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

http://thestar.com.my/news/story.asp?file=/2012/5/17/nation/20120517173601&sec=nation

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

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.

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

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

http://mastroubleshooters.blogspot.com/2011/11/6-major-things-that-mas-should-have.html

MORE TO COME!

SOLUTIONS FOR A BETTER MAS

As the sentiment for the share swap and the CCF is negative, no amount of plans and implementation rolled out from Management from this point onwards will bring positive results as the productivity and loyalty to the programme is already flawed and damaged.

Therefore, the membership of the Board and the senior management must be examined and reconstituted with a view to rally the entire organization to common objectives for the good of MAS.  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.

(More details here http://mastroubleshooters.blogspot.com/2012/03/open-letter-to-mas-chair-man.html)

Friday April 27, 2012

Is the AirAsia-MAS share swap off?

Friday Reflections - By B.K. Sidhu

THE rumour mill is certainly on an overdrive mode.

Rumours are swirling around that the AirAsia-Malaysia Airlines (MAS) share swap and even the collaboration is off.

Early this week, a news report from Singapore said that threats by the national carrier's 20,000 employees had pushed Putrajaya to unravel the tie-up between AirAsia and MAS.

A day later, a local report said the share swap would be an item on the agenda at Sunday's Umno supreme council meeting.

Yesterday, the opposition said the Government should admit that the MAS-AirAsia share swap was a mistake.

Some blogs have gone to the extent of explaining in great detail why the share swap should not have occurred in the first place.

(Click below for more details)

http://mastroubleshooters.blogspot.com/2011/11/7-reasons-why-khazanah-should- not. html http://mastroubleshooters.blogspot.com/2011/11/7-reasons-why-khazanah-must-not.html   http://mastroubleshooters.blogspot.com/2012/02/mr-pm-can-we-please-stop-this-nonsense.html

Some say the announcement will be made by the powers that be to scrap the share swap mid next week while others say it will be within the next one to two weeks.

MAS has eight unions and associations and they have come together to form a group to oppose the share swap. The group is against the share swap, not so much the collaboration, and it claims that it represents most of the 20,000 MAS employees.

The group issued a memorandum to the Prime Minister and gave reasons why the deal should be called off in February. Last month, the memo was circulated to several MPs.

This topic has been discussed by many quarters, including the powers that be, and even the views of former MAS managing director Tan Sri Abdul Aziz Abdul Rahman were sought.

The question that remains unanswered is whether the share swap has really been called off, or it is still intact, amid all the objections.

For that, we have to wait, but if you ask AirAsia supremo Tan Sri Tony Fernandes, he was reported to have said that “media report saying the Government has decided to unwind the deal is not true.''

Even Abdul Aziz also believes that the deal is still intact.

MAS Employees Union (Maseu) president Alias Aziz said the union “will continue with its fight for the share swap to be dismantled because it favours AirAsia.''

But this has been refuted by Deputy Finance Minister Datuk Dr Awang Adek who felt it was not one sided.

So long as there is no share swap, both airlines can cooperate and Alias says MAS works with many other airlines including Qantas, Singapore Airlines and even Cathay Pacific.

“The share swap must be cancelled. There is conflict of interest,'' Alias said yesterday.

The share swap and collaboration was forged between the two airlines August last year and as a result of that, Fernandes and his partner Kamarudin Meranun sit on the board of MAS by virtue of their 20% stake in MAS.

Intact or not, the entire share swap and collaboration has come under the spotlight since it was inked and the changes made do not favour the staff. Some have said there is erosion in value and decline in staff morale.

But despite turbulent times, the staff have done what is expected of them and the on-time performance has averaged 92% the past four months.

For an airline to take off, there are 60 different activities that need to be done and everything has to be done in sync so that the take-off is on time.

These includes the technical checks, booking and sales of tickets, fuelling, getting the food prepared and despatched onboard, all the safety aspects, pilots and crew arriving on time and passengers taking their seats before the take-off.

