Serious bid: Feriz (left) and Shukor at the press conference. Feriz says the company will present its proposal to Khazanah today.
SHAH ALAM: The top brass from Jentayu Danaraksa Sdn Bhd will present its latest proposal to Khazanah Nasional Bhd today to buy Penerbangan Malaysia Bhd (PMB) and turn it into a global aircraft leasing firm in a deal worth up to RM8.75bil.
Jentayu also has plans to set up a new airline, Fly JD, that would offer premium economy services in Asean. Both the leasing and airline businesses may be able to absorb the more than 6,000 employees that Malaysia Airlines (MAS) will axe as part of Khazanah’s resuscitation plan for the national carrier.
Jentayu claimed it had the financial backing from local and foreign financial institutions to undertake its plan, and had lined up international lessors to partner it to operate an international aircraft leasing company which would rename PMB to JD Leasing.
“A substantial number of the 6,000 jobs slated for removal by Khazanah will be absorbed by Fly JD and JD Leasing,’’ Jentayu managing director Feriz Omar told a press conference here yesterday.
Jentayu was set up less than six months ago and is led by former MAS managing director Tan Sri Abdul Aziz Abdul Rahman and a group of bumiputras who claim to have a lot of experience and expertise in the aviation industry. Apart from Feriz and Aziz, the other directors of Jentayu are Shukor Yusof (formerly from Standard’s & Poor), Datuk Seri Zakaria Bahari (group chief executive of Radimax Group Sdn Bhd, formerly known as Realmild (M) Sdn Bhd), Datuk Abdul Rahim Mohd Zin (former director of Senai Airport Terminal Services Sdn Bhd) and Daruis Zainuddin (director of AIA and American Insurance Group and Sure Reach Sdn Bhd).
They first came up with a proposal to buy over some of MAS assets, namely Firefly, MAS engineering, repair and overhaul (MRO), and the aircraft leasing business held by PMB. These proposals were also presented to the Prime Minster and Khazanah.
Feriz said Jentayu has since met Khazanah twice, including a meeting with Khazanah managing director Tan Sri Azman Mokhtar.
Hence, the new plan is to be presented to Khazanah.
Whether Khazanah will agree to its plan remains to be seen, but Jentayu directors told reporters that their plan should be seriously considered as it complemented Khazanah’s move to revive MAS and gave Malaysia a chance to get into the aircraft leasing business on a global scale.
“It is totally dependent on Khazanah, (but we feel) it is a proposal that cannot be refused by Khazanah or any other agency.... all this is about salvaging jobs at MAS,’’ Feriz said.He said Khazanah would also be offered strategic shares in JD Leasing at no cost.
The final price, he added, would be dependent on the number of aircraft it took, the valuations and leasing rates, and that the funding would be in the form of equity and debt instruments.
Under the new proposal, it plans to pay up to RM5.25bil to buy over MAS aircraft via a sale and leaseback arrangement and also undertake to refinance the RM3.5bil bond issue by PMB which is due in 2016.
PMB was set up as part of the widespread asset unbundling exercise in 2002, a year after the Government bought back the airline from tycoon Tan Sri Tajuddin Ramli. But PMB transferred all its MAS shares to Khazanah before the share swap with AirAsia Bhd two years ago. MAS had been in the red for some years now and suffered two unprecedented air disasters this year.
In August, Khazanah announced a 12-point plan to revive the airline, which include removing 6,000 jobs and injection of RM6bil cash and Khazanah has move ahead to win shareholder’s approval to delist MAS, appointed a new CEO in Christoph Mueller to manage the new MAS which will take over the airline from July 1, 2015.
According to Shukor, the market for aircraft leasing is booming as 35% of aircraft flying are on lease and that it will rise to 50% in a decade. The business also offers a return on investments of between 12% and 15% per annum and it can go up to 18%.
“MAS spent RM1.3bil to lease 26 aircraft and RM26mil more in finance charges last year, we think we can offer a significant reduction for leasing of the aircraft (if we are given a chance),’’ Shukor said, adding that if the deal went through, MAS would be asset light and need not worry about aircraft purchases in the future.
He was also of the view that MAS should not be shrunk but be allowed to grow in view of the Asean Open Skies policy, and the expected growth in air travel in the region over the decade.
“Instead of shedding jobs, they should be reinstating jobs. We have talent and geographical advantage and the workers should not be blamed for the problems faced by MAS,’’ he added.
In its quest to get PMB and help the 6,000 workers that will be axed, Jentayu has also managed to win support from MAS biggest union, Maseu, and yesterday Nufam (National Union of Flight Attendants Malaysia) president Ismail Nasaruddin was also present at the press conference to lend support to Jentayu’s plan.
“We will support them for the sake of the staff and their jobs, we can’t allow skilled people to lose jobs,’’ Ismail said.
