The slow demise of MAS in sight?
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The slow demise of MAS in sight?
This report from Bernama :
(Bernama) - Malaysian Airline System Bhd (MAS) recorded a net loss of RM2.52 billion, on the back of RM13.9 billion in revenue, for the financial year ended Dec 31, 2011.
For the fourth quarter, the national carrier recorded RM1.28 billion in net loss, on a turnover of RM3.68 billion, said group chief executive officer Ahmad Jauhari Yahya.
He said the bottom-line group losses for 2011 underscored the imperative need for the airline to immediately adopt strong measures to stop the “bleeding”.
“This includes staff redeployment, increasing productivity and efficiency, relentless cost control and making further reviews.
“We are also implementing an aggressive sales and marketing strategy,” he told a press conference here today.
Ahmad Jauhari said the group’s full year performance was severely impacted by a 21% increase in expenditure of RM16.2 billion, from RM13.41 billion in 2010, previously.
He said the higher expenditure was due to a 33% increase in fuel cost of RM5.85 billion and a 15% increase in non-fuel expense of RM10.43 billion.
The rise in non-fuel expense was mainly due to provisions totalling RM1.09 billion made in the fourth quarter for stock obsolescence, redelivery of aircraft and impairment of freighter aircraft.
Ahmad Jauhari said the accounts for the year under review recognised provisions and escalating operational costs which, although painful, provided a holistic snapshot of the organisation and full knowledge of the company’s actual position.
For the full year, Malaysia Airlines saw capacity (available seat per kilometre) increase seven percent, passenger traffic up five percent but lower seat factor reducing to 75%.
He said revenue and average fares across all classes showed improvement throughout the year, particularly in the front-end cabins.
However, there was an overall drop in seat factor as the airline strived for better yields.
On a regional performance basis, the domestic and short-haul, intra-Asean services continued to be key markets for the company, with these segments reporting positive growth on a quarterly, as well as, on a year to-date basis, he added.
Meanwhile, the cargo division suffered in line with an overall slowdown of the industry, globally.
Revenue dropped 14%, capacity decreased nine percent while yield increased two percent.
Ahmad Jauhari also said MASkargo recorded a loss before tax of RM19 million in 2011 compared with a profit of RM141 million in the previous year due to higher fuel costs and impairment of its A330 freighter fleet.
This one from Business Times :
(Business Times) - Malaysian Airline System Bhd (MAS) might ask its shareholders to pump in more money into the company via a cash call exercise, analysts speculated yesterday.
OSK Research and Hong Leong Investment Bank (HLIB) Research speculated there is a high possibility of MAS calling for cash call exercise due to the urgent cash it needs to fund the operating losses, potentially high restructuring cost and
new deliveries of aircraft.
(Bernama) - Malaysian Airline System Bhd (MAS) recorded a net loss of RM2.52 billion, on the back of RM13.9 billion in revenue, for the financial year ended Dec 31, 2011.
For the fourth quarter, the national carrier recorded RM1.28 billion in net loss, on a turnover of RM3.68 billion, said group chief executive officer Ahmad Jauhari Yahya.
He said the bottom-line group losses for 2011 underscored the imperative need for the airline to immediately adopt strong measures to stop the “bleeding”.
“This includes staff redeployment, increasing productivity and efficiency, relentless cost control and making further reviews.
“We are also implementing an aggressive sales and marketing strategy,” he told a press conference here today.
Ahmad Jauhari said the group’s full year performance was severely impacted by a 21% increase in expenditure of RM16.2 billion, from RM13.41 billion in 2010, previously.
He said the higher expenditure was due to a 33% increase in fuel cost of RM5.85 billion and a 15% increase in non-fuel expense of RM10.43 billion.
The rise in non-fuel expense was mainly due to provisions totalling RM1.09 billion made in the fourth quarter for stock obsolescence, redelivery of aircraft and impairment of freighter aircraft.
Ahmad Jauhari said the accounts for the year under review recognised provisions and escalating operational costs which, although painful, provided a holistic snapshot of the organisation and full knowledge of the company’s actual position.
