Are AirAsia Staff Being Screwed On IPO

[CAPTAIN WOOBLAH]

Understand that AA has issued the shares to employees at a very high price.

Friends on the inside appear unhappy especially management.

One point brought up is that the price for staff is Rm 1.08 mgmt and the pilots at Rm 1.40 on a parvalue share of Rm 0.10

Understand institutional investers shy and that RHB staff got a much better deal than AA staff.

Tell me I'm wrong here people.

Wooblah.

[cal_ley]

You are wrong.you must be getting wrong information about the IPO for staff and the ESOS for staff.

[CAPTAIN WOOBLAH]

Interesting comment,

I read the prospectus and yes staff have to buy via pink form at Rm 1.40 / on issue of 0.10 sen. ie. 1400% on par worth.

What do you think the shares will be worth in your estimation?

The fund managers I spoke to range from max 1.70 to 0.70 sen.

So how much is it worth when balanced with the risk.

A friend of mine has lots of shares on pink form now. Would you be willing to buy them and at what price say 1.70 to 2.00.

Wooblah.

[cal_ley]

Why selling at rm1.70 to rm2.00 since the fund manager say that the max price is only rm1.70?you friend should sell it lower rite?(because even your friend know that the prestige of this share.)

i will purchase many lots of Airasia shares thru pinkform and normal purchase.

[CAPTAIN WOOBLAH]

Well good luck and I hope you make a lot of cash. Really !!!!

Just incase it turns out to be a bummer, make sure you have enough cash to pay for your flying training at MFA.

Good luck,

Wooblah.

[cal_ley]

Thank you so much for your advice but my training has been fully paid by Airasia.

Btw are you a Captain or F.O in Airasia?

Regards,

[CAPTAIN WOOBLAH]

:cool:

Neither Dude,

Just a long haul driver paid in USD.

Again best of luck on the A320.

Wooblah. :) ;)

[7sex7]

wooblah,

keep on writing dude,loads of ppl likes to read ur post=BERNAS N BERISI!!

even thou cal ley's trng has been fully paid by AA,he got to pay evry penny back!!!!!

Loads of ppl dont understand what the fuel price will,do to ur shares-u can be the lowest cost airline in d world-but u still run on fuel!

We wait n see....after raya,bungkus or KAYA....

[CAPTAIN WOOBLAH]

Thanks 7X7,

I am after all just writing from an objective point of view. I fear Cal is a bit off base here and clouded with his flying school passion. I used to get an erection from a PA-34 and well I'm too old to get one without viagra these days.

From an objective point of view:

1) Fuel is a huge cost in running an airline and well unless the Chinese and Indian economies shrink tremendously high fuel prices are here to stay for some time. Airasia has bought foward fuel swaps in the futures market until June 2005. After this date they will have to either buy fuel at market rates or gamble on the derivitives market to flat line the price. They will go for the flat line because this is the only way they can keep the fares flat. If fuel price kept going up and down then their revenue manager would lose all his hair matching yeild against cost against seat factor.

2) Airasia is a VIRTUAL AIRLINE the IPO is similar to that of the dot.com companies with revenues and growth based on predicted numbers based on estimated market research and estimated GDP, inflation rates and individual spending capacity of the people wiithin the business markets. (What happened to these shares and the people that bought them)

3) Load factor in an LCC is not a measure of yield and while the prospectus talks a lot about load factors (actually seat factors) very little is expressed in terms of yeild. A good example would be selling the flight to BKK at $ 1.00 and filling 148 seats giving a 100% load factor at a yield of $ 148.00

4) Expansion requires great CAPEX (Capital expenditure) and very low yeilds as lead in low fares need to be emplaced to entice travellers to fly, this cost is not factored in the income statements because it is intangible as nobody knows what the actual development cost will be until operations begin.

5) Peoples Express is a great example to compare AA to as this airline made great profits, expanded at a fast and furious pace and WENT BANKRUPT.

