Kuala Lumpur, Jan 2: Shares in Malaysian Airline System fell eight per cent on Wednesday, despite reports that 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-per cent 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-per cent stake.

MAS shares were down 8.6 per cent or 30 cents to 3.20 ringgit. MAS officials declined to comment immediately on Wednesday’s report in the Asian Wall Street Journal that economic adviser to the government Nor Mohamed Yakcop 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 the respected chairman of the Corporate Debt Restructuring Committee Azman Yahya was made a director. MAS shares have gained about two thirds since early December after news of Mr 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 lease-back 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 research head at TA Securities CK Ngu.

— Reuters