The government should explain the RM6.1 billion debt relief package given to national carrier Malaysia Airlines System last week, said Parti Sosialis Malaysia (PSM) today.

Pro-tem party's central committee member Dr Jeyakumar Devaraj said that the sum made available to the special purpose vehicle set up by the Finance Ministry to relief MAS of its outstanding debts are tantamount to a second bailout for the ailing airline company.

"Why the government has decided to commit such a huge amount of money for this bailout while at the same time refusing to set up funds that will help the common people?" Jeyakumar said in a statement today.

While the government has no hesitation in allocating large sums to assist MAS, it had refused the Malaysian Trade Union Congress' proposal to set up a retrenchment fund to provide cover for workers laid off by companies that are claiming bankruptcy, said Jeyakumar.

He added that the retrenchment fund would cost less than RM50 million compared to MAS' RM6.1 billion package.

In order to remedy future misuse of public funds, the socialist party also called upon the government to set up an independent commission to investigate if the huge losses and debts accumulated by MAS were due to over-rated contracts awarded to companies linked to politicians or to the extravagance of top-level management.

"We have to look at the whole privatisation exercise again and see how much it has cost the rakyat (citizens) on the whole," said Jeyakumar.

"While privatisation is supposed to increase efficiency of companies, in this case, as in many others, there appears to be only a transfer of money from the people to the privileged few," he added, citing the Light Rail Transit project as another example.

Outstanding debts

The opposition party's comments came in view of the announcement last Tuesday of MAS' asset sale exercise to enable it to pay off some of its outstanding debts and to provide working capital to fast track its recovery back to profitability.

From the RM6.1 billion to be raised, RM2.4 billion would be used to take delivery of five new aircrafts, RM1.58 billion to repay MAS' yen bonds due this year, RM1.3 billion to repay short-term borrowing, and RM820 million to be used as working capital.

As part of the deal, three existing Boeing 747-400 aircrafts and several properties belonging to the company would be sold to Finance Ministry's special purpose vehicle — Aircraft Business Malaysia Bhd — and leased back to MAS.

While no jobs will be lost as a result of the refinancing of the company, the 21,000-strong MAS may slash its workforce by 2,500 workers should the takeover of MAS Catering by a consortium led by LSG SkyChefs, a unit of Deutsche Lufthansa AG, materialises.

The assistance extended to MAS came several months after the re-nationalisation of MAS when the Finance Ministry paid RM1.8 billion, or RM8 per share, to buy the 29.09 percent stake of MAS from Tajudin Ramli's Naluri Bhd.

Tajudin, who purchased the shares at RM8.70 in 1995, was largely regarded as having benefitted from the re-nationalisation process, as the price paid was more than double MAS' market price and net tangible assets per share.