MAS-sive Sale

[Sing Yew 1]

From the news:

Malaysian Air Expects MYR1.5B From Ppty Sales - Source

 

(MORE TO FOLLOW) Dow Jones Newswires

 

January 09, 2006 00:23 ET

 

Malaysian Air To Sell Local, Overseas Ppties - Source

 

KUALA LUMPUR (Dow Jones)--Malaysian Airline System Bhd. (3786.KU) is selling most of its local and overseas properties, including its Kuala Lumpur headquarters, in the coming months to raise MYR1.5 billion ($400 million), an executive close to the company said Monday.

 

The planned disposal of the properties comes at a time when the unprofitable airline is at risk of a cash crunch. The airline is also set to report its third straight quarter of losses in the three months ended Dec. 31 due to high fuel and operating costs, and unprofitable routes.

 

"It is going ahead, the sale of the MAS Building," said the executive on condition of anonymity. Employees at the MAS Building in downtown Kuala Lumpur will move out of the 35-storey office block over the next few months, in preparation for its sale, local newspapers said Saturday.

 

A Malaysian Airline spokesman declined comment on the reports and this story.

 

In addition, the airline also plans to sell overseas properties located in prime parts of cities such as London and Sydney, the executive close to the company said.

 

"MYR1.5 billion is what they will raise if you take all the properties around the world," said the executive.

 

The headquarters, MAS Building, has a market value of about MYR125 million, and is in need of extensive refurbishment, he said.

 

(MORE TO FOLLOW) Dow Jones Newswires

 

January 09, 2006 00:29 ET

 

Malaysian Air To Sell Local, Overseas Ppties -Source -2-

 

Malaysian Airline, the operator of Southeast Asia's biggest passenger plane fleet, had MYR1.42 billion in cash as at Sept. 30. That hoard is likely to be far lower now as the airline is likely to have spent more cash than it received due to higher costs and poor performance on some routes.

 

Local newspapers have said the company needs MYR3 billion in cash to continue as a going concern in 2006, a figure the company hasn't commented on.

 

On Dec. 2, Prime Minister Abdullah Ahmad Badawi said the government - which owns 69% of the airline - was prepared to lend it money though he warned any help won't be a bailout.

 

Malaysian Airline "must earn the right to survive", Abdullah said, after meeting the airline's newly-appointed managing director, Idris Jala.

 

Thus far this financial year, the airline has posted cumulative losses of MYR648.4 million and earnings for the October-December period are due by end-February.

 

For the year ended Dec. 31, three analysts polled by Thomson Financial forecast an average loss of MYR803.1 million, indicating a projected MYR154.7 million loss in October-December.

 

Earlier last year, Malaysian Airline changed its financial year-end to Dec. 31 from March 31. Consequently, its earnings announcement for the latest financial year will only include three quarters.

 

Analysts say a turnaround is unlikely for the airline in the next year or so, though most think the worst is over for the carrier, which operates about 100 passenger planes.

 

Link

[Min Chun 0]

Selling head quaters?!

[Denny Yen 0]

Thanks for the scoop Sing Yew, keeping your radar screen open to scan news huh?!!

 

DJ is a very respected agency, and they do not simply write any news without verifying the story/source. MAS chose to "out" the story via foreign media, rather than local media.

 

Although the timing of this news is unexpected, however, the tactic used is not new. It is probably a move calculated to "gauge" reaction and make appropriate adjustments in time to respond to local media and politicians' reaction when the news hits them tomorrow/over the next few days.

[KC Sim 2]

Sale of property and aircraft is a finite option in raising cash and avoiding the capital crunch.

 

MAS' longterm sustainability must be contingent on the following:

 

- good corporate governance

- innovative product and good (and consistent) service delivery

- appropriate level of fuel hedging (it is probably hedging too little now to tide over fuel price escalations in 2005)

- efficient route structure (can someone revive the report about the number of routes that are profitable and perhaps identify those that are or are not profitable?)