For the full year, Malaysia Airlines saw capacity (available seat per kilometre) increase seven percent, passenger traffic up five percent but lower seat factor reducing to 75%.
He said revenue and average fares across all classes showed improvement throughout the year, particularly in the front-end cabins.
However, there was an overall drop in seat factor as the airline strived for better yields.
On a regional performance basis, the domestic and short-haul, intra-Asean services continued to be key markets for the company, with these segments reporting positive growth on a quarterly, as well as, on a year to-date basis, he added.
Meanwhile, the cargo division suffered in line with an overall slowdown of the industry, globally.
Revenue dropped 14%, capacity decreased nine percent while yield increased two percent.
Ahmad Jauhari also said MASkargo recorded a loss before tax of RM19 million in 2011 compared with a profit of RM141 million in the previous year due to higher fuel costs and impairment of its A330 freighter fleet.
This one from Business Times :
(Business Times) - Malaysian Airline System Bhd (MAS) might ask its shareholders to pump in more money into the company via a cash call exercise, analysts speculated yesterday.
Among the national carrier’s biggest shareholders are the government-linked Khazanah Nasional Bhd and the Employees Provident Fund.
Collectively, the two control about 58 per cent of the company, with Khazanah owning the lion’s share of the airline.
The second largest stakeholder in the lossmaking carrier is the privately-held Tune Air Sdn Bhd with a 20.5 per cent stake.
The core owners of Tune Air are also the main drivers of AirAsia Bhd, Asia’s top budget carrier.
OSK Research and Hong Leong Investment Bank (HLIB) Research speculated there is a high possibility of MAS calling for cash call exercise due to the urgent cash it needs to fund the operating losses, potentially high restructuring cost and
new deliveries of aircraft.
“It (the cash call) depends if the existing shareholders will subscribe to it,” said the analyst.
Meanwhile, analysts said the airline does not need the government’s assistance to raise funds and strengthen its balance sheet.
“That wouldn’t be right. They should do it on their own,” an analyst said.
MAS yesterday said it hopes to finalise and announce a plan to raise funds and strengthen its balance sheet within the next 60 days.
Companies can raise cash from its existing shareholders via a rights issue exercise or it could even ask its shareholders to advance them cash.
Alternatively, a company can also place out its shares to a third party to raise money with proceeds from the placement going directly to the company.
Cash calls normally dilute the earnings per share of a company, hence it came as no surprise there were “sell” calls on MAS.
OSK, HLIB and MIDF Research maintained their “sell” recommendation on MAS. MAS shares fell five sen to close the trading day at RM1.38 a share, with some analysts saying that the share could drop to as low as 90 sen.
On Wednesday, MAS said it suffered a fourth quarter net loss of RM1.28 billion against a net loss of RM225.9 million in the same period a year ago The worse-than-expected losses were mainly driven by high fuel cost and additional provisions like redelivery of aircraft, impairment of freighters and stock obsolescence.
The loss triggered the question whether AirAsia will pull out its shares in MAS in the near future.
Analyst said it is highly unlikely since both companies are committed to work with each other.
"I don't think there will be any reasonable basis where the share swap can be terminated or cancelled," the analyst said.
Business Times reported yesterday that MAS remains confident that the worst is over and is looking at a breakeven this year despite the shocking loss.
However, analysts remained sceptical, saying that the outlook on MAS is still bleak and it is very unlikely that it will achieve a breakeven this year.
They claimed that there are still some concerns on fuel prices and MAS' aircraft deliveries. Therefore it is still too early for MAS to look at breaking even.
"It depends on how fast they (MAS) can turn around and they have to do something ... They have not done something meaningful since their turnaround announcement," said an analyst.
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Had a look at a friends roster the other day, hes on their narrow body fleet. For the past 15 yrs his roster has seen him flying quite a lot every month, but his rister since about November has been really empty, with stints of nearly 2 weeks not flying (11-12 days)
A sign of the times no doubt
A sign of the times no doubt
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High time for a RCI on Malaysia Airlines
Joe Fernandez | March 3, 2012
We have to determine how much of the losses at MAS are due to Malaysia Airlines, the national carrier.