There are about 100 take-offs in a day and imagine the work involved in putting a flight in the air without the support of the staff, this would have been a very difficult task.

Whether it is for the better or worse for the share swap to be scrapped, the thing that needs fixing fairly quickly is the element of trust and confidence. There is distrust and disengagement. And that is a huge challenge in itself.

WE ARE GETTING WARMER

Unions convinced Putrajaya to rethink MAS-AirAsia deal, Singapore BT reports

Sources also told The Malaysian Insider last month that Putrajaya was having a relook at the share swap and was considering a special entity to take MAS off the hands of its main shareholders, Khazanah Nasional Berhad and Tune Air.

By Clara Chooi

April 25, 2012

KUALA LUMPUR, April 25 — It was the powerful MAS unions and their political threats that had moved Putrajaya to unravel the MAS-Air Asia share swap deal, Singapore’s Business Times reported today, citing executives familiar with the decision.

The financial daily pointed out that union leaders had recently dangled their votes openly before the government by saying their over 20,000 members would back the opposition if the proposed tie-up materialised.

“Indeed, union leaders met with opposition leader (Datuk Seri) Anwar Ibrahim recently. Only later did they meet up with Mr Najib (Prime Minister Datuk Seri Najib Razak),” the daily reported in an article today.

The newspaper noted that the controversial share swap deal has drawn heavy criticism since it was announced last August, including some from the “right-wing elements” in Umno but largely from the ailing carrier’s unions.

Among others, AirAsia chief Tan Sri Tony Fernandes was accused of taking advantage of the loss-making national airline for his personal ambitions, the daily said.

“Since the deal was announced, for example, AirAsia has won approval from the government to fly two routes it has long coveted: to Seoul and Sydney,” it reported.

According to the business daily, Fernandes was also criticised when MAS suddenly agreed to part-sponsor Queens Park Rangers, the English Premier League (EPL) club that he had bought. AirAsia had previously agreed to sponsor the club.

But despite this, executives familiar with the government’s decision to unravel the airlines’ tie-up told the Singapore BT that it was the unions that finally made up Putrajaya’s mind.

This, the daily wrote, is a clear reflection of the political dimensions of the national airline.

Along with the controversies surrounding Lynas Corporation’s rare earth plant in Kuantan and the National Feedlot Corporation’s (NFCorp) alleged mishandling of the country’s national cattle farming scheme, said Singapore BT, the MAS-AirAsia share swap deal has been identified as one of three key issues that Najib must resolve before the 13th general election.

MAS has had a turbulent past decade after the government bought back the airline from former corporate high-flyer Tan Sri Tajudin Ramli at RM8 per share or about double the market price at the time.

It then had its books cleaned up in 2002 under the wide asset unbundling (WAU) exercise that was engineered by the BinaFikir consultancy, then led by current Khazanah managing director Tan Sri Azman Mokhtar.

The state-owned airline had two rights issues since the WAU, raking in RM1.6 billion in 2007 and RM2.67 billion in 2010 to fund its operations and fleet purchases.

It was also lacklustre financially, shocking the market with massive losses last year even as rivals such as Singapore Airlines reported profits, albeit reduced.

The national carrier also suffered the indignity of having its market capitalisation surpassed by younger upstart AirAsia, after its share price fell to record lows.

A share swap and accompanying collaboration framework with AirAsia unveiled last August was supposed to help put MAS, which posted its biggest ever annual loss in February, back on firmer footing amidst an increasingly challenging aviation environment.

Under the share swap, AirAsia’s main shareholder, Tune Air Sdn Bhd, exchanged a 10 per cent stake in the budget carrier for a 20.5 per cent share of MAS from Khazanah.

The idea was to have some of the business acumen that took AirAsia from a two-plane outfit to Asia’s largest budget airline in just 10 years, rub off on the national carrier.

Following the share swap, the management team led by new managing director Ahmad Jauhari Yahya put together a business turnaround plan last December to help propel MAS back to profitability.

The new management’s efforts to restructure the airline and put it in a more competitive position, however, caused friction with the unions and employee associations.

