Malaysia Airlines regional jets at Kuala Lumpur International: Wiki Commons

The word ‘privatised’ is misleading in relation to Malaysia Airlines after today’s announcement that it will be turned into a 100 percent government owned carrier at least in the short term.

The investment arm of the State of Malaysia, the Khazanah Nasional, which owns 70 percent of the carrier, said it would purchase all minority shares in the flag carrier and finalise a restructuring plan by the end of the month.

This means it is a privatisation which is reverse of the privatisation of British Airways or Qantas, where government owned carriers were sold into private hands, or ‘privatised’, and listed on stock exchanges. The minority private share holders in Malaysia Airlines are being bought out by the goverment owned investment fund, and the stock is being delisted as it passes once more into total sovereign ownership prior to a restructuring.

During this period, assuming as most analysts have, that the sovereign owned carrier is then returned to private hands through an offer of publicly traded shares, then it will become a privately owned publicly traded enterprise.

In the market parlance of the US and Australia, a public company is taken private when one or more shareholders decided to buy out everyone else, something that might have happened at various stages to Virgin Australia, and who knows, might yet happen.

However, in the case of the Malaysia Airlines privatisation, that buyer is a sovereign fund, which effectively means the Malaysia flag carrier which has been tipped to be rebranded Air Malaysia, has been nationalised.  Or will be. For the time being.

The official announcement can be read here.

Malaysia Airlines was in dire financial straits before the disasters that overtook flight MH370 on 8 March with the loss of 239 lives, and MH17 on 17 July with the loss of 298 lives.  It has been estimated as losing as much as $US 2 million per day.

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