Trading of Malaysian Airlines (MAS) stock was suspended on Friday after its largest shareholder, Khazanah Nasional announced plans to restructure the ailing airline.
Khazanah, which owns 69 percent, said the state takeover will represent the first stage of a "complete overhaul", and that detailed plans will be announced by the end of this month.
The takeover will cost 1.38 billion ringgit (429 million US dollars).
Malaysia Airlines has been hit by two major disasters this year, which added to its longstanding financial woes.
In March, Flight 370 from Kuala Lumpur to Beijing disappeared with 239 people on board after flying far off course.
The plane has still not been found, with a search in the southern Indian Ocean underway.
In July, 298 people were killed when Flight 17 was shot down over Ukraine.
It was heading to Kuala Lumpur from Amsterdam and was shot out of the sky over an area of eastern Ukraine controlled by pro-Russian separatists.
Before the disasters, the carrier's financial performance was among the worst in the industry, putting a question mark over its future even before its brand was tied to two almost unfathomable tragedies.