6) Further requirements to expansion is the ability of AA to hire Pilots mainly Captains and engineers. Now why are so many of the current Captains and engineers leaving AA. Answere, because the can get better work conditions and pay elsewhere. Which means AA will have to pay more to attract these people or stop or slow down the expansion plans, which will translate to lower earnings and/or higher costs

7) High productivity or a highly productive workforce REALLY MEANS STAFF A WORKING TO THE LIMITS OF HUMAN ENDURANCE.
The pilots and engineers work long duty hours at very high workloads. For example pilots work a 25 minute turnaround and have to do the walk around and the load sheet. If there is a delay they try to turn around the flight even faster they have done it in about 12 minutes. This could lead to a compromise in safety as pilots would be rushing to complete paperwork and checks, both pilots may not be in the cockpit as one maybe doing the walk around thus leading to no check and balance to load/trim sheets and preflight checks. Brake cooling and a complete ground inspection may not be achieved as the pilot may be rushing. The engineers do most of the MEL rectification and A checks on the night shift. Studies have shown that this is a time when humans in general make the most mistakes. HENCE SOME SAFETY ISSUES.

8) The overall experience level of AA pilots is lower that most established airlines as they hire mainly from the RMAF which is not a major operator of the B733 or A320 types.

9) The training and safety departments would not be as experienced as say MAS, TG or SQ because they have not had the benefit of time to mature and grow. With AA systems need to be implemented very fast due to quick expansion. Additionally the airline started with 2 aircraft and most systems were handled by MAS. AA does not have a simulator or training complex thus when you are paying others you need to keep costs down. Additionally some of their most experienced captains have left.

10) The AA brand is the CEO an accountant and very good salesman. This is risky because what if someting happens to him the brand is gone and thats what the shareholders are esentially buying! Does he understand the business, well I think he looks at the numbers and crunches them like a bean counter but does he understand the operation and people like the pilots and engineers well I don't think so because if he did none of them would have left.

11) The AA cadet pilot scheme. People have told me that this is only open to people with connections. Is this true!!!!!!

12) With regard to prestige I do not think there is any associated with AA shares. I have a feeling they won't run high and may even go down and stay there.

13) Competition, well, there is going to be a lot. People in the region learn very quickly and the AA prospectus is detailed enough for competitors to get an idea of AA's business. It is very foolish of AA to assume that others cannot duplicate their model and run it much better with stronger industrial and political relations.

14) AA average fleet age is 16 years as stated in the prospectus and are working 12.8 hours a day at an average stage length of 522 nm at 25,106 sectors per year ie 69 per day (page 73 of the prospectus) thats about a 1.1 to 1.2 cycle to hour ratio. Not good for a B737 or A320 as 1.7 is about what you need to keep maintenence costs down. At these rates maintenence costs will contine to rise significantly. You can't plane accurately for cyclic ageing. The engines on wing life also appears to be lower than MAS, Why?

15) Change of fleet to A320, this will be the final nail in the coffin because (IF IT AINT BOEING WE AINT GOING) Airbus is not a low cost airline aircraft. Easy has found out the hard way and well Ryan just sticks to boeing as do Southwest why, because B737's are designed for low tech not the Bus.

These are just a few points I saw when reading the prospectus and quite frankly I have not heard anything from AA that fully and objectivly addresses these.

Wooblah.

[7sex7]

Wooblah,
Now I start to wonder whether ur a pilot or an economist/analyst?U sound mo like a economist to me,,,,hahah…anyway good write ups

1)Fuel price is here to stay…Can they manage to be lowest cost after june 2005?Maybe,by using “minyak kelapa sawit”…

2)IPO-only oversub by public by 1.5-is it good sign?only by 1.5 times?N they have to lower their retail from RM1.40 to RM1.16-not a good sign I guess.Will it go up?Not now I guess,but Im sure TONY’s got some secret weapons to make it shoot up in the long future.

3)Well,talking bout load factor is a good way to paint a good picture to the public!Hey…who knows wat is yield?Not the common public,layman,makcik n pakciks…..

4)Expansion n new aircraft is the way to go if they wanna be a major player in the future n be competitive to TIGERRRGrrrr.Old aircraft might be cheap to buy,but expensive to maintain-n ur talking bout cost of spares in US dollars.Sadly,nothing is made in JINJANG!!

6)According to my sources,working condition isn’t great for the x airline ppl.But it’s a good deal for the X RMAF pilots n some other small airlines pilots.AA gives them a chance to the jet,n u don’t have to be an airline capts SON to get in!N best of it,u don’t have to be FO for 10yrs bfore u jump to the LH seat!

