Wednesday, 3 September 2014
Former Head of MAS Engineering speaks.
RETRENCHMENT OF 6000 MAS STAFF
It is really heart-breaking that 6000 staff member will have to go under the Khazanah restructuring plan. All in all, about 20,000 or more people, including family members and dependents, will be affected by this move.
The Khazanah announcement with regard to the downsizing of the new MAS workforce to 14,000 lacks substance to enable meaningful comments to be made. In my view if the workforce is reduced to such numbers with the current company structure intact, then new MAS, scope of business will have to be shrunk to what it was in the 1980s. It appears that Khazanah is going for a quick fix. According to some analysts new MAS will save RM715 million by axing 6000 people for the work force.
However, MAS will have to cancel/defer deliveries of new aircraft thereby incurring additional cost in terms of penalty payments to the aircraft manufacturers.
The suggestion to restructure the current MAS by spinning-off Engineering, Airport Operations and MasKargo into 100% subsidiaries will achieve the objective of reducing the workforce of new MAS to 14,000 people or less, at the same time will avoid retrenching 6000 people and creating new businesses which could contribute to new MAS' income.
The transfer of the domestic operations and secondary regional points to FireFly will further reduce new MAS' cost. In addition to the reduction in technical and cabin crew which will be transferred to FireFly, substantial saving would be in the reduction of lease rental for the B737-800 and the maintenance cost of those aircraft that are transferred to Firefly.
Assume the following:
- 25 B737- 800 aircraft has to be transferred to FireFly
- Monthly utilization of 300 Flight hours.
- Lease rental of USD300, 000 per month
- Direct maintenance cost of USD700 per flight hours
Lease Rental for 25 aircraft = USD(300,000 x 12 x 25) = USD90,000,000
Maintenance cost = USD(700 x 300 x 12 x 25) = USD63,000,000
Total savings to new MAS USD153 million or about RM459 million per year.
If we add the cost of the 6000 people, the cost reduction to new MAS is more than RM1billion per year.
The money that Khazanah proposed to compensate the retrenched staff could be gainfully used to set up the new subsidiaries.
Any rebuttals are most welcome. Silence is no longer an option.