Malaysia Airlines says eyeing mergers as fuel soars
KUALA LUMPUR (Reuters) - Flag carrier Malaysian Airline System (MASM.KL) is considering possible mergers, as the industry struggles to cope with soaring fuel prices and softer demand, Chief Executive Idris Jala said on Thursday.
The company would look at possible partners world-wide but Idris stressed he was only looking at opportunities and was not in any talks.
"It's very, very early days. We are just only looking at the landscape. We haven't identified (anyone). We have looked at all those airlines that we're working with today. They're probably looking at us too."
Crude oil CLc1 is trading at record highs near $120 a barrel, hitting airlines and prompting mergers, including the planned union of Delta Air Lines (DAL.N) and Northwest Airlines NWA.N and the search for a partner for troubled Alitalia AZPIa.MI.
The International Air Transport Association, in downgrading its 2008 industry profit forecast recently for a second time in four months, called for more mergers saying the sector was overcrowded.
Idris said the industry in Asia would be plagued by overcapacity in five years' time and that state-controlled Malaysia Airlines would prefer a partner that helped raise revenues rather than just lowering costs.
"If you take a look at the orders of aircraft today -- the orders of aircraft against demand -- it will show in the next five years, there will be a period of overcapacity," he told reporters.
He ruled out any interest in codeshare partner Alitalia but said he planned to continue the codeshare arrangement.
"I prefer to look for someone that is not like us," he told an airline conference.
Mergers between airlines are traditionally difficult because many are controlled by governments who wish to keep them as national carriers.
Malaysian state funds control a combined 90.4 percent in the airline.
Malaysia Airlines had hedged about 43 percent of its fuel needs at around $89 a barrel and was reviewing its current level of fuel surcharge, Idris said.
(Reporting by Liau Y-Sing, writing by Mark Bendeich; Editing By Ovais Subhani and Lincoln Feast)
