FOOLS NEVER LEARN Part 2

MAS stock falls 16%, analysts doubt financing capabilities

Presenna Nambiar 

sunbiz@thesundaily.com

PETALING JAYA (Nov 29, 2012): 

"We were taken by surprise on the rights issue proposal. It indicates that MAS may have issues securing financing to meet the group's huge near-term capital requirement amounting to RM9 billion," Alliance Research Sdn Bhd said in a report yesterday.

"We believe investors will be jittery of such a large cash call amid continued operating losses.

"While the cash call will help to address the short-term funding requirement and liquidity needs, it does little to address the losses at the operating level."

Malaysia Airlines' (MAS) stock fell more than 16% on news that it is yet again seeking capital injection from major shareholder, Khazanah Nasional Bhd and cancelling 90 sen of its par value.

The national airline, which was the most actively traded counter yesterday, saw more than RM560 million of its market capitalisation wiped out at the end of trading activities.

The stock closed 17 sen down at 84 sen, with some 77.2 million shares done.

MAS had on Tuesday announced plans to have a rights issue to raise up to RM3.1 billion for working capital (RM1.3 billion), capital expenditure (RM987 million) and repay borrowings (RM777 million).

It also plans to shave off its share premium account in a bid to cut its accumulated losses, buy back 10 Boeing 737-400s originally on lease for RM64 million to meet network requirements prior to the delivery of its new 737-800 fleet and to save on high maintenance costs it would need to incur to deliver the planes back to its lessor in mint condition.

Analysts are still cautious on the MAS turnaround story, despite it beating the consensus target on core losses, overshadowed by another rights issue and a reduction in par value of its shares from RM1 per share to 10 sen a share.

The airline registered a small operating profit of RM3.9 million on revenue of RM3.3 billion for the third quarter ended Sept 30 2012 due to lower jet fuel prices and fuel consumption as a result of a 7% year-on-year reduction in capacity available-seat-kilometre (ASK) and better utilisation of newer and more fuel-efficient aircraft.

"We were taken by surprise on the rights issue proposal. It indicates that MAS may have issues securing financing to meet the group's huge near-term capital requirement amounting to RM9 billion," Alliance Research Sdn Bhd said in a report yesterday.

"We believe investors will be jittery of such a large cash call amid continued operating losses.

"While the cash call will help to address the short-term funding requirement and liquidity needs, it does little to address the losses at the operating level."

Alliance opined that based on the indicative issue price of 60 sen as disclosed in the company's announcement, the proposed rights issue will be at a steep discount to current price, while the dilution is enormous given its expectation of a 3-for-2 rights issue in order to raise RM3.1 billion.

The cash call is the third by MAS since 2007.

MAS raised RM1.55 billion and RM2.67 billion from its rights issue in 2007 and 2009 respectively, to finance new aircraft and pare down debts.

HwangDBS Vickers Research Sdn Bhd said there is execution risk in MAS trying to turn around its business, and the aviation landscape in Malaysia will become more competitive with the emergence of Malindo Airways next year.

The research firm has trimmed its FY12 core net loss forecast to RM567 million from RM961 million previously, after raising MAS' passenger load factor from 70% to 75%.

HwangDBS is expecting MAS to register stronger performance in the fourth quarter of 2012 due to the year-end holidays.

Kenanga Research said with the new fleet in operation, MAS will be able to make a meaningful turnaround.

The airline is to receive 12 new 737-800s and three new A330-300s in 2013. It has already added 14 737-800s, eight A330-300s and four A380s to its fleet since 2010.

Kenanga is raising its FY12 estimate higher by 30% from a RM764 million net loss and RM1.2 billion revenue previously, with a new RM482 million core net profit target for FY13 estimate, as it expects MAS to be able to recover its yield and get a higher load via the new fleet.

"In the near term, any positive share price movement is likely to be muted due to the negative sentiment on its proposed capital reduction and rights issue announcement," it added.

Related article:

http://mastroubleshooters.blogspot.com/2012/05/mas-turning-around-or-spinning.html

BINGO, BUNG!

Bung Mokhtar hits out at Syed Mokhtar, Zeti

G Vinod

 | October 23, 2012

The Kinabatangan MP urges the government to stop Syed Mokhtar from monopolising business in the country and get someone to replace Bank Negara governor Zeti Akhtar Aziz.

