Malaysia Airlines withdraws lawsuit following out-of-court settlement

Malaysia Airlines has withdrawn a long-running US$35.5 million lawsuit against Air Maldives in the Malaysian High Court, after the Maldivian government withdrew a US$90 million counter-claim in the Singapore International Arbitration Centre.

Malaysia’s national news agency Bernama reported that an out-of-court settlement had been reached between the two parties after discussions on 14 February. The Maldivian cabinet held a meeting to discuss such a settlement in late December.

According to Bernama, the agreement was reached after “intense negotiations” between Malaysian Airline Systems (MAS) executives Dr Mohd Amin Khan (General Manager of Network and Revenue) and Dr Wafi Nazrin Abdul Hamid (General Manager of Corporate and Legal Services), and State Finance Minister Ahmed Assad and Attorney General Husnu Suood representing the Maldives.

Last week Suood told parliament that the Air Maldives case presented “legal challenges” and there was little documentation in favour of Air Maldives.

Neither Assad nor Suood were responding to enquiries at time of press.

Failed airline

Air Maldives went international in 1994 in a joint venture between Maldivian government and Naluri (then Malaysian Helicopter Services Berhad), a holding company owned by the chairman of Malaysia Airlines, Tan Sri Tajudin Ramli.

Naluri paid $8 million for a 49 per cent stake in the national carrier, according to a report by Alkman Granitsas in the Far Eastern Economic Review. The plan was to run short-haul flights connecting the Maldives to major regional hubs, including Colombo, Trivandrum and Kuala Lumpur.

But despite a burgeoning tourism industry the airline met an inglorious fate in 2000, spiralling into bankruptcy amid ambitious expansion into long-haul routes and allegations of mismanagement under the directorship of Anbaree Abdul Satter, also the controversial head of the National Security Service (NSS).

Initally a short-haul carrier, the airline leased three aircraft and started running long-haul routes, including Gatwick, and quickly found itself facing losses somewhere between US$50 to US$70 million. Granitsas noted at the time that the airline’s collapse in April 2000 met with little comment from the Maldives government or media, and suggested that the resultant plunge in business confidence led to a run on the rufiyaa and a dollar shortage that crippled the economy.

He quoted Husnu Suood, then a lawyer representing Airbus, as saying “the current economic crisis can be party attributed to the collapse of Air Maldives.”

A former member of the Air Maldives cabin crew told Minivan News that news of the company’s collapse was dropped “very suddenly”.

“I was on board the last flight between Male’ and Dubai when we were told,” she said. “We landed in Dubai at 8:30pm carrying a load of Hajj pilgrims from Colombo, and somebody came on board to tell us to stop any flights.  We were flown back [to Male’] and two sets of crew in Dubai were recalled.”

She added that while there had been rumours that the company was facing financial difficulty, “we’d started picking up really full flights to London Gatwick and were already planning the roster for Charles de Gaulle in Paris and Johannesburg South Africa.”


One thought on “Malaysia Airlines withdraws lawsuit following out-of-court settlement”

  1. Mismanagement is not merely allegations. It's cold hard fact. The nation's reputation has been ruined on the world stage as a result of Air Maldives' incompetence and the incompetence of those leading the Airline.

    Those who were in management positions need to be brought to account. The people who were responsible should be identified and justice should be sought for one of the biggest political and business blunders in our history.

    If it wasn't for ambition run a mock, coupled with gross incompetence, none of this would have happened.


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