COMMENT
It’s a familiar story. Malaysia Airlines has once again now well passed the threshold of bankruptcy after chalking up RM2.52 billion in losses for the financial year ending Dec 31, 2011.
This means that the Umno gravy train at the airline and company alone can be conservatively estimated at RM3.5 billion for last year, that is, the losses plus a modest RM1 billion in after-tax profit.
The losses will continue, the bleeding will continue, thanks to the RM150 per serving nasi lemak syndrome, among others.
The inevitable bail-out, if not bankruptcy, looms unless Khazanah Nasional Bhd thinks out of the box. That concept will be explored further in a little while.
Hopefully, Petronas will not be called upon again to bail out Malaysian Airlines System Bhd (MAS), the company, with petrodollars stolen from Sabah and Sarawak which, according to the World Bank in 2010, have the dubious distinction of being the poorest states in Malaysia.
One question to consider before bail-outs is whether Khazanah Nasional should hand over its 50% stake in Tune Air Sdn Bhd to MAS to provide the company with yet another income stream. Tune Air has a 20% controlling stake in AirAsia. The other 80% of AirAsia shares are either owned by the staff or listed on the stock market.
History keeps repeating itself at MAS because obviously the people there are forced to keep doing whatever it is that they are doing in the same old manner ever since the Malaysia Singapore Airlines (MSA) split in 1972.
A long overdue Royal Commission of Inquiry (RCI) should be set up to probe MAS. AirAsia and Singapore Airlines should also be invited to provide testimony on the industry.
We have to determine as well how much of the losses at MAS are due to Malaysia Airlines being the national flag carrier. Anything national or under the Malaysia Boleh slogan, which covers a multitude of sins, should be suspect.
Political interference
One cannot expect a different and better result if the approach remains the same as the previous one which had proven to be disastrous.
The crux of the problem at MAS, externally and internally, is corruption. This means opportunism, nepotism, collusion and cronyism. Externally, there’s a lot of political interference from those who have nothing but the almighty ringgit sign in their eyes.
If leadership – delivering the goods – is all about being effective, the emphasis in management – getting people to work, getting work out of people, getting the work done – is on efficiency.
MAS fails on both points.
The proof is all there, splashed in red ink, in the latest figures announced on Feb 29. Why Feb 29 which comes only once in four years?
Minister in the Prime Minister’s Department, Idris Jala, was doing well as MAS chief when he was suddenly removed under subtle political pressure to his present position which keeps him in the backroom.
The story was that many people were not happy with Jala during his time at MAS because they could no longer win Ali Baba contracts at inflated prices and promptly sub-contract them out to successive hands before the last person in the chain – usually a Chinese (the Baba) perennially on the brink of insolvency – fulfilled it for a pittance.
There’s the notorious example revealed in Parliament not so long ago of a so-called supplier charging MAS RM150 for each serving of the humble nasi lemak on board flights. This was a contract which went through numerous hands before being fulfilled by the last person at RM15 per serving. MAS could have sold the nasi lemak at RM25 per serving to passengers and still make a decent profit instead of burdening further them with a mark-up on the RM150.
No five-star hotel in Malaysia charges more than RM25 for a serving of nasi lemak.
Hare-brained exercise
After the outcry in Parliament, the supplier had to cut his rate to RM75 per nasi lemak serving. We don’t know how much MAS is charging passengers for nasi lemak after their mark-up.
The supplier, it was revealed in Parliament, was related to then prime minister Abdullah Ahmad Badawi, “Mr Clean” himself.
However, Jala wasn’t the worst example of political interference in MAS.
There was the time, not so long ago, when Tajudin Ramli was literally handed MAS on a silver platter under a privatisation exercise which can only be described as hare-brained. The then prime minister was Dr Mahathir Mohamad.
We learnt that Tajudin became Mahathir’s scapegoat to cover up the RM15.5 billion in foreign exchange losses incurred by Bank Negara under his (Mahathir’s) direction.
