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.

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.