Malaysia Airline Grasping for Survival
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Malaysia Airline Grasping for Survival
From The Asian Wall Street Journal
31 July 2002
MAS Aims to Scale Back
To Boost Its Profitability
By S. JAYASANKARAN
Staff Reporter of THE WALL STREET JOURNAL
KUALA LUMPUR, Malaysia -- Debt-plagued Malaysian Airline System, or
MAS, unveiled details of a radical restructuring plan it hopes will
return the state-controlled company to profitability.
The plan, among other things, calls for publicly listed MAS to sell
most of its assets, sharply reduce debt and become essentially a
management concern operating most of Malaysia's international and
domestic air routes.
In a statement to the Kuala Lumpur Stock Exchange, MAS said a new
state-owned entity called Penerbangan Malaysia Bhd. would acquire 73
of its aircraft for 5.1 billion ringgit ($1.34 billion) and assume
almost seven billion ringgit of MAS's liabilities in exchange for new
stock in MAS. PMB, which will ultimately own 69.3% of MAS, will seek a
waiver from Malaysia's Securities Commission exempting it from having
to make a general offer for the remaining shares it doesn't own, the
airline said.
MAS said it would continue to operate its profitable cargo and
international passenger services with aircraft leased back from PMB.
MAS will also operate domestic routes, using leased planes, on PMB's
behalf for a fee. All revenue from the domestic routes will go to PMB.
Separately, MAS said it will sell its property assets for more than
1.5 billion ringgit to Global Network Sdn. Bhd., another newly created
government company. MAS will then lease back the properties it needs
for its operations. The airline said it will also sell its catering
unit to a private company for 175 million ringgit.
The airline said the shedding of assets and liabilities to the
Malaysian government would translate into a profit of 94.2 million
ringgit in the year ending March 31, 2003, against a loss of 835.56
million ringgit in the year-earlier period. The restructuring will
also result in an almost debt-free MAS holding 676 million ringgit in
cash by March 2003, compared with its current net debt of almost nine
billion ringgit.
"With an enhanced financial position, a clear balance sheet and a
strong holding company, we believe we are in a better position now
than last year," said MAS's managing director, Mohamed Nor Yusof.
With its current debt load and accumulated losses of more than 2.5
billion ringgit, MAS teetered on the verge of insolvency. The
government's rescue of the airline illustrates Kuala Lumpur's newfound
willingness to use drastic measures as part of a state-led initiative
to hasten corporate reform.
The decision to abandon the government's longstanding practice of
cross-subsidizing MAS's unprofitable, but politically necessary
domestic routes with profits from cargo and international routes also
marks a step toward a more market-oriented approach to
state-controlled enterprises. Government officials say it is an
indicator of the growing influence of Prime Minister Mahathir
Mohamad's pro-market finance adviser, Nor Mohammed Yakcop, a former
central banker who, since last July, has been the driving force behind
Malaysian corporate restructuring.
Indeed, controversy at MAS first prompted Kuala Lumpur's corporate
reform drive. In early 2001, the government purchased a controlling
interest in MAS from politically connected businessman Tajudin Ramli
for 1.79 billion ringgit, paying a 250% premium over the
then-prevailing market price for MAS stock. The deal was opposed by
Tan Sri Nor Mohammed, but it was pushed through by then-finance
minister Daim Zainuddin, Tan Sri Tajudin's longtime business mentor.
Public outrage over what was seen as a government bailout of Tan Sri
Tajudin exacerbated a growing rift between Dr. Mahathir and Tun Daim,
who resigned his post in June. Dr. Mahathir took over the finance
portfolio and Tan Sri Nor Mohammed has since emerged as the architect
of government restructuring policy.
Securities analysts expect MAS stock, which last traded at 3.86
ringgit each before being suspended on Monday, to climb when trading
resumes Thursday.
Apart from its restructuring plans, the airline announced smaller
losses for the first quarter of its 2002 financial year -- 80.8
million ringgit against a loss of 320.7 million ringgit a year
earlier.
31 July 2002
MAS Aims to Scale Back
To Boost Its Profitability
By S. JAYASANKARAN
Staff Reporter of THE WALL STREET JOURNAL
KUALA LUMPUR, Malaysia -- Debt-plagued Malaysian Airline System, or
MAS, unveiled details of a radical restructuring plan it hopes will
return the state-controlled company to profitability.
The plan, among other things, calls for publicly listed MAS to sell
most of its assets, sharply reduce debt and become essentially a
management concern operating most of Malaysia's international and
domestic air routes.