KUALA LUMPUR: Kinabatangan MP Bung Mokhtar Radin launched a broadside against business tycoon Syed Mokhtar Al-Bukhary and Bank Negara governor Zeti Akhtar Aziz at the Parliament today.

In his criticism against Syed Mokhtar, Bung Mokhtar questioned the Finance Ministry’s rationale in allowing the billionaire to control mega businesses in the country at the expense of other businessmen.

“He wants Keretapi Tanah Melayu, he wants Mass Rapid Transit. He wants everything on land, sea and air. Given a chance, he will even do business in the graveyard,” said the outspoken MP.

He also said that it was not fair for other businessmen and pointed out that there were other capable bumiputeras out there who could work on projects as effectively.

“Even open tenders for small businesses, Syed Mokhtar will be there. Don’t let one man control everything,” said Bung Mokhtar.

He also said that the government should be mindful as the people were watching and urged the relevent authorities to come up with a mechanism to keep tabs on monopolistic system.

“This thing keeps happening. Last time we had Tajuddin Ramli controlling MAS but what happened? At the end, government had to take responsibility for its losses.

“That’s why I object to monopoly. Don’t depend on one person to control our economy,” said Bung Mokhtar.

Sack the governor

On Zeti, Bung Mokhtar urged the Finance Ministry to probe the Bank Negara governor for allegedly being negligent in monitoring the rising numbers of gold trading companies in Malaysia.

He was referring to the recent raid by Bank Negara on four gold trading companies for allegedly being involved in various malpractises.

The companies raided were Genneva Malaysia Sdn Bhd, Pageantry Gold Bhd, Caesar Gold Sdn Bhd and Worldwide Far East Bhd.

“There were complaints made against some of the companies in the past five years but no action was taken. Why did Bank Negara raid and freeze their assets only after they have grown big?

“Looks like governor was sleeping on the job. If that’s the case, it’s time for the government to find someone who can really monitor our financial system better,” said Bung Mokhtar.

The Sabah MP also urged Bank Negara not to penalise the investors for the wrongdoings of the companies. His statement received the support of Sri Gading MP Mohamad Aziz.

He added that it was only fair for the central bank to return money to investors first before freezing the companies assets.

“People are worried whether they will get their money back or not. Next time, return their money first before taking action against errant companies,” he said.

MAS SPINNING PLAN

MAS’ BONDS ARE NOT DEEMED AS BORROWINGS : LEAVING THE PENSION FUNDS SEEMINGLY CONNED?

August 17, 2012, 9:13 am

Source: http://scwatch.wordpress.com/2012/08/17/mas-bonds-are-not-deemed-as-borrowings-leaving-the-pension-funds-seemingly-conned/

"The government is using the retirement savings of the people to keep afloat a company that is struggling to compete with its foreign competitors (note: the local market has been lost to Air Asia)."

It was not really surprising when MAS announced its second quarter results with another loss in the region of RM350m.

It’s still bleeding and there is no sign of it stopping in the foreseeable future.

One of the main reason is the fixed overheads including maintaining over 20,000 employees without corresponding returns in terms of revenue generated or value add provided to the organisation.

It therefore begs the question as to what kind of returns MAS’ management expects in the following year or so……with the RM2.5 billion worth of ‘perpetual bonds’ it has issued or plans to issue.

To date RM1.0 billion has been issued based on its second quarter results.

The worry (I’ll tell you later why  we should worry) is that the monies raised from the bonds will only be used to keep the company afloat i.e. without investing it to generate profits for MAS.

Hey, don’t try to kid us with the A380 super jumbo jets which MAS had taken delivery of……as the saviour for MAS!

They were ordered years ago premised on projections based on a wish and a hope…..and may find utilisation of these planes scarce compared to its more efficient competitors!

Which brings me back to the point of the bonds – if the proceeds are just to pay for its abnormally high overheads (in order to evade the political repercussions of not paying!), it may explain why the bonds have features that do not oblige MAS to pay interest on the bonds NOR to repay the principal!!

What kind of bond is this, you may ask?

Well, as long MAS gets the money, who cares?

The one who cares will be the one coming out with the money!

And who are they?

The country’ pension funds!

The bonds’ special features of not being obliged to pay interests or principal may also explain why the bonds are NOT deemed borrowings in MAS’ books.

It may also ‘justify’ the bonds not requiring any rating!

They are effectively deemed to be share capital in  nature.

Why the obsession not to have the bond classified as borrowings?

