MAS Pre-Tax Profit Falls To RM282.03 Million

[KK Lee 5]

You can have advisors and consultants, can't you? Good management will ensure a business is professionally and properly run. I think that in Malaysia, we have too many politicians and not enough professionals in GLCs. That is why we see a great deal of incompetence and not enough transparency and accountability.

 

GLC typically engage external consultant for ‘restructuring’ to justify removing old hands to cold storage, renaming job title and adding a new layer of management for CEO team mates

Edited February 26, 2011 by KK Lee

[Mohd Azizul Ramli 2]

These statuses are just hilarious. I think the spelling mistakes are intentional LOL.

 

Tony Fernandes

Malayaisan airlines made 130 million in one full year operating when airlines had record years. With paper gains from derivatives 240 ringitt.

 

Tony Fernandes

ts all about focus and discilpine. Mas has so many brands. First class. Business class , economy. Long haul short haul. Mas wings catering , MRO, cargo and now a low cost airline with 2 types. Firefly turbo and firefly jet.

240 hinggit, boleh?

[Mohd Suhaimi Fariz 2]

Arrogance will get nobody nowhere. He should have been the bigger man instead of rubbing MH's face in.

[N Azman 0]

"Its all about focus and discipline, mas has so many brands"

 

Obviously he has not heard of Lufthansa group and its subsequent brands....e.g. dolomiti, germanwings, LH Technik, LH Consulting etc.

 

But then, i don't expect much knowledge beyond the LCC world from him, much less class and manners.

[Lock SH 0]

Certainly the truth is hard to swallow .......... whether we like him or not, he has proven himself that he is "A BILLION DOLLAR MAN" .....

 

In today's 'dog eats dog' world, money talks and bullshit walks .......

 

If only people in MAS swallow their pride and start learning something from this so called 'bed-wetter' in local airline industry, things might be different ........ We all know that "SNOBBISH RULES" .......

 

 

[flee 5]

MH management would do well if they focussed on these two lines of the 2010 financial statements:

 

Operating revenue RM 12,980,447,000

Operating expenses RM (13,323,737,000)

 

Their trading position is very weak and they need to improve on these. Very challenging if the price of oil keeps increasing.

 

MH is nowhere near Lufthansa in terms of size, network coverage and management competence. So, it would not be fair to compare them to Lufthansa at this stage. MH should focus on doing the basic things airlines do well. You must get your core operating activities running well before expanding into other business segments.

[Mohd Suhaimi Fariz 2]

Certainly the truth is hard to swallow .......... whether we like him or not, he has proven himself that he is "A BILLION DOLLAR MAN" .....

 

In today's 'dog eats dog' world, money talks and bullshit walks .......

 

If only people in MAS swallow their pride and start learning something from this so called 'bed-wetter' in local airline industry, things might be different ........ We all know that "SNOBBISH RULES" .......

 

 

 

I have to disagree. Southwest Airlines make money almost every year and their management aren't as obnoxious. Their management doesn't take cheap shots. They do have competitive advertising against their competitors but they did it in a way that endears them to the public.

[N Azman 0]

id like to believe the times of good businessmen are not completely gone to wily class-less gangsters. end of the day, like good businessmen, we never burn bridges, not even with our competitors.

 

you never know who might take you over one day.

 

I have to disagree. Southwest Airlines make money almost every year and their management aren't as obnoxious. Their management doesn't take cheap shots. They do have competitive advertising against their competitors but they did it in a way that endears them to the public.

 

Youre quite right. in fact, herb kelleher is recognized as one of the finest gentlemen in the industry.

 

 

MH is nowhere near Lufthansa in terms of size, network coverage and management competence. So, it would not be fair to compare them to Lufthansa at this stage. MH should focus on doing the basic things airlines do well. You must get your core operating activities running well before expanding into other business segments.

 

so don't expand MRO or any other subsidiary unless operating pax business achieves desired margin?

 

way off court.

 

in the full svc carrier world, ancillary businesses are there precisely to AID the margins thru synergies of business.

 

you're right about one thing tho. MH do need to increase margin. but thats purely in pax business. are you convinced their other businesses are not making money or the wrong margin too?

[KK Lee 5]

Unlike FY that has separate brand name from MH, LH regional (i.e. Air Dolomiti, Augsburg Aiways, Lufthansa Cityline, Eurowings, Contact Air) are marketed and ticketed as single entity LH.