7)Reliable sources again,FO does the trim sheet n x chkd by capt n signed by him.So there is no compromise here.Both crew are aware of what they r doin.MH transit is only 35 mins in line stations,n they do cut it down too at times.So its just an xtra 10 mins that’s not productive,but used most of the times to chk out the cabin crew!hahah…MAS pilots,transit is the relax time-AA pilots,that’s the time to work ur a@@ out.

8)If they were to hire more experienced crew,I bet they wont be the cheapest anymo!Everythg is low- LOW COST=LOW PAY….

9)When any airlines have been just set up,the trng will be in their infancy.Same goes for MH SQ or TG.In the late 60’s+70’s,who were the trng ppl in MH?Just to remind you,AA has been around for 8yrs-since the DRB days in the green+blue livery,its just been given a fresh look n ownership by TONY.So I don’t thk DCA will close 1 eye to their trng dept even if the operator only got 2 aircraft!N the sims are coming up nex yr in KLIA ,it was in the newspaper.

10)Put a pilot there as the CEO,you will be bankrupt even faster!Just look at TOAD...Myb some pilots left for greener pastures,but the rate of leaving is even higher in MH.In MH,everybody wants to leave-thx to toad!At the end of the day….its the MOOLAH,PAISE,DUIT…period!How hi can a Malaysian co pay with the ringgit pegged??Nanti ada MINISTER marah

11)Mite be a liitle truth in it,but hey…its an open secret that its pretty common in the big boys airlines.But HATS off to AA,they did give priority to their own staff to join the cadet scheme.Half of their first batch cadets are the ops boys,stewards n from all over the depts..can u get a such thg in MAS?Dont dream if ur not a 744 capts son!

Whatever the ppl mite say,AA is good in a way.Created lots of jobs,esp for the pilots n the RMAF boys + cabin crews.Its the time for them to earn back whatever they lost financially serving the country!
:E

[halfscaledelfection]

u 2 guys make pprune very much worth it if i could say, not every post here is without some whipping n lashing instead of good logic n knowledge on aviation in dis region.

I'm expecting a call frm Air Asia for an interview and i suppose,a sim ride. I'm FOF (fresh of flite school!!!!), and would appreciate it if some1 could PM regarding PPPPP (PRIOR PREPARATION PREVENTS PISS POOR PERFORMANCE!!!)

MAS, well, no reply from them!

thanks all

[CAPTAIN WOOBLAH]

Hi 7X7,

Well I am just a pilot and well, getting close to retirement. The industry has evolved so much since I first started flying, some for the better and some for the worse. But, back in the simpler days most pilots had a good idea of cost and the ability to apply such to the day to day operation to enable the company to save money. For example if a pilot knew the price of brakes and tyres and the manufacturers average landings, the pilots could then match or better these figures. This was also true for engines, consumables, rotables and LLP's (Life limited Parts) With this knowledge and the numbers, pilots could approach management for pay increases based on factual financial information and also use it to cost the company more money if they became unhappy. These days though most of this information is kept away from the pilots and to a great extent the engineers.

With regard to your post, you make some great comments from a different perspective and I think that is great. We only have a couple of weeks to go before the IPO listing so lets wait and see. My opinion is that the shares will drop to Rm 0.90 cents as this would be (in my opinion) fair value given the virtual projected market share and yield combined with a weak fuel hedge till June 2005 and of course high and unstable fuel prices. If growth and yield could not be achieved and operational costs go up substancially then well the price could really fall to who knows where.

With reference to Da'Toad. He is an extremely poor example of anything!!!! Even being a man!! I would go as far as saying simple math Ie. 1x1 would be a difficult task for him to tackle. He is a great example of a person that has forgotten where he came from, the difficulties he once faced and the way he was treated. I guess that old addage do unto others as others would do unto you holds true for this very little man. Pilots have run very succesful airlines in the past, they infact were the pioneers of the industry, Flying Tigers, Pan Am, BOAC, to name a few. It was only when these pilots retired and the accountants took over did it all turn to crap.

With regard to Mr. F, well ego and greed will prevail and from an overall perspective I think he is a sweet talker that has persuaded his staff to work very hard for his personal gain. When he makes his cash he will split leaving all in a dark place. I just hopr the regulatory watch dog the SC watches him and the publics funds like a hawk. I have a feeling that we will see his true colours very very soon.

Wooblah.