Well, there is this indicator used by financial analysts the world over called “Gearing Ratio” which effectively measures the level of borrowings compared to your shareholders funds.

The higher the ratio, the higher the risk to the company.

Therefore, what is supposed to be part of the numerator (read: borrowings) now becomes part of the denominator (read: share capital)!

That way, the gearing ratio of MAS looks better than it really is…….through this window dressing exercise vide the use of fancy words in the Terms of Reference when issuing this bond.

Which comes to why we should worry about this whole exercise.

Granted, this kind of bond has been issued in other countries…….but the companies that issue them are financially strong and investors queue up to invest in their shares and financial instruments.

This is inspite of the remote risk of these ‘blue chips’ not paying interest or repaying principal … the investors are prepared to take that risk to enable these companies to add a few more brownie points to their existing AAA status!

Not so for MAS, our dear old Malaysian Airlines!

Many have claimed that MAS is technically insolvent……and it’s financials seem to support such an assertion.

So the question is why would anyone want to invest in the kind of bonds that a struggling company like MAS has issued……knowing full well that MAS is not obliged to pay interests nor are they obliged to repay the principal?

That’s because the common factor here is the government which effectively controls MAS and also the pension funds!

The government is using the retirement savings of the people to keep afloat a company that is struggling to compete with its foreign competitors (note: the local market has been lost to Air Asia).

And the decision to do so appear purely political……i.e. to enhance standing of UMNO…..the costs of which are borne by the people’s savings in the pension funds!

Is this acceptable?

Shouldn’t the bonds issued by MAS be subscribed by Tajuddin Ramli and his cohorts?

Press Statement

Press Statement By Tan Sri Abdul Aziz Bin Abdul Rahman,

Former Managing Director of Malaysia Airline System

23 July 2012

"In the interest of the good name of our National Carrier and also the Nation, I suggest that colours of the Logo and livery on the A380 aircraft be reverted to the airline’s original colours as soon as possible, before it is too late."

The colours of the Logo and the Livery of the MAS A380 aircraft are outrageously wrong. They are wrong for at least two main reasons.

Firstly, the new colours have deviated from the original tradition and objective of the official colours of the national carrier. The colour of the logo has ignored the original tradition and history of the creation of the logo.

The original colour of the logo was red depicting one of the prominent colours of our Flag – the Jalur Gemilang as MAS is the country’s Flag Carrier. Later, dark blue colour was added as one of the main colours of our flag. All these were chosen and approved by the government and in particular YAB Tun Abdul Razak. The airline operated throughout the periods of all the Prime Ministers in those colours.

The latest Prime Minister that approved the logo was Tun Mahathir Mohamad. I remember going to see him with the designer Encik Johan to get his blessing. He was the one who suggested that the Logo on the tail of the aircraft be tilted slightly to give the aerodynamic look.

Secondly, the new different colour of the Logo is in conflict with the basic principle of branding in business. It portrays the image of confusion among the consumers and reflects badly on the management. No business organization would do such a thing.

Furthermore, in this case the A380 aircraft will be flying all over the world. It will create a bad image for our National Carrier.

In the interest of the good name of our National Carrier and also the Nation, I suggest that colours of the Logo and livery on the A380 aircraft be reverted to the airline’s original colours as soon as possible, before it is too late.

In this regard, I think the government should investigate to find out as to who had decided on the new colours without sound reasoning and direct the management accordingly.

Signed,

Tan Sri Abdul Aziz Bin Abdul Rahman

CAN WE HEAL THESE?

Salam Ramadhan al-Mubarak!

AIDA – Awareness > Interest > Desire > ACTION!

On July 21, 2012 at 5:22 pm, GE Man wrote at  http://weechookeong.wordpress.com/2012/07/18/conspiracy-or-sabotage/                                                                                        

"With 18 on the list above , My dear PM and BOD of MAS and Tan Sri chairman, YB YB , you must not stand still while MAS being screwed to death. MAS is BLEEDING ok!"

xxxxxxxxxxx The finale on conspiracy and sabotages in MAS xxxxxxx

The share suap is a very well planned conspiracy and sabotage mission’s to destroy MAS slowly if not immediately to kill off AA only competitors in Malaysia.

The Pariah parachuted his armies (A.., Danny Rashy, Azhari, Rozman, Amin, Zakiah, Shane Nolan etc etc ) on search and destroy missions, forcing MAS to swallow poison’s pill after a poison’s pill so that MAS is so sick that MAS won’t be competitive to operate for at least the next 10-20 years.

