Wednesday 23 May 2012

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.

Saturday 19 May 2012

BERNAMA OR STAR SPIN?






Among other things, Tan Sri Abdul Aziz, the former MAS Managing Director, wrote on  5 April
2012
Currently the staff morale is very low and action should be taken to improve the situation quickly.  The membership of the Board and the senior management must be examined and reconstituted.  People with high integrity, the right knowledge, experience and with the national interest at heart, should provide the leadership of the organization as soon as possible.

but Bernama or Star wrote         
Abdul Aziz said it was more appropriate for employees to give full support to the management for any plans to change its business model as such plans were necessary to keep MAS in business.

Tan Sri wrote
It should be noted that the current management is now actively engaged in negotiating the sale of assets in engineering, training etc.  It is important that the activities be suspended immediately otherwise it will be too late to take remedial measures.  The proposed formation of joint-venture companies relating to engineering, training etc. should also be suspended before it is too late.

But they wrote
Former MAS chairman Tan Sri Abdul Aziz Abdul Rahman has appealed to the airline's workers' unions not to make rash decisions over business plans by its management to turn around the ailing national carrier.


Thursday May 17, 2012

Former MAS chairman asks unions not to make rash decisions


KUALA LUMPUR: Former MAS chairman Tan Sri Abdul Aziz Abdul Rahman has appealed to
the airline's workers' unions not to make rash decisions over business plans by its management
to turn around the ailing national carrier.

At the same time, he said it was also imperative that cooperation and support from the airline's
20,000 employees be sought and obtained otherwise such plans would fail.

"But I would urge all MAS employees to be more patient and not to take hasty actions that are
not within the law," he said in an interview with Bernama.

MAS' share swap agreement with budget airline AirAsia had to be unwound two weeks ago
following strong resistance from MAS employees' unions.

Abdul Aziz said it was more appropriate for employees to give full support to the
management for any plans to change its business model as such plans were necessary
to keep MAS in business.

"MAS needs a new business model and any new business model certainly requires other
changes to take place in the process," he said.

Abdul Aziz, who helmed MAS for over 20 years from the mid-1970's, said the employees must
also brace themselves for the Asean Open Skies Policy in 2015 under which all existing
restrictions for airlines in the region flying into each other's territory would be dismantled.

He said despite the scrapping of the share swap, collaboration between MAS and AirAsia in
other areas would result in a win-win situation for both if it was carried out in a rational manner.

"When such collaboration runs smoothly, I am confident MAS will once again rise to become a
competitive and profitable airline," he said.

On the larger picture, Abdul Aziz said MAS was set up as a premier full-service airline right from
the start.

"Suddenly 10 years, another airline emerged to compete with MAS by offering low fares," he
said referring to AirAsia.

"This itself created a competition. Basically the market in our region is a low-fare market.

"So I think, MAS has no choice but to compete. This means MAS can do both premier service
and budget airline service and it could succeed in the competition.

"We can learn from AirAsia as well as learning from other budget airlines. MAS has to compete
otherwise it will continue to plunge," he said. - Bernama

Friday 11 May 2012

2001/2003 MAS FLIGHT PLAN THAT NEVER TOOK OFF


2001/2003 MAS FLIGHT PLAN
SHARE SWAP BETWEEN MAS AND AIR-ASIA AND ITS IMPLICATIONS
By former MAS Managing Director
5 April 2012



Recently MAS and Air-Asia entered into an arrangement to swap shares.  In consequence Air-Asia has two representatives on the Board of MAS.  Many quarters questioned the move to swap shares in view of the fact that the arrangement would cause adverse implications to MAS.  


Some of the implications are as follows:-
(i)         The most critical problem facing MAS is the shortage of funds to finance the purchase of Airbus 380 and B737-800 aircraft.  It is alleged that the total amount required is RM12 billions.
The Government as the major shareholder has to play a leading role in the process of fund raising.  The current management is proposing to raise funds through the sales of movable assets in engineering, cargo, training and ground handling.  These departments will be under separate joint-venture companies and MAS will not be in complete control of those companies.  It means that MAS will have to outsource those services.  The quality of the total MAS services will be adversely affected.  Employees’ reactions to the move will affect the operations adversely and it will take a long time to come back to normal.  The image of the airline, will also be adversely affected in the process.
(ii)        MAS has over the years developed its Engineering capabilities to a very high level.  The facilities and equipment are comparable to any of the best outfits in the world.  The expertise is also comparable to any other similar organization in the world.
The current management’s move to sell some of the engineering assets and to change the management structure is a negative step and should not be proceeded with.  MAS should be allowed to continue with its objective of making its engineering capabilities to be of world class and recognized by the aviation industry world-wide and in the process engineering will become a major income earner from third party customers contributing to the profitability of the airline.
(iii)       The share swap between AirAsia and MAS does not give any advantage to MAS.  The modes of operations of both airlines are different as they are on different business models.  In fact the arrangement is suicidal to MAS as it has to compete against Air-Asia on the same routes with a disadvantaged business model.  Under the arrangement, AirAsia operates low fare while MAS operates premier services.  This arrangement is suicidal for MAS in view of the fact that the markets they are competing in, are low fare price sensitive markets.
The solution is for MAS to provide both premier and low fare services.  This can be done so that MAS can compete against AirAsia fairly.  It is a matter of making some adjustments to the terms and conditions of carriage and making some changes to the operating procedure.  MAS should be able to prevail in the competition.
iv)   The share swap between Air-Asia and MAS resulting in the appointments of representatives of Air-Asia on the Board of MAS was a serious mistake and should be revoked.  Air-Asia and MAS are still in competition on almost all  the MAS routes and it is highly irregular to have the airline’s opponents making strategic decisions for the company’s own operations.  Air-Asia has under the arrangement agreed to maintain their aircraft at MAS facilities in consequence of the share swap.  This arrangement is in fact for mutual benefit as Air-Asia is given favourable rates.  Even if there was no share swap, it would be in the interest of Air-Asia to maintain their aircraft with MAS as otherwise AirAsia will have to maintain their aircraft with SIA whose rates are no better than MAS.  Without the share swap the two airlines can still cooperate for mutual benefit.
(v)        The current management has taken steps to move staff from Area A at Subang Airport to KLIA.  The staff concerned (a fairly large number) are very unhappy as it means that they have to overhaul everything, moving house to Sepang and this will cause severe hardship to them.
It is proposed that such a move should be stopped.  Instead since the land in Area A is to be used for some purposes, the staff there should instead be moved to Area B and not to KLIA.