In a statement to the Kuala Lumpur Stock Exchange, MAS said a new
state-owned entity called Penerbangan Malaysia Bhd. would acquire 73
of its aircraft for 5.1 billion ringgit ($1.34 billion) and assume
almost seven billion ringgit of MAS's liabilities in exchange for new
stock in MAS. PMB, which will ultimately own 69.3% of MAS, will seek a
waiver from Malaysia's Securities Commission exempting it from having
to make a general offer for the remaining shares it doesn't own, the
airline said.
MAS said it would continue to operate its profitable cargo and
international passenger services with aircraft leased back from PMB.
MAS will also operate domestic routes, using leased planes, on PMB's
behalf for a fee. All revenue from the domestic routes will go to PMB.
Separately, MAS said it will sell its property assets for more than
1.5 billion ringgit to Global Network Sdn. Bhd., another newly created
government company. MAS will then lease back the properties it needs
for its operations. The airline said it will also sell its catering
unit to a private company for 175 million ringgit.
The airline said the shedding of assets and liabilities to the
Malaysian government would translate into a profit of 94.2 million
ringgit in the year ending March 31, 2003, against a loss of 835.56
million ringgit in the year-earlier period. The restructuring will
also result in an almost debt-free MAS holding 676 million ringgit in
cash by March 2003, compared with its current net debt of almost nine
billion ringgit.
"With an enhanced financial position, a clear balance sheet and a
strong holding company, we believe we are in a better position now
than last year," said MAS's managing director, Mohamed Nor Yusof.
With its current debt load and accumulated losses of more than 2.5
billion ringgit, MAS teetered on the verge of insolvency. The
government's rescue of the airline illustrates Kuala Lumpur's newfound
willingness to use drastic measures as part of a state-led initiative
to hasten corporate reform.
The decision to abandon the government's longstanding practice of
cross-subsidizing MAS's unprofitable, but politically necessary
domestic routes with profits from cargo and international routes also
marks a step toward a more market-oriented approach to
state-controlled enterprises. Government officials say it is an
indicator of the growing influence of Prime Minister Mahathir
Mohamad's pro-market finance adviser, Nor Mohammed Yakcop, a former
central banker who, since last July, has been the driving force behind
Malaysian corporate restructuring.
Indeed, controversy at MAS first prompted Kuala Lumpur's corporate
reform drive. In early 2001, the government purchased a controlling
interest in MAS from politically connected businessman Tajudin Ramli
for 1.79 billion ringgit, paying a 250% premium over the
then-prevailing market price for MAS stock. The deal was opposed by
Tan Sri Nor Mohammed, but it was pushed through by then-finance
minister Daim Zainuddin, Tan Sri Tajudin's longtime business mentor.
Public outrage over what was seen as a government bailout of Tan Sri
Tajudin exacerbated a growing rift between Dr. Mahathir and Tun Daim,
who resigned his post in June. Dr. Mahathir took over the finance
portfolio and Tan Sri Nor Mohammed has since emerged as the architect
of government restructuring policy.
Securities analysts expect MAS stock, which last traded at 3.86
ringgit each before being suspended on Monday, to climb when trading
resumes Thursday.
Apart from its restructuring plans, the airline announced smaller
losses for the first quarter of its 2002 financial year -- 80.8
million ringgit against a loss of 320.7 million ringgit a year
earlier.
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Yet once again the tax-payer will pay for the deficit. While the culprit got away scot free with the loot.
If they apply President Bush Corporate Reform Laws, Daim's boys will be tucked away in jail for the next 25 years.
If they apply President Bush Corporate Reform Laws, Daim's boys will be tucked away in jail for the next 25 years.
Last edited by OldAce999; 1st Aug 2002 at 04:02.
Moderate, Modest & Mild.
The asset-stripping of MAS by T.R., was publicised loud and long, here on PPRuNe WHEN it was happening.
ALL of the staff could see the BLATANT sell-offs, and the transferral of buildings, and funds to his other companies.
What was done??
In true Malay?isian?j style - NOTHING.
The "good" Dr M. turned a blind eye (but no doubt was well rewarded!!), as MAS was very quickly denuded of EVERYTHING?Ain record time.
If MAS employees had ANY balls they would take class action against the perpetrator and DEMAND that the STOLEN money obtained from the asset-stripping be returned to the airline!!
The compacency of the MAS employees is a Malaysian National disgrace - Mana ada Sistem!!