 

MH yield is low? More like MH cost is too high. Personally find 90% of time MH fare is more expensive than TG, EK, EY, etc and can’t afford to take MH without MH Asean Pass

[KK Lee 5]

Higher yield for MH? FY ‘Standard Set of Services’ at RM38 effectively set the marginal price for MH 5 star hospitality. FY will eventually take over MH domestic routes.

 

Believe MH need to go through a drastic cost cutting exercise else unlikely to be profitable

[Sri Ramani K. 0]

so don't expand MRO or any other subsidiary unless operating pax business achieves desired margin?

 

way off court.

 

in the full svc carrier world, ancillary businesses are there precisely to AID the margins thru synergies of business.

 

you're right about one thing tho. MH do need to increase margin. but thats purely in pax business. are you convinced their other businesses are not making money or the wrong margin too?

 

Agree with what you have to say. Problem seems to sound as if they're making money elsewhere and losing it all in their core operating business. Just like buying a multi million dollar home and having no money to pay for the utilities. Probably what flee meant here is for them to cut down some time beautifying the icing and making sure the cake turns out well first.

[leon t 0]

MH is lucky that it made some profit - and from its meagre profit as compared to even a LCC like AK - MH must do more to reduce its high overheads and efficient fleet - and to this - its even questionable why it still go ahead with buying 6 A380s.

[Mohd Suhaimi Fariz 2]

MH is lucky that it made some profit - and from its meagre profit as compared to even a LCC like AK - MH must do more to reduce its high overheads and efficient fleet - and to this - its even questionable why it still go ahead with buying 6 A380s.

 

The A380 infrastructure's in place so they've passed the point of no return. Besides, who's to say that using A380 isn't going to be profitable?

 

Don't forget, the international airline business faced so much this year, especially carriers flying to Europe. First was the closure of airspace due to the Icelandic volcano eruption, then London snowed in to a standstill. Surely MH will get a bigger hit than AK because of that.

[flee 5]

Probably what flee meant here is for them to cut down some time beautifying the icing and making sure the cake turns out well first.

You are correct - if a building foundation is not sound, it will collapse no matter how beautiful the external window dressing is!

 

Lufthansa is a bad comparison because MH is nowhere near them in these areas:

 

1 Management competency

2 Size of the aircraft fleet

3 Size of the company

4 Network coverage

5 Financial strength

 

When your airline is of a certain size, you should not try to do too many things as you will have to manage so many aspects of those operations. Doing too many things will distract the management from the real important tasks at hand.

 

MH is so poor at cost control and nearly had an operating loss. Only unrealised or paper operating income spared them from reporting red numbers. MH management should focus on bringing the costs down so that they are more in line with the revenue.

 

MH must do more to reduce its high overheads and efficient fleet - and to this - its even questionable why it still go ahead with buying 6 A380s.

Yes, cost control is something they need to focus on.

 

The A380s will definitely help to reduce cost of sales as they will be primarily deployed on MH's profitable KUL-LHR and KUL-SYD routes. That should boost their gross margins, assuming they can fill up the planes.

[BC Tam 2]

Believe MH need to go through a drastic cost cutting exercise else unlikely to be profitable

 

MH management should focus on bringing the costs down so that they are more in line with the revenue.

 

And repercussions of such actions ?

Likely recent events in Egypt and Libya will seem like Sunday picnics in comparison

[N Azman 0]

You are correct - if a building foundation is not sound, it will collapse no matter how beautiful the external window dressing is!

 

Lufthansa is a bad comparison because MH is nowhere near them in these areas:

 

1 Management competency

2 Size of the aircraft fleet

3 Size of the company

4 Network coverage

5 Financial strength

 

 

aiyaaaa. I mentioned LH because they are one of the best in the business, something all FSC should aspire to. Not making comparisons to MH. Of course size revenue and whatnot its not comparable yet between those two. Nobody is comparing them face to face. it doesnt take Dr Obvious to say who's bigger and better innit?

 

But why the ongoing comparison to AK then in terms of margins and strategy? AK is completely on a diff universe altogether. If you say we cant compare to LH because you seem certain everyone in MH are 'incompetent' , but then you turn back and raise many comparisons with AK, who are on a completely different business model. You're starting to sound like tony.