Mahathir was assisted by Nor Mohamed Yakcop – then in Bank Negara – in this “crime”: gambling away the people’s money in speculation, even before he accused George Soros of being a moron on the same issue – speculation – during the Asian financial crisis in 1997-1998.
Nor Mohamed still remains in the government as a Minister in the Prime Minister’s Department. He was even Finance Minister II not so long ago before being shunted sideways to his present position overseeing the revamp of the Economic Planning Unit (EPU).
MAS is a never-ending story, the kind of story which will one day see Malaysians witnessing at home the same Greek tragedy being played out in Athens.
Radical solution
One radical solution for the proposed RCI on Malaysia Airlines to consider is whether it would be feasible for Khazanah Nasional to exchange the national flag carrier lock, stock and barrel – minus liabilities and losses – with Tony Fernandes for his partner Kamarudin Meranun’s and his combined 50% stake in Tune Air Sdn Bhd.
Fernandes and Kamarudin are already on the board of MAS as non-independent, non-executive directors. Besides, the duo are members of the MAS management committee, whatever that means.
AirAsia in Thailand, Indonesia and the Philippines are of course different entities which Fernandes and his Malaysian partner and/or partners run in those countries with local partners.
If the Umno government can hand over MAS to Tajudin, there’s no reason why it can’t hand over the company, this time, to Fernandes – to prove its belief in 1Malaysia.
If Tune Air fails under Khazanah Nasional, it can always exchange the company again, along with AirAsia Malaysia, with Fernandes for MAS which will be doing extremely well by that time.
Joe Fernandez | March 3, 2012
We have to determine how much of the losses at MAS are due to Malaysia Airlines, the national carrier.
COMMENT
It’s a familiar story. Malaysia Airlines has once again now well passed the threshold of bankruptcy after chalking up RM2.52 billion in losses for the financial year ending Dec 31, 2011.This means that the Umno gravy train at the airline and company alone can be conservatively estimated at RM3.5 billion for last year, that is, the losses plus a modest RM1 billion in after-tax profit.
The losses will continue, the bleeding will continue, thanks to the RM150 per serving nasi lemak syndrome, among others.
The inevitable bail-out, if not bankruptcy, looms unless Khazanah Nasional Bhd thinks out of the box. That concept will be explored further in a little while.
Hopefully, Petronas will not be called upon again to bail out Malaysian Airlines System Bhd (MAS), the company, with petrodollars stolen from Sabah and Sarawak which, according to the World Bank in 2010, have the dubious distinction of being the poorest states in Malaysia.
One question to consider before bail-outs is whether Khazanah Nasional should hand over its 50% stake in Tune Air Sdn Bhd to MAS to provide the company with yet another income stream. Tune Air has a 20% controlling stake in AirAsia. The other 80% of AirAsia shares are either owned by the staff or listed on the stock market.
History keeps repeating itself at MAS because obviously the people there are forced to keep doing whatever it is that they are doing in the same old manner ever since the Malaysia Singapore Airlines (MSA) split in 1972.
A long overdue Royal Commission of Inquiry (RCI) should be set up to probe MAS. AirAsia and Singapore Airlines should also be invited to provide testimony on the industry.
We have to determine as well how much of the losses at MAS are due to Malaysia Airlines being the national flag carrier. Anything national or under the Malaysia Boleh slogan, which covers a multitude of sins, should be suspect.
Political interference
One cannot expect a different and better result if the approach remains the same as the previous one which had proven to be disastrous.
The crux of the problem at MAS, externally and internally, is corruption. This means opportunism, nepotism, collusion and cronyism. Externally, there’s a lot of political interference from those who have nothing but the almighty ringgit sign in their eyes.
If leadership – delivering the goods – is all about being effective, the emphasis in management – getting people to work, getting work out of people, getting the work done – is on efficiency.
MAS fails on both points.
The proof is all there, splashed in red ink, in the latest figures announced on Feb 29. Why Feb 29 which comes only once in four years?