The list of conspiracy and sabotages that bleed’s MAS to death:

1) Killing off Fire Fly B737-400/800 Jet Services since it is directly  competing with AA as a low cost community carrier and taking over some of its routes.

2) Cut/Stop MAS profitable routes ( Bandung , Surabaya , Sydney etc etc ) so AA can take over the routes and mount additional flight.The rakyat had no choice but to pay what ever price AA put since they are monopolizing this routes.

3) Re schedule / re timed MAS flight to odd hours ( Hong Kong ,  Beijing etc etc ) so that AA take the prime slot. MAS seat’s load factors dived.

4) Signed the so called an AAX’s 35,000 passengers re-accommodation at  a very low fare. MAS loosing money at least MYR 1000 per AAX’s passengers carried and lost of sale able seats to would be full paying MAS passengers.

5) Logo and re-branding, con-sultan fee’s paid , re-painting of more then 115 aircraft which will cost at least MYR 900,000.00 per aircraft that requires down time of at least 10 days.

It will cost a whooping MYR 100 millions. Lost of aircraft utilization will cost money too to MAS. Luckily the change of logo and re-branding were restricted to A380. Even that will cost money for the respraying of the 6 A380!

6) QPR sponsor worth MYR 10 million when AJ is crying MAS is bleeding.

7) A380 seat re-configuration at the wimp and fancy of the Pariah which cost MAS at least MYR 4 million per ship set . With 6 unit A380 ordered , this will add an additional cost of MYR 24 million to MAS and the “old seats” to be scrap.

8) The A380 ferry (joy rides) flight from Toulouse to Kuala Lumpur with some joy riders on board who are not related at all to the ferry flight formalities, incurring additional cost of sending them to Toulouse , hotels , daily allowances and lost of sale-able commercial seats, Kuala Lumpur – London and Kuala Lumpur – Paris .

9) Lost of UN UNIFIL Lebanon lucrative charter flight to AAX. Giving an excuse of MAS don’t have any aircraft available to do it where’s else many aircraft laying idle due to routes cut and excess cabin crews had to be deployed to Golden Lounge to work.

10) Lost of Fire Fly ATR 75-200 maintenance contract to SAE.

11) Lost of Batavia Air and Lion Air B737-300/400 maintenance contract to AIROD.

12) The would be B777 seat and IFE retrofit worth at least MYR 150 million for all 15 unit MAS B777. This B777 will be phased out in 3 years time yet a retrofit is initiated and as it is the seat and IFE served its purpose well.

13) B737-800 steel brakes changes to carbon brakes which cost millions. AJ had issued a direct LOI/LA to one of carbon brakes manufacturer without going thru’ a normal company procurement procedure and WITHOUT Board approvals !!

Using a carbon brakes is only economical if you use it since day one you buy the aircraft. Now MAS got to buy the new carbon brakes and discard/throw away/scrap the steel brakes inventory worth millions and MAS got to change tyre type from radial to bias tyre !!

14) Two weeks ago in London Farnborough airshow,  AJ signed a MYR 5 billion contract for A380 Trent 900 Engine Total Care Maintenance Program with RR for as long as MAS is flying this A380 aircraft . No engineering and financial evaluation was carried out and NO BOARD approval sought. All decide by the TRIO , AJ , Azhari and Amin.

15) Approximately 3 years ago MAS/PMB had sold 17 unit of their B737-400 classic aircraft to AAR and MAS leased it back (Sale and Leased Back ) from AAR until such time that all MAS new B737-800NG is delivered as replacement.

Two weeks ago , during Farnborough Air show in London too, MAS Airlines Engineering Group (AEG) and someone had signed an agreement with AAR to purchase back 6 unit of this B737-400 classics.

The surprising deal is that the purchase price per aircraft is MYR 19.8 million (USD 6.4 mil). The market price is only USD 2.5 million (MYR 7.75 mill) each . (Pls refer www.speednews.com for aircraft prices)

MAS is paying 2.5 times more then the market price !!!

AND what is the logical explanation buying back this junk ??

MAS will be milked by a whooping MYR 118.8 millions for this deal.

As usual no engineering and financial evaluation was carried out and NO BOARD approval sought. All decide only by two persons and one of whom is an ex GE Man.

