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Malaysian airline Double Loss

Old 1st Jun 2002, 01:50
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Malaysian airline Double Loss

From The Business Times, Singapore
30 May 2002

MAS loss doubles to RM836m
Airline blames disrupted operations after Sept 11, but 'haemorrhage'
stemmed
By Eddie Toh

THE Malaysian government, which bought a RM1.8 billion (S$850 million)
stake in Malaysian Airline System (MAS) from magnate Tajudin Ramli two
years ago, will have to wait a little longer for an earnings
turnaround. The national carrier sank deeper into the red for the year
ended March 2002, with net loss doubling to RM835.6 million from
RM417.4 million a year earlier.

Management blamed the dismal performance on the 'disrupted operating
environment' following the Sept 11 attacks on the US.

But on a more upbeat note, MAS managing director Mohd Nor Yusof told
analysts and journalists yesterday that the airline had contained the
'haemorrhage'. He also disclosed that MAS had adopted a new accounting
standard to take into account the foreign exchange translation loss of
RM2.36 billion in 1998.

The previous management, led by Mr Tajudin, had amortised the forex
loss over five years instead of biting the bullet. As a result, the
new management has managed to write back some of the amortisation
retrospectively for previous financial years.

Mr Mohd Nor was still sticking to his earlier vow to make MAS
profitable again by March 2004. He said the airline industry was
steadily recovering from the steep downturn in air travel in the last
quarter of 2001. 'All our new planes are fully deployed,' he said. The
former banker said MAS was no longer suffering from a liquidity
crunch. The government has stepped in to revive MAS despite paying
RM1.8 billion, or RM8 per share, to acquire Mr Tajudin's 29 per cent
in MAS in 2000. Since then, MAS has said it would hive off its
money-losing domestic operations to the government and transfer the
profitable international operations and its listing status to a new
firm. Mr Mohd Nor declined to give a progress report on the
restructuring exercise, saying that it should be completed by July.
The government will also acquire over RM5 billion worth of the
airline's properties and aircraft, and lease them back to MAS.

He said MAS had received some payments from the government from the
disposal of the assets and that MAS was now in a position to meet the
repayment of a yen-denominated loan due today. He was also upbeat on
the company's prospects. 'We are quite bullish since we have cleaned
up the balance sheet,' he added.
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Old 2nd Jun 2002, 16:14
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The new management has been in place for over a year, apart from the few new GM, virtually nothing has changed. The company canít survive on its own without Government life support. The only way for the company to make profit in 2004, is for the Government to write off its debts and capital expenditure.

May be it would be cheaper to allow the Mas to fold and restart with a new airline. But in the boleh-land, pride override rational.
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