Minister in the Prime Minister’s Department, Idris Jala, was doing well as MAS chief when he was suddenly removed under subtle political pressure to his present position which keeps him in the backroom.
The story was that many people were not happy with Jala during his time at MAS because they could no longer win Ali Baba contracts at inflated prices and promptly sub-contract them out to successive hands before the last person in the chain – usually a Chinese (the Baba) perennially on the brink of insolvency – fulfilled it for a pittance.
There’s the notorious example revealed in Parliament not so long ago of a so-called supplier charging MAS RM150 for each serving of the humble nasi lemak on board flights. This was a contract which went through numerous hands before being fulfilled by the last person at RM15 per serving. MAS could have sold the nasi lemak at RM25 per serving to passengers and still make a decent profit instead of burdening further them with a mark-up on the RM150.
No five-star hotel in Malaysia charges more than RM25 for a serving of nasi lemak.
Hare-brained exercise
After the outcry in Parliament, the supplier had to cut his rate to RM75 per nasi lemak serving. We don’t know how much MAS is charging passengers for nasi lemak after their mark-up.
The supplier, it was revealed in Parliament, was related to then prime minister Abdullah Ahmad Badawi, “Mr Clean” himself.
However, Jala wasn’t the worst example of political interference in MAS.
There was the time, not so long ago, when Tajudin Ramli was literally handed MAS on a silver platter under a privatisation exercise which can only be described as hare-brained. The then prime minister was Dr Mahathir Mohamad.
We learnt that Tajudin became Mahathir’s scapegoat to cover up the RM15.5 billion in foreign exchange losses incurred by Bank Negara under his (Mahathir’s) direction.
Mahathir was assisted by Nor Mohamed Yakcop – then in Bank Negara – in this “crime”: gambling away the people’s money in speculation, even before he accused George Soros of being a moron on the same issue – speculation – during the Asian financial crisis in 1997-1998.
Nor Mohamed still remains in the government as a Minister in the Prime Minister’s Department. He was even Finance Minister II not so long ago before being shunted sideways to his present position overseeing the revamp of the Economic Planning Unit (EPU).
MAS is a never-ending story, the kind of story which will one day see Malaysians witnessing at home the same Greek tragedy being played out in Athens.
Radical solution
One radical solution for the proposed RCI on Malaysia Airlines to consider is whether it would be feasible for Khazanah Nasional to exchange the national flag carrier lock, stock and barrel – minus liabilities and losses – with Tony Fernandes for his partner Kamarudin Meranun’s and his combined 50% stake in Tune Air Sdn Bhd.
Fernandes and Kamarudin are already on the board of MAS as non-independent, non-executive directors. Besides, the duo are members of the MAS management committee, whatever that means.
AirAsia in Thailand, Indonesia and the Philippines are of course different entities which Fernandes and his Malaysian partner and/or partners run in those countries with local partners.
If the Umno government can hand over MAS to Tajudin, there’s no reason why it can’t hand over the company, this time, to Fernandes – to prove its belief in 1Malaysia.
If Tune Air fails under Khazanah Nasional, it can always exchange the company again, along with AirAsia Malaysia, with Fernandes for MAS which will be doing extremely well by that time.
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hahaha.. denial - a river in egypt
your gaji might not be there in the next 3 to 5 years, or if you're lucky, it'll be paid by someone else, with different t&c.
ignorance is bliss.
____________________________________________________________ _____
well, this unaudited loss of 2.5 bil is a farce.
all this crap started happening when they made the share swap, IJ and Tg Ad were doing a crappy job, but not 2.5 bil worth of a crappy job.
i'm not surprised at this. the new MAS Chief Financial Officer is an ex-air asia man.
i believe the end game is to kill what is now known as Malaysia Airlines.
even the widebody fleet.
they have a solid plan, even mr. dr. tun "20 year democratic ruler" mahathir is on board.
come up with back to back losses, gain the rakyats and the goverments backing to make air asia the national airline (or give tony and his people a major controlling stake in MAS [cause air asia is doing so DAMN well /sarcasm])..
your gaji might not be there in the next 3 to 5 years, or if you're lucky, it'll be paid by someone else, with different t&c.
ignorance is bliss.