- enter into better quality strategic alliances (either with specific airlines or with an alliance such as oneworld or Skyteam)

- re-look its value proposition and then stick to a consistent and sustained marketing message. Over time, it must have some things that are consistently and positive associated with MAS . . . even as the marketing message is tailored to each market

- introduce a more fuel-efficient fleet (given that fuel price is tracking consistently in one direction - UP) and fuel-efficient practices

- improve productivity within its entire administration and management

- update its corporate image to cast away the various negative adjectives that have over the years been associated with the airline (and most certainly need to get rid of the current flight stewards uniform for something more classy - those lapels are MASsive and ultra-tacky you could imagine the stewards taking flight in a strong wind)

- be more proactive in engaging the travel industry worldwide in promoting all the destinations it flies to (not just Malaysia). SIA commits to spending millions of dollars with the natonal/state tourism organisations of Australia, Indonesia, the Philippines each year.

- invest in research that gives it a better understanding of the changing trends of travel in a worldwide and regional environment

- invest in a team of people who have a strong feel for strategic planning (people who dare to tell the bosses that flying to Zagreb is an unsustainable business proposition and can back it up with sound arguments - and not be fired)

 

But the good thing is a new head is in place at MAS and all these restructuring and bitter pill consumption is taking place when much of the Asia Pacific region is going through an upswing in business. MAS MUST take advantage of this upswing to do everything it needs to (and not wait to re-attempt all these when the region's economies go through a downward spiralling business cycle).

 

From the folks on the other side of the causeway, we wish MAS well . . . and please send those beautiful B738s across to Changi please.

 

KC Sim

Edited January 10, 2006 by kc sim

[Attan 0]

Sale of property and aircraft is a finite option in raising cash and avoiding the capital crunch.

 

MAS' longterm sustainability must be contingent on the following:

 

-  good corporate governance

-  innovative product and good (and consistent) service delivery

-  appropriate level of fuel hedging (it is probably hedging too little now to tide over fuel price escalations in 2005)

-  efficient route structure (can someone revive the report about the number of routes that are profitable and perhaps identify those that are or are not profitable?)

-  enter into better quality strategic alliances (either with specific airlines or with an alliance such as oneworld or Skyteam)

-  re-look its value proposition and then stick to a consistent and sustained marketing message.  Over time, it must have some things that are consistently and positive associated with MAS . . . even as the marketing message is tailored to each market

-  introduce a more fuel-efficient fleet (given that fuel price is tracking consistently in one direction - UP) and fuel-efficient practices

-  improve productivity within its entire administration and management

-  update its corporate image to cast away the various negative adjectives that have over the years been associated with the airline (and most certainly need to get rid of the current flight stewards uniform for something more classy - those lapels are MASsive and ultra-tacky you could imagine the stewards taking flight in a strong wind)

-  be more proactive in engaging the travel industry worldwide in promoting all the destinations it flies to (not just Malaysia).  SIA commits to spending millions of dollars with the natonal/state tourism organisations of Australia, Indonesia, the Philippines each year.

-  invest in research that gives it a better understanding of the changing trends of travel in a worldwide and regional environment

-  invest in a team of people who have a strong feel for strategic planning (people who dare to tell the bosses that flying to Zagreb is an unsustainable business proposition and can back it up with sound arguments - and not be fired)

 

But the good thing is a new head is in place at MAS and all these restructuring and bitter pill consumption is taking place when much of the Asia Pacific region is going through an upswing in business.  MAS MUST take advantage of this upswing to do everything it needs to (and not wait to re-attempt all these when the region's economies go through a downward spiralling business cycle).

 

From the folks on the other side of the causeway, we wish MAS well . . .  and please send those beautiful B738s across to Changi please.

 

KC Sim

24243[/snapback]

 

KC

 

That's the best short and sharp analysis I've come across so far. Hope the powers that be read it and take note.

[Sandeep G 1]

an excellent list KC!

 

But let's not forget commitment to innovative developments in IT to enhance operational efficiencies and reduce the need for additional staff. Also a relook at the number of staff presently working at MAS and commitment toward better human resource management... These are the areas where MAS is desperately lagging..

[H Azmal 0]

They're selling the HQ with a reserve price of MYR 130m...hmm doesn't get 'em far does it?

 

TIme to downsize the 737s I guess!