http://sg.biz.yahoo.com/reuters/nklr199268.html

Wednesday January 2, 5:22 PM

UPDATE 1-Malaysian Airline dips despite revamp talk

(Adds details, analyst comments in paragraph 13 onwards)

By Wong Choon Mei

KUALA LUMPUR, Jan 2 (Reuters) - Shares in Malaysian Airline System fell eight percent on Wednesday, despite reports the state's economic adviser had been appointed to its board to speed up an eight billion ringgit ($2.1 billion) debt restructuring plan.

Analysts said investors, eyeing the stock's 66-percent gain over the past month, might prefer to cash out until more concrete restructuring details emerged from the government, its main shareholder with a 49-percent stake.

MAS shares were down 8.6 percent or 30 cents to 3.20 ringgit by 0857 GMT.

MAS officials declined to comment immediately on Wednesday's report in the Asian Wall Street Journal that Nor Mohamed Yakcop, economic adviser to the government, had been appointed to the board of the ailing carrier.

"We have to check. If true, an announcement will be made in the afternoon," a company official said.

The reported appointment comes barely a month after Azman Yahya, the respected chairman of the Corporate Debt Restructuring Committee, was made a director.

MAS shares have gained about two thirds since early December after news of Azman's appointment broke, on hopes by investors that it would lead to quicker resolution of MAS's financial problems.

Analysts expect the government to announce soon a plan to recapitalise MAS which might include a bond issue to refinance its loans, divestment of non-core businesses and an aircraft sale and leaseback scheme to a state agency to lighten the company's debt-servicing burden.

The airline's plan to get back into the black by 2004, after four straight years of losses, has been set back by the slump in global travel volumes following the September 11 attacks on the United States.

"Any appointment that can add weight to MAS finding its way out of its huge losses is market positive but investors may want more details to hang onto their shares," said C.K. Ngu, research head at TA Securities.

Ngu said a correction to the stock price was likely to be brief, as investors anticipated the government's next move to resolve the carrier's problems.

NO FOREIGN SALE SOON

Tuesday's comments made by Prime Minister Mahathir Mohamad that the government would consider foreign partners for MAS were seen as confidence-boosting for both the stock and the market, though analysts ruled out any quick sale.

They said the airline would need to complete its restructuring, which could take years, before it could attract any foreign buyer.

Malaysia, criticised by investors in the past for being over-protective of strategic corporate assets, is seen becoming more receptive to foreign buyers as it tries to revitalise its debt-heavy firms.

"It is positive but don't read too much into it," said Noor Azwa of KAF Research. "Getting foreign buyers at a time when the industry is in crisis won't be easy. MAS needs to put its house in order before anyone would want it."

Airlines that have shown interest in buying a slice of MAS include KLM Royal Dutch Airlines NV , with whom the Malaysian carrier has codeshare arrangements and a joint marketing, sales and distribution deal.

Elsewhere in the sector, the Malaysian government agreed last Monday to extend until the end of March a memorandum of understanding to sell 30 percent of Malaysia Airport Holdings, the manager of its ultra-modern Kuala Lumpur International Airport, to Dutch airport operator Schiphol.

http://about.reuters.com/dynamic/countrypages/ malaysia/1009890258nKLR201746.ASP

UPDATE 1-Malaysia PM sees better growth, may stay on longer

01 Jan 2002 13:04

KUALA LUMPUR, Jan 1 (Reuters) - Malaysia's Prime Minister on Tuesday forecast a return to more robust growth in 2002, and said he might defer a planned retirement at the next election.

In an interview with Malaysia's official Bernama news agency, Asia's longest-serving leader said he may contest the election, due by the end of 2004, "in certain situations and if required" to ensure the success of his Barisan Nasional coalition.

"I am 76. The desire to ensure Barisan Nasional's success is there, but Barisan Nasional can achieve success even if I do not contest or am no longer the leader," said Mahathir.

"This is a possibility but in certain situations if I am required to contest, I will contest," he said without elaborating.

GROWTH SEEN RECOVERING IN 2002

Malaysian economic growth slumped in 2001, with Mahathir tipping official numbers to emerge broadly in line with market expectations.

The Prime Minister said the economy was expected to grow less than one percent in just-completed 2001, rising to around three percent in 2002.

"We believe that for 2001 we may achieve growth of only between 0.5 percent and one percent, and in 2002 maybe about three percent," he said.

A Reuters survey of 10 forecast houses in December showed an average forecast of 0.43 percent growth in 2001, rising to 3.49 percent in 2002. In 2000 Malaysian GDP grew 8.5 percent.

Malaysia has cut its official GDP growth forecast for 2001 to 1.0-2.0 percent from 5.0-6.0 percent.

Mahathir, who has ruled multi-racial Malaysia for two decades and who has stifled all past potential successors, said in 2000 he would wind down and leave more work for his deputy Abdullah Badawi.

But Mahathir has shown little of sign of letting go and in June last year, he appointed himself acting finance minister after the resignation of Daim Zainuddin.

Mahathir told Bernama he still needs a finance minister or at least a second finance minister.

U.S. TIES IMPROVED

On ties with Washington, Mahathir said relations between the two countries have improved since President George W. Bush's administration began almost a year ago.

"It's better now than before," he said.

Relations turned sour after former U.S. President Bill Clinton's government condemned Malaysia for the sacking of Mahathir's former deputy Anwar Ibrahim in 1998.

Once a prime-minister-in-waiting, Anwar is serving 15 years in jail after being convicted on sex and corruption charges that he says were trumped up after he became a threat to Mahathir.

Former Vice President Al Gore embarrassed Mahathir in 1998 by walking out of him at a dinner in Kuala Lumpur after endorsing Anwar's reform movement at the function.

Mahathir said a few foreign airlines, including some from Europe, have shown some interest in acquiring a stake in loss-making national carrier Malaysian Airlines System (MAS), but the government had not made any decision.

Buried under eight billion ringgit ($2.0 billion) of debt, the airline was dealt a blow by the global slump in air travel after the September 11 air attacks on the United States.