____________________________________________________________ _____
well, this unaudited loss of 2.5 bil is a farce.
all this crap started happening when they made the share swap, IJ and Tg Ad were doing a crappy job, but not 2.5 bil worth of a crappy job.
i'm not surprised at this. the new MAS Chief Financial Officer is an ex-air asia man.
i believe the end game is to kill what is now known as Malaysia Airlines.
even the widebody fleet.
they have a solid plan, even mr. dr. tun "20 year democratic ruler" mahathir is on board.
come up with back to back losses, gain the rakyats and the goverments backing to make air asia the national airline (or give tony and his people a major controlling stake in MAS [cause air asia is doing so DAMN well /sarcasm])..
Last edited by cav-not-ok; 4th Mar 2012 at 03:53.
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KUALA LUMPUR, (Bernama) -- Tun Dr Mahathir Mohamad has urged Malaysia Airlines (MAS) to study AirAsia's cost-cutting measures and management structure for it to return to the black.
Now was the best chance to understudy and see why the national carrier had plunged into a deep fiscal crisis while the budget airline was making profits, the former prime minister told Bernama.
The swap deal between Khazanah Nasional and key shareholder of AirAsia should tie them together, he said.
In August last year, MAS and AirAsia entered into a collaboration agreement that was strengthened by Tune Air and Khazanah -- the major shareholders of AirAsia and MAS respectively -- swapping their shares.
This resulted in Tune Air holding 20.5 per cent equity interest in MAS and Khazanah owning 10.0 per cent of AirAsia, and also Tune Air founder and co-founder Tan Sri Tony Fernandes and Datuk Kamarudin Meranun joining MAS' board.
"Given that both the airlines operate from the same country, there is no reason for MAS to fail. They have to team up with AirAsia," Dr Mahathir said.
"AirAsia is making plenty of money. They are making profit even though their fares are very low.
"So there is something MAS can learn from AirAsia in terms of management, cutting down costs and therefore, making profit," he said.
MAS posted RM2.52 billion net loss for its financial year ended Dec 31, 2011 -- the biggest-ever in its corporate history, on the back of RM13.9 billion revenue.
AirAsia, meanwhile, reported a net profit of RM564.1 million on the back of RM4.47 billion record revenue.
Asked whether Khazanah should divest its shares in MAS if the crisis continues, Dr Mahathir said: "Well, I would not be able to say on that."
Now was the best chance to understudy and see why the national carrier had plunged into a deep fiscal crisis while the budget airline was making profits, the former prime minister told Bernama.
The swap deal between Khazanah Nasional and key shareholder of AirAsia should tie them together, he said.
In August last year, MAS and AirAsia entered into a collaboration agreement that was strengthened by Tune Air and Khazanah -- the major shareholders of AirAsia and MAS respectively -- swapping their shares.
This resulted in Tune Air holding 20.5 per cent equity interest in MAS and Khazanah owning 10.0 per cent of AirAsia, and also Tune Air founder and co-founder Tan Sri Tony Fernandes and Datuk Kamarudin Meranun joining MAS' board.
"Given that both the airlines operate from the same country, there is no reason for MAS to fail. They have to team up with AirAsia," Dr Mahathir said.
"AirAsia is making plenty of money. They are making profit even though their fares are very low.
"So there is something MAS can learn from AirAsia in terms of management, cutting down costs and therefore, making profit," he said.
MAS posted RM2.52 billion net loss for its financial year ended Dec 31, 2011 -- the biggest-ever in its corporate history, on the back of RM13.9 billion revenue.
AirAsia, meanwhile, reported a net profit of RM564.1 million on the back of RM4.47 billion record revenue.
Asked whether Khazanah should divest its shares in MAS if the crisis continues, Dr Mahathir said: "Well, I would not be able to say on that."
lets not forget, grandpa is advisor to Air Asia