16) Early this month (July), against all MAS procurement procedure and the first one in MAS history, Azhari had issued an LOI (Letter Of Intent) to LHT a contract worth MYR 500 million for the A330 Aircraft Component Support PBTH (Power By The Hour) , knowing that there is other bidders who had offered a lower price then LHT .

Azhari is the first CEO of MAE (MAS Aerospace Engineering) history who issue LOI without Board Approval.

He doesn’t have such authority, only tender department who can issue LOI/LA after BOD had approved it.

A wrong procurement procedure, Azhari will bull doze this A330 LHT contract during this coming BTC (Board Tender Meeting) on Wednesday / 25 July 2012. He will try to shove it to the BOD throat.

17) In the making, Azhari and Amin is now trying to do something about the B737-400 engine CFM56-7 PBTH (Power By The Hour) contract worth at least MYR 1.5 billion (minimum 10 years contract)( more then 200 engines) and source said it may be a direct nego again. One can expect where it will go. Just think who is maker!

18) In the making think,Azhari and Amin is trying to figure out who will get the B737-800 / B777 / A380 / B747-400 APU maintenance contract worth more then a 1 billion ringgit . A total of more then 150 units of APU (Auxillary Power Unit) is to be contract out for maintenance soon.

With 18 on the list above , My dear PM and BOD of MAS and Tan Sri chairman, YB YB , you must not stand still while MAS being screwed to death. MAS is BLEEDING ok!

This will be the way to kill MAS as MAS be will be liable and inherit a long term high engineering operating cost, too high to sustain the business for at least the next 10-20 next years from now , how MAS will survive like this ?

A procurement manual is there to be followed so the tender and bidding is carried out in a transparent manner,how come one person or a TRIO are allowed to decide on this multi billion ringgit contract.

At least least 3 bidders must participate to make the bidding process to be an advantage to MAS bottom line. Direct nego is a suicide !!

The remaining parachuted fellows are the share suap parasites and should leave MAS, so much damaged done in the last 11 months..

A FINAL WAKE UP CALL

A FINAL WAKE UP CALL FOR MAS MANAGEMENT, UNIONS AND STAFF

In continuation of our earlier post below, 

http://mastroubleshooters.blogspot.com/2011/12/organisational-diagnosis-another.html

we have reproduced some serious and valid comments from

http://weechookeong.wordpress.com/2012/06/13/finally-rashdan-is-out-what-about-rozman-omar-and-azhari-dahlan/

CONCERNED on June 13, 2012 at 9:09 am 

For MAS to turnaround and succeed, the departure of Rashdan should not be overly celebrated. Instead , Mas staff should take a good long look at themselves and the Company and ask pertinent questions about how and why the Share Swap and Collaboration could have happened in the first place. Because the TRUTH is, Mas has been a lame duck organisation for many years, subsequent top managements have come and gone with their quick fixes, but the problems that lead to Mas’s consistently dismal performance remain. It is convenient to vent anger, frustration and even hatred at the “newcomers” because it is comforting to be able to deny the fact that the rot has set in a long time ago, there are deep rooted legacy problems, the organisation is structurally not even organised to conduct the business it is supposed to do, successfully. Khazanah saw this,and perhaps in their haste, ill-placed intentions and not to forget the presence of some personal agendas on the part of our competitors and political masters, the Share swap and CCF was crafted. Think for a moment, would anyone even consider such a deal for successful airlines like SQ? No way. So, even with Rashda’s departure, is Mas magically going to turnaround and recover? No way.
So now, what next? Whilst the focus should remain on getting the revenue in,the Board should seriously addreess the structural issues starting with the people. Clean up HC first, the rot began there decades ago.

WE ARE WATCHING on June 13, 2012 at 8:01 pm

Good question. Should be answered by the custodian of all things people related, ie HC, and the Human Potential Development Department which has “Talent Management” under it. But, wait a minute, these HC people have been around for ages including the Head of HPD, and MAS has difficulty in locating or identifying qualified people within its 20,000 workforce? Back to Concerned’s posting, the rot is right there in HC. And guess what? MAS offers the Voluntary Leave Programme and does not extend VPs and up if they reach retirement age. Good ideas to trim staff costs and allow natural attrition to help reduce the numbers. BUT, in spite of Policy, HC just EXTENDED the services of the VP, Human Potential Development for another year at a salary exceeding RM20k! Talk about double standards. What is the justification for this when it is universally known how incompetent these people are? If one wants to debate the point, then answer this basic question – who among the 20,000 staff has been identified, groomed and is ready to assume the CEO’s position? The silence speaks volumes for the total lack of proper people management in the Company. So, what does HC do? Extend the services of the incompetent. What a joke.