[cal_ley]

7x7,
there is many people around which not afford to pay training fee by themself,and one of the way is getting a cadetship.no doubt we have to payback but atleast we get to achieve what we really want to do in life.And we have to compate with thousand of applicants it show that we are some of the best which selected by an airline.we are not that luck like you which can afford to pay the training all by yourself or pay by parents(dont have to pay back) and join as private student in the training(many still jobless after grad).

Cheers to airlines cadet!!!

Regards,
Cal_ley

[QNH1013]

cal_ley, Indeed you have chosen a wonderful career and well done for making the grade and getting on the Cadet Course :ok: However don't let it get to your heard too much ok. A Pilot should be a humble character through his or her career. Especially remember that when you get on line and give the respect that is due to your seniors and peers. Some of the fresh graduate MFA guys have come here with a little bit of an 'attitude'. Im not saying you will be like that, but pass the word around to your coursemates ok. You've got a long way to go and alot to learn. And you'll always be learning in aviation. It's a great job. By the way, my basic training was paid by my parents, and I HAVE to pay back :D
Happy flying and study hard.

[cal_ley]

QNH1013,

Thank you so much for your advice.
and i do understand that being a flyer is a life long learning.the only career amount all which need to study from time to time and all the basecheck every 6month(dont think there is any other careers which have test every 6 month),and seniority,experience play a big part in this.
i always pay my respect to everyone,not only to the Captain or F.O cause i always believe that everyone is playing an important role in this line.
(No ticketing staff no customer,no engineer no aircraft,no pilot no takeoff,no cleaner no passanger in plane,no cabincrew no service)...

And i still in the process of learning.

Regards,
cal_ley

[MRD]

Wooblah

I hope you never stop writing on pprune subjects. You have very good topics and may I say the things you say are 99% pretty close to the truth. Aviation these days sucks as everything is squeezed from you including safety.

Pilots do make very good CEO's but unfortunately many things are kept from them. They are even pit with other pilots from different country just as too keep them in line. Its very sad too to see other pilots nowadays putting other pilots down just as to keep them inline with CEo's wish and fancy. They are used, brainwash and twisted by the very person they work for so as others toe the line or out you go.

Time will tell and usually time will bring out the worst in them which they try hard to hide. Though they have made many jobs for selfgain they have also given aviation a very bad name.

Time will tell!!!!!!

[CAPTAIN WOOBLAH]

:cool: MRD,

I couldn't agree with you more and thanks for the kind words.

Lets see where the shares close at this Monday.

Happy flying,

Wooblah.

[cal_ley]

Monday closing was good.
what do you think??

Regards,

[Chrome]

So where is the doubter? Any explanation on the share's good performance?

0.90 sen indeed :D

[CAPTAIN WOOBLAH]

Well well,

Let me be the first to congratulate AA on their share debut, and yes I did not expect the share price to exceed RM 0.90. And. I was wrong.

At a closing price of RM 1.50 it makes AA shares 1:1 when compared to MAS valued at RM 15.00 a share. I still (personally) believe that it is way overvalued. But, the market has spoken and the price is such. Willing seller, willing buyer.

Having said that. RHB, Libra & CSFB have been the main players and if you look at the volume of shares traded, 40M plus it is evident that the bookbuilders are trying to sustain the price and each time there is profit taking the shares fall back to 1.40. But this support cannot continue indefinatly. Inside sources estimate that over 150M has been spent thus far supporting the shares.

As far as IPO's are concerned AA has been tepid especially as the market rallied on a technical rebound driving the KLSE index to the 905 point. AA shares did not shine and profits are marginal.

Example. 40 lots for a pilot at RM1.16 = purchase price of RM46,400 interest at 3.5% = RM1,624 + Brokerage = X. Sale price at RM 1.50 = RM 60,000 - Share purchase + interest + brokerage = RM 11,000 approx. (The risk here was the 46,400)

The question at hand here is:

1) Did you sell and make money!
2) Are you still holding the shares waiting for it to rise further!

I would venture to say that the rally should have happened by now and with current economic trends the share may fall to my predicted figure. One reason it may appreciate to a high level would be if the ringgit was unpegged to the USD. This would increase the profits in AA as maintenance reserves and spares are purchased in USD. But again there is the risk that the USD may appreciate overnight with a few words from Greenspan!!!!!!

Lastly I do not work for AA. I am lucky that I can live here in Malaysia and my company allows me to commute. I therefore enjoy the benefits of both worlds and will be happy to do so till my retirement which will be here all to soon.

Keep it on the hardstuff,

Wooblah.