. The carrier, saddled with debt of $2.63 billion, has so far failed to win government approval to raise domestic fares.

Swissair, Australian carrier Qantas Airways Ltd and Dutch carrier KLM have been reported to be in the running for a stake or alliance in MAS. MAS has proposed raising its foreign shareholding limit to 45 per cent from 30 per cent. Foreigners now own 16 percent of MAS, of which nine percent is held by the Brunei government.

Daim said in August that the government would not allow the sale of shares in the National carrier to "parties that oppose us or which the government is not comfortable with".

Compared with the other two carriers, Swissair is the preferred choice, analysts said. Diplomatic ties between Malaysia and Australia are stormy at Times. The Malaysian government has a golden share in MAS, allowing it to veto key policy decisions. Tajudin, through Naluri, is the single largest shareholder of MAS. A senior MAS executive on Wednesday spoke of closer ties on air freight cooperation with Swiss cargo.

Ralph Gotz, head of MAS kargo, told Reuters the MAS cargo arm was looking to expand its cooperation with Swisscargo. "There are a lot of synergies between us. We have a complementing network structure… both companies pursue a very common business plan.

"We have a very good synergy by sharing the same IT platform for our reservation system, which is unique in this world," he said. MAS shares had rallied since Tuesday, helped by news reports that MAS had been allowed to raise domestic fares by up to 50 per cent.

But a government Minister on Wednesday denied the reports. MAS shares closed up 7.6 percent or 26 cents at 3.70 ringgit on Wednesday. The shares had risen by 11.45 percent since Tuesday.