KUALA LUMPUR, Jan 20 — Low-cost carrier AirAsia Group Berhad (AAGB) and Japan Airlines Co Ltd (JAL) appear to be the frontrunners for the future plans for ailing airline Malaysia Airlines Berhad (MAB), a report said today.

Citing an official document it sighted, business publication FocusM said the document contains details on proposals involving four different shortlisted entities, namely AAGB, JAL, Air France-KLM SA and Malindo Airways Sdn Bhd.

FocusM reported that Khazanah Nasional Bhd had gone through four proposals to identify a partner for MAB’s parent company Malaysia Aviation Group Bhd (MAGB).

According to the FocusM report, Khazanah Nasional Bhd’s management "has been pushing” for a merger involving MAB, AAGB and the latter’s long-haul carrier unit AirAsia X (AAX) to steer MAB towards financial sustainability.

According to Focus M, the merger proposal to turn the three companies into a listed entity would see Khazanah Nasional turning into a minority shareholder, with Khazanah believing this could result in an Asean champion.

While the merger proposal was seen as an opportunity to resolve overcapacity issues in the market and to get economies of scale, Khazanah Nasional admitted that this idea appeared "commercially viable” but had the "highest execution risk”.

FocusM said AAGB had under this proposal asked for Khazanah Nasional to give up its golden share if AAGB and AAX buy over MAB.

The JAL proposal involves the pumping in of RM1.12 billion in exchange for a 25 per cent stake and KLIA as a proposed hub for JAL, with Khazanah Nasional to remain the major shareholder and the government to retain its golden share, the report said.

FocusM said that Khazanah Nasional is expected to make a decision on a strategic investor by this April, and with definitive agreements expected to be executed by this June.

Earlier today, Prime Minister Tun Dr Mahathir Mohamad was reported saying that about five proposals had been received for Malaysia Airlines, but said some of these proposals were not feasible.