The Sarawak government has denied reports it has signed a memorandum of understanding (MOU) with Malaysia Aviation Group (MAG) concerning Sarawak's proposed takeover of MASwings (MY, Kota Kinabalu). The denial runs counter to widespread reporting in local media.

According to the media reports, Transport Minister Lee Kim Shin met with MAG on July 8, and both parties signed the document, saying that the MoU aims to smooth out the potential takeover process, including setting timelines and establishing ground rules.

But Sarawak Ministry of Transport spokesman Jong Yang told ch-aviation that the reports were incorrect. "The take-over of MASwings by the Sarawak government is still in the preliminary planning stage," he said via email. "Therefore, no MOU has yet been signed with Malaysian Aviation Group."

The Malaysian state on the island of Borneo has mounted a concerted campaign over the need for it to have its own passenger airline, citing a lack of connectivity to international destinations and high fares on existing routes. Until recently, the proposal was to establish a new airline from the ground up, leaning heavily on local charter operator Hornbill Skyways (Kuching) for operational support. In June, the Malaysian government, which offered in-principle support to Sarawak's bid, suggested the state government acquire MASwings, a proposal Sarawak initially cautiously welcomed but now appears to be warming up to.

"The Sarawak government has decided to establish its own airline through the acquisition of MASWings," said Lee last week. However, the state government has also added the conditions that any acquisition should not result in a significant debt burden, would be subject to due diligence, and in addition, any permit must come with permission to fly to neighbouring countries, not just within Malaysia.

MASwings' sister carrier is Malaysia Airlines (MH, Kuala Lumpur International), a part of MAG, which the Malaysian government owns through its Khazanah Nasional Bhd sovereign wealth fund. Sarawak has also been campaigning for the same sovereign wealth fund to finance the costs of starting up or acquiring any airline. Local media reports also say the Transport Minister met with Khazanah officials on the same day as the purported MAG meeting. However, Khazanah is yet to make any public funding or financing commitments.

MASwings, which flies a fleet of 16 turboprops, including ten ATR72-500s and six DHC-6-400s, presently has bases in Kota Kinabalu, Miri, and Kuching, the latter two airports being located in Sarawak. The carrier was originally set up to act as a regional community airline for both Sarawak and Sabah and continues to fly to major centres in both states.