Anonymous on June 13, 2012 at 9:18 pm

The most sensible and honest observation on MAS. The staff are in denial mode and it is always better to blame others than ourselves. The rot is too deep everywhere.

Hmm on June 13, 2012 at 11:58 am

Mas is doomed BECAUSE the employees whether management wiil never
change. Majority of the staff understand its not about merit or efficiency. From
the beginning those who want to go up must SUCK UP AND VERY HARD
indeed and majority are selfish in their career. Just look at the union with their
greedy leaders. Who made them .Even without Tony or Danny , MAS without
spoon feeding as from day one its a goner. Dont get upset by this remarks.
Take a look yourself in the mirror before blaming others why you and your
airline is nothing to be proud of.
Take note of Concerned. He has a point to ponder.

Fathi Ridzuan on June 14, 2012 at 12:40 pm

Totally agree. It is easier to blame others than yourselves. The fact is for all to see. The airline is bloated with staff, a majority of which are not really interested in helping the airline raise its profitability. The union behaves like a mafia. I am not a fan of Danny and he simply does not have the leadership skill or absolutely zero people skill. I have worked with him, and he is the worse the CEO I have ever worked with in my 23 year corporate life. But the airlines problems go way beyond Danny. And no one has the balls the make the drastic change required, especially when any CEO appointed will have to deal with the mafia union!

Note:
MAS TROUBLESHOOTERS advice to future Management;
For solutions, the decision makers and current management (excluding A.J.) need to analyse all the comments posted here;

http://www.rockybru.com.my/2010/08/why-sia-is-worth-s187-b-and-mas-is.html

LEADERS SOLVE PROBLEM OTHERS FEAR

MAS ship is sinking very fast. We need to revitalise MAS into becoming a GOLDEN airline in the world again. The following plan of action is required:

STAGE 1

1. IDENTIFY, EVALUATE AND PUT THE RIGHT TEAM OF BOARD OF DIRECTORS AND TOP MANAGEMENT 
2. TRIPLE PRONGED MANAGEMENT APPROACH ON GOOD LEADERSHIP, PEOPLE AND COST MANAGEMENT
3. DIAGNOSE THE HEALTH OF THE ORGANISATION ON 13 CRUCIAL DIMENSIONS
4. ALIGN PEOPLE STRATEGIES OF A COMPANY WITH BUSINESS RESULTS 

STAGE 2 – THE SEVEN STIMULUS DRIVE

1. TOTAL ENGAGEMENT OF STAFF AT ALL LEVELS
2. SEEK AND REWARD STAFF CONTRIBUTION SCHEME
3. STOP THE BLEEDING
4. ERADICATE LEAKAGES AND WASTAGES
5. RETAIN BRANDING AND LIVERY
6. REVIEW AND STRENGHTEN FINANCIAL STRATEGY
7. FAIR COLLABORATION AND COOPERATION WITH LOCAL PLAYERS

SEVEN VITAL STIMULUS DRIVE

MAS: TURNING AROUND OR SPINNING?

On Wednesday May 23, 2012, the STAR wrote:

RM9bil fund raising to enable MAS to continue uninterrupted

PETALING JAYA: Malaysia Airlines (MAS) yesterday surprised the market place with a massive RM9bil fund raising proposal that involves the issuance of bonds and taking a loan.

This is the fifth consecutive quarter of loss for the airline and though the amount has narrowed compared to the previous corresponding quarter in 2011 where it reported RM242mil net loss, but when stripped of the non-cash items, the net loss for the first quarter in 2012 was RM347mil.

It is essentially the RM199mil forex gain that narrowed the losses for the first quarter.”

On the contrary, we have gathered that:

MALAYSIA Airlines (MAS) is perhaps the only Malaysian company that has undertaken the most number of restructuring exercises over the past decade to try to get back on its feet. A decade ago its books were severely tainted with red ink and had to be cleaned up via the Widespread Asset Unbundling (WAU) exercise where it became an asset light airline. But 10 years later it is still in dire straits and appears not too far from where it was a decade ago.

The state-owned airline has already had two rights issues since Idris Jala took over, raking in RM1.6 billion in 2007 and RM2.67 billion in 2010 to fund its operations and fleet purchases.