YOU know precisely who the culprit is!Get up off your fat asses and DO SOMETHING about it, instead of crying here!!
ALL of the staff could see the BLATANT sell-offs, and the transferral of buildings, and funds to his other companies.
What was done??
In true Malay?isian?j style - NOTHING.
The "good" Dr M. turned a blind eye (but no doubt was well rewarded!!), as MAS was very quickly denuded of EVERYTHING?Ain record time.
If MAS employees had ANY balls they would take class action against the perpetrator and DEMAND that the STOLEN money obtained from the asset-stripping be returned to the airline!!
The compacency of the MAS employees is a Malaysian National disgrace - Mana ada Sistem!!
YOU know precisely who the culprit is!Get up off your fat asses and DO SOMETHING about it, instead of crying here!!
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Effectively Mas has becomes a virtual airline, owning no aircraft but people only. At the same time, with expected discounted leasing fees from the Government, the profit and lost account is a dream of other airline executive, guaranteed to make profit and the truth cost is bared by the Government i.e. tax payers.
However, without accountable management and if history is to repeat itself, I bet my 2 cents, the management will somehow find a way to lose tons of money in 3 to 5 years.
Mas Catering at KLIA was built for more than MYR350 millions in 1998.
However, without accountable management and if history is to repeat itself, I bet my 2 cents, the management will somehow find a way to lose tons of money in 3 to 5 years.
Mas Catering at KLIA was built for more than MYR350 millions in 1998.
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Nothing will ever change at MAS unless management staff are selected for their expertise rather than just the fact that they are Malays (Bumiputras). Whenever I hear duff titles like Datu and Tan Sri, it makes me want to puke. There are a lot of very capable Chinese and Indians living in Malaysia. But because they are only 'Malaysians' as opposed to 'Malays', they won't get a look-in at the top jobs. Malays spend far too much time on the golf course and have not learned to lead by example. And as far as Dr (?) M. (another Malay) is concerned, they don't call him Mister 10% for nothing. Don't get me wrong, I have flown on MAS many times, its a nice service and the Chicken Satay is great. I even managed to fly First Class once, when there were seats available !! Usually, First Class seats are blocked for government officials, airline management and their well connected friends. Well, we wouldn't want Chinese or Indians to book the best seats in the house now, would we ? If any of you Malays are reading this, wake up. Many of you guys are more racist towards your fellow citizens that Hitler was towards the Jews, and its time for a change. Let the Chinese run MAS, they know how to make money. 
Moderate, Modest & Mild.
Charterguy has expressed an opinion that MOST matsaleh form after having lived in Malaise-ia, and of which their (Singaporean) neighbours are also aware.
The handouts and privileges given to Malays, simply because they are Bumi are excessive, and DOES create ill-feeling. Malays are usually referred to as "the handicapped" by Chinese and Indians behind their backs. I`ve had the great pleasure of knowing many Malays (within MAS) who are totally undeserving of this tag, and who are enthusiastic, hard-working, generous and tolerant human beings.
unfortunately it is the MAJORITY of the lesser-educated population who leech off the benefits they are handed out.
MAS`s problems are symptomatic of Malaise-ia`s troubles in general.
The FACT is MAS is where it is NOW because no-one did anything at all, at the time the rorts were going on.
I still do not believe it is too late NOW, to bring the perpetrator(s) back into the spotlight and demand that Malaysia Airlines be RE-FINANCED with the money that was plundered from it.
But that means that some of YOU are going to have to do SOMETHING!
Do you have the get up and go that the majority of the population doesn`t?
Or will you wait for ANOTHER Government handout?
The handouts and privileges given to Malays, simply because they are Bumi are excessive, and DOES create ill-feeling. Malays are usually referred to as "the handicapped" by Chinese and Indians behind their backs. I`ve had the great pleasure of knowing many Malays (within MAS) who are totally undeserving of this tag, and who are enthusiastic, hard-working, generous and tolerant human beings.
unfortunately it is the MAJORITY of the lesser-educated population who leech off the benefits they are handed out.
MAS`s problems are symptomatic of Malaise-ia`s troubles in general.
The FACT is MAS is where it is NOW because no-one did anything at all, at the time the rorts were going on.
I still do not believe it is too late NOW, to bring the perpetrator(s) back into the spotlight and demand that Malaysia Airlines be RE-FINANCED with the money that was plundered from it.
But that means that some of YOU are going to have to do SOMETHING!
Do you have the get up and go that the majority of the population doesn`t?
Or will you wait for ANOTHER Government handout?
