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CCTV Script 28/08/14

— This is the script of CNBC's news report for China's CCTV on August 28, Thursday.

Welcome to the CNBC Business Daily, I'm Qian Chen.

Malaysia Airlines has announced plans to cut jobs and drop some of its routes as part of its restructuring plans.

The company also saying that it is set to share costs with Australia for the latest phase in the search for missing Malaysia Airlines Flight MH370.

But the carrier's recent dramatic tragedies were not the only misstep that's been denting the carrier.

Adam Bakhtiar takes a look at the national carrier's chequered history.

The recent dramatic tragedies of the mysterious disappearance of flight MH370 & MH17's deliberate shoot down over Ukraine so close in succession, have ruptured a big financial hole in the carrier that now requires urgent surgical attention involving once again another government led rescue plan.

But the plight of Malaysia's flagship carrier cannot alone be blamed on the recent disasters.

This chart behind me basically speaks for itself, illustrating that Malaysia Airlines history has been rather turbulent, since it's listing on the stock market back in 1985. But the years of mismanagement have taken a huge financial toll and now it's shares are worth a fraction of what they used to be.

Retracing these missteps takes us all the way back to the 1994 when the Malaysian Government thought it would be a good idea to bring in a strategic private investor by the name of Tajudin Ramli, who bought a 32% stake at Rm 8.00 per share, a significant premium to the spot market price of Rm4.00 at the time, and he took on a lot of debt to do the deal.

After years of mismanagement during Tajudin's term as the head of the carrier, and the crippling Asian Financial Crisis in 1997/98, the Malaysian government engineered a rescue plan in late 2,000, buying back Tajudin's stake at the exact same price, despite the shares trading significantly lower in the market at Rm3.68

Since then MAS has gone through three major business turnaround programmes estimated to cost some $6.3 billion injected via government-backed bonds and cash calls.

And even after transferring the entire fleet of aircraft assets and related liabilities from it's balance sheet in 2002, plus the loss making domestic business into a Special Purpose Vehicle controlled by the Ministry of Finance, the carrier has been racking up losses. This is how much it's lost over the course of the last few years. And of course, the recent twin disasters has just amplified its financial difficulties. That have made matters a whole lot worse, with it's brand damage taking a further toll on it's most recent numbers.

I'm Qian Chen, reporting from CNBC's Asian headquarters.


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