CONCLUSION:
1.         In consequence of the move to swap shares between MAS and Air-Asia, the airlines have to face changes which are affecting MAS adversely in many aspects.  It is recommended that the arrangement be revoked.
2.     Currently the staff morale is very low and action should be taken to improve the situation quickly.  The membership of the Board and the senior management must be examined and reconstituted.  People with high integrity, the right knowledge, experience and with the national interest at heart, should provide the leadership of the organization as soon as possible.
3.         There are many critical issues that need to be solved on an urgent basis.  The most pressing issue is the financial aspect.  The Chairman of the company said that the company was very sick and needed urgent treatment, while the Managing Director also said that unless the financial situation was fixed fast, the company would be bankrupt soon.  It is therefore a serious situation and the government must now be involved in resolving the problem.
4.       The traffic rights available to the national carrier should be examined.  It appears that some carriers especially those from the Middle East are enjoying traffic rights at our expense.  They are practising the illegal carriage of 6th Freedom traffic at our expense.  This is a very serious intrusion into the company’s business opportunity.  This issue should be examined fast with the assistance of the government. In the context of the current competitive environment, action must be taken fast to conclude effective strategic alliances with other carriers where relevant.
5.       It should be noted that the current management is now actively engaged in negotiating the sale of assets in engineering, training etc.  It is important that the activities be suspended immediately otherwise it will be too late to take remedial measures.  The proposed formation of joint-venture companies relating to engineering, training etc. should also be suspended before it is too late.
END.

Tuesday 8 May 2012

Malaysia Airlines 2011 Awards


Best Service Brand (MAS China Region)
Top Travel Award Ceremony
Best Airline Station (Hong Kong Station)
Board of Sabah Tourism
Best Cover in Special Interest / Niche - English Category (Going Places August 2011 Cover - Gold)
MPA (Magazine Publishers Association) Awards 2011
Best Cover in Special Interest / Niche - English Category (Going Places March 2011 Cover - Bronze)
MPA (Magazine Publishers Association) Awards 2011
IT Innovation of The Year 2011 (Joint winners with SITA)
The CAPA - Aviation Awards for Excellence 2011
Asia's Leading Airline
World Travel Awards (Asia & Australasia) 2011
Asia's Leading Airline Lounge
World Travel Awards (Asia & Australasia) 2011
Global Leadership Awards 2011 (Firefly)
Aviation Week's Overhaul & Maintenance Magazine
Asia's Best Employer Brand Award 2011
Employer Branding Institute, World HRD Congress & Stars of the Industry Group
Top Airline Affiliated Maintenance and Repair Organisation (MRO) in the World (MAE)
Aviation Week's Overhaul & Maintenance Magazine
Award of Excellence (Going Places - Magazine Category)
KL Mayor Tourism Awards 2011
Top 10 Airframe MRO in the World (MAE - 3rd Position)
Aviation Week's Overhaul & Maintenance Magazine
Malaysian Institute of Directors (MID)
Innovative Leadership in Globalisation
Advertising & Marketing Magazine
Regional Travel Magazine of the Year (Going Places)

Malaysia Airlines 2012 Award


Wednesday 2 May 2012

SAY WHAT?


Well done, YAB PM, YB Wee, YB Puad Zarkashi, Bloggers, Unionist and 1Malaysia people.
We may have won the battle but the war is not over yet as elaborated here http://syedsoutsidethebox.blogspot.com/2012/05/robbery-at-mas.html
Mr. Chair Man even had the audacity to ask Union for proposal within 2 days to turnaround the Company while they had 9 months of GAJI BUTA. 
They should resign and save themselves from further humiliation and save MAS from further degradation.
Be extra careful, the previous Managements were no archangels either because they too had successfully turned around and around the Company as written in the STAR on 2 May 2012 below,
MAS, which is undergoing its fourth turnaround attempt since the wide asset unbundling brokered by Bina Fikir Sdn Bhd in 2002, posted a record RM2.52bil net loss in its financial year 2011, weighed down by an uptick in fuel prices as well as non-cash provisions and impairments.
The latest turnaround plan, which was unveiled in December, outlined an aggressive 12% capacity cut - the largest in its history - and targets to achieve some RM1.18bil to RM1.51bil in cost savings and additional income to make the airline profitable by 2013.”
Further expounded in details here
MORE TO COME!