Industry experts said that a further injection of cash will not save MAS as “operational fixes” are required. Most of the past solutions for MAS, either the WAU or Idris Jala’s business transformation plan, were financial in nature to keep the airline in the black. But what is needed are operational fixes.

Its cash and cash equivalent have depleted to RM968.5mil as at Dec 2011 compared with RM5.2bil in Dec 2007, a rapid rate of cash depletion of almost RM4.3bil in four years.

THE 2001 and 2003 ORGANISATIONAL DIAGNOSIS

Since 2001, the WAU Team has not been able to fix "operational issues" in MAS as highlighted by the late Tan Sri Azizan in the Berita MAS dated September 2001 and September 2003 and summarised below:

SEPT 2001

1.         TO RE ENGINEER THIS ENDANGERED COMPANY.

2.         THE ORGANISATION STRUCTURE OF THE COMPANY IS FOUND TO BE NOT

            CONDUCIVE TO AN INTEGRATED APPROACH.

3.        REVIEWING AND IMPROVING THE PROCESSES AND PROCEDURES TO PLUG THE RAMPANT LEAKAGES AND STOP THE HAEMORRHAGE.

4.         BEHOLDEN ON US TO PROTECT IT FROM PREDATORS.

5.         PRESENT FRAGMENTED MAS IS NOT IN THE RIGHT STATE.

6.   MAS CULTURE IS DOMINATED BY A “SILO MENTALITY” RESULTING IN UNINTEGRATED AND UNCOORDINATED ACTIVITIES.

7.         FOSTERED ABUSE, PLUNDER OF THE COMPANY FOR PERSONAL GAINS, HIGH

COST, INEFFICIENCY AND HAS DRIVEN THE COMPANY TO NEAR BANKCRUPTCY.

8.    DEDICATE OURSELVES TO CREATING A NEW CULTURE GROUNDED IN A FEELING OF COMMON RESPONSIBILITY, BASED ON ACCOUNTABILITY.

SEPT 2003

1.         TO ENSURE THAT FACTIONALISM FOSTERED BY THE CLAN CULTURE WOULD NOT BE AN OBSTACLE.

2.         ALWAYS STRIVE TO SUPPRESS ANY TENDENCY TOWARDS FACTIONALISM.

3.         THIS REQUIRES A CHANGE IN MINDSET AND A NEW CULTURE.

4.         WE HAVE TO PREVENT LEAKAGES AND WASTAGES.

5.         GOOD FINANCIAL MANAGEMENT IS ESSENTIAL FOR OUR SURVIVAL.

THE SHORT TERM GAIN, LONG TERM PAIN

This is the fourth in a decade after WAU, Business Turnaround 1 and Business Transformation 2. The same people who crafted WAU are back hammering out a share swap without proper due diligence and based merely on “judgment call” instead.

Had they put in place a long-term plan then, would MAS be in this state?  The new team “has taken a short-term view of MAS when they should have engaged with the experts from within to get to the root of the problem as the 2012 Business Plan does not address that.

MAS' poor showing can be attributed to three factors; lack of good leadership management, people management and cost management in the last 15 years.

An example of poor leadership can be demonstrated in the email below:

Received from EN.XXX 87772344                      06-12-05 13.01

   -> IDRIS.JALA                MD, IDRIS JALA                    MD/OFF

   -> MAS.$$MESA            MAS EXEC STAFF ASSOCIATION

   -> MAS.CHAIRMAN        DATO' DR MOHAMED MUNIR            CHAIRMAN

W'SALAM,

Puan XXX/Bro XXX cpy Saudara Idris/Chairman/$$MESA,

BERANI KERANA BENAR, TAKUT KERANA BERSALAH.

InsyaAllah, together we can help our new MD to turn around this ailing and beloved airline even better than before. We have the ingredients, I can sense the honesty, sincerity and determination in our new MD.

First hurdle is to raise staff morale, another word we need morale booster.

Second hurdle is to remove CANCEROUS ELEMENT. We can't afford to have enemy

within. We have enough enemy outside.

If we can go past these two hurdles, the turnaround will be very smooth.

We have done it before; there is no reason why we cannot do it again and even better.

The "Flying Buffet" if it is true, hopefully not, already created a lot of damage to staff morale. Leadership by example and accountability is very important in our organisation which fly national pride.

Together we can do it.

Rgds/XXXX.

MESA President.