Sources also told The Malaysian Insider last month that Putrajaya was having a relook at the share swap and was considering a special entity to take MAS off the hands of its main shareholders, Khazanah Nasional Berhad and Tune Air.

According to Singapore BT, no details of how the deal would be unravelled have yet surfaced, not even from Fernandes.

“No one has talked to me yet,” he was quoted as telling Singapore BT in a text message. “There are lots of rumours. I am still doing my best.”

WE ARE GETTING WARM

Cooperation to face regional competition

"Cooperation between the two companies will certainly give more edge to them but they cannot interfere in the respective entity."

By AZMAN ANUAR
rencana@utusan.com.my

23/04/2012

Since MAS and AirAsia signed the transfer of shares agreement, there are many criticism been made that some of the beneficial aspects of the agreement have been overlooked. This is common when partition voices are able to overwhelm the good points in the agreement.

In August 2011, the biggest shareholder of MAS, Khazanah Nasional Bhd. agreed to swap its share with Tune Air Sdn. Bhd., the biggest shareholders of AirAsia. This saw Khazanah Nasional obtain 10 percent of interest in AirAsia while Tune Air get 20.5 percent interest in MAS.

Khazanah also agreed to take 10 percent interest in AirAsia X, a subsidiary of AirAsia, which managed the long haul flight of the budget airlines.

A comprehensive cooperation framework (CCF) was also signed for the realization of cost efficiency and enhanced revenue in the purchase of aircrafts, engineering, support service, cargo services, catering and training among the three airlines.

CCF which was concurrently signed by MAS, AirAsia and AirAsia X, should see MAS focusing on being the main airlines that provides comprehensive service, AirAsia as regional budget service airlines while AirAsia X in low-cost airline that provides long haul flight services.

The share swap which is incorporated in the CCF received negative response from the various sectors including the MAS staff union.

Focus is on many trivial issues to the point that they overlook a more crucial matter such as beneficial cooperation.

Reciprocal cooperation for mutual benefit is normal and it can be done in any business organization either via the share swaps of two or more companies.

Cooperation between the two companies will certainly give more edge to them but they cannot interfere in the respective entity.

What is happening now is that both entities are facing healthy competition and ensure that they are on the right flight path in maintaining their status as relevant flight entities.

Former MAS pilot, Capt. Zakaria Salleh is of the view that if the staff of MAS and AirAsia are competing against each other, they should now cooperate closely to continue improve their respective service.

He said, the MAS cabin crew which amass many international award surely be able to share their skill with their new colleagues while AirAsia staff can share their knowledge on cost saving.

“The engineering staff of MAS which obtain excellent aircraft servicing record can also benefit AirAsia. They must move as a team and no longer as competitor, in order to enable MAS and AirAsia to maximize their resource in facing the challenging environment,” he said.

In many cases, competition gives advantages to consumers but it can also cause wastage especially to a small country like Malaysia which has limited human resources.

In this context, it is important that MAS and AirAsia work together so that this wastage will not continue which in the end create disadvantages and giving the edge to the regional competitors.

The cooperation in the field of oil and gas between Petronas and Exxon as in the Tapis oilfield, Shell and Petronas in Gumusut-Kakap, Murphy and Petronas in Kikeh and and a more dramatic win-win cooperation take place between Shell and Exxon in the oilfield of Brent in the North Sea of North United Kingdom. The cooperation took place among the competitor without sacrificing their identities and business objectives.

Shell and Exxon compete to enlarge their areas of operation in the entire globe. What is needed is the sincerity in the cooperation to gain maximum benefit.

(more details here: http://mastroubleshooters.blogspot.com/2011/11/7-reasons-why-khazanah-should-not.html)

Another example is the cooperation between Air France + KLM, though they come from different countries and always competing.

In conclusion, an excellent cooperation need not in the form of share swap. The dynamic exchange in the airlines industry probably may not allow MAS to move individually because it will affect the airlines as this is part of the factor that cause its major losses.