 

LCC model : single fleet, single product, ancillary charges, emphasis on fares, NO subsidiary business in airline value chain (MRO Catering leasing asset mgmt etc)

 

FSC model : multi fleet, multi product, few ancillary, emphasis on value and service, YES to subsidiary businesses in airline value chain

 

So you tell me which advise should MH management listen to :

Tony : (you have too much brands! must focus and discipline like we do!)

Chris Franz : (Expand products and capability, build synergies, reduce cost)

[flee 5]

aiyaaaa. I mentioned LH because they are one of the best in the business, something all FSC should aspire to. Not making comparisons to MH. Of course size revenue and whatnot its not comparable yet between those two. Nobody is comparing them face to face. it doesnt take Dr Obvious to say who's bigger and better innit?

MH will always say that they are a special case. They are not the same as LH, SQ, TG, CX, QF, BA, etc. They will have to do things their own way!

 

But why the ongoing comparison to AK then in terms of margins and strategy? AK is completely on a diff universe altogether. If you say we cant compare to LH because you seem certain everyone in MH are 'incompetent' , but then you turn back and raise many comparisons with AK, who are on a completely different business model. You're starting to sound like tony.

Why compare? Because MH chose to be a direct competitor to AK.

 

They chose take on AK head on whereas other legacy carriers like SQ did not. As such, all I am trying to point out by comparing the two sets of financial statements is that MH has suffered as a result of competing with them when they have not managed to rein in the costs.

 

I did not say that everyone in MH is incompetent. I am just saying that the levels of competency in MH's management is quite different from those of LH.

 

So you tell me which advise should MH management listen to :

Tony : (you have too much brands! must focus and discipline like we do!)

Chris Franz : (Expand products and capability, build synergies, reduce cost)

Believe it or not, all businesses share common management principles, regardless of which industry you are in. Good management will always be rewarded with strong corporate performance while poor management will be punished and the company will go bust. It does not matter if you are running a legacy, low cost carrier or even a cargo airline. Management must have a firm and responsive grip of the business, deploy resources efficiently and effectively, be responsive to market and competition dynamics, be innovative, be financially disciplined, etc. etc.

 

At the end of the day, its the report card that shows what the bottom line is. They have to please the stock market. Those people only look at your results - they don't really care if you are an LCC or a legacy carrier.

[Mohd Suhaimi Fariz 2]

Why compare? Because MH chose to be a direct competitor to AK.

 

Not for long. That's why Firefly's being expanded with jets.

[Riza 0]

MH is always in a a category of its own.

 

WY - As a start up to now, they position themself as a boutique airline servicing a limited destination & build up on that.

TG - Well, if they not flying to European destination, the European home-based carrier will fly to BKK. BKK & HKT is the choiced holiday destination for many. So kinda like "I'll go to BKK once in my life". People'll fly there, just send planes to pick up the passengers.

SQ - Known for its service & de facto carrier for its down south neighbor, generates 70% of it sales its outside home-country (I read it somewhere) due to its strong reputation.

EK - Expanding like there's no tomorrow with their famous 7-abreast 77W which makes DXB is a transit point for 4 in 5 passengers. They also ferry millions of pax from India to the west of DXB. A look at their route map will put cold feet on KL/LH/AF on their eastern long-haul route. More passengers from North America are bypassing Europe as transit point to India/SEA due to its expansion. Looks like EK is reinventing the map where DXB is now center of the world. Same might goes to QR & EY.

LCC - Point to point, single fleet type, simplified services on/off ground with fees for 'extra' services. A first choice for budget conscious/first time traveller.

 

What can be said about MH? Well, besides the coveted 'the best cabin crew as they advertised', I might look as how these can be capitalized to strengthen their network & services.

[Mohd Azizul Ramli 2]

We need Idris Jala back to do BTP3 for MH.

[Riza 0]

The turnaround & its essence shall be continuously implemented & monitored thoroughout, even in the event of personnel leaving the company. If not, we'll go the Sinusoidal way.

[N Azman 0]

 

Believe it or not, all businesses share common management principles, regardless of which industry you are in. Good management will always be rewarded with strong corporate performance while poor management will be punished and the company will go bust. It does not matter if you are running a legacy, low cost carrier or even a cargo airline. Management must have a firm and responsive grip of the business, deploy resources efficiently and effectively, be responsive to market and competition dynamics, be innovative, be financially disciplined, etc. etc.

 

At the end of the day, its the report card that shows what the bottom line is. They have to please the stock market. Those people only look at your results - they don't really care if you are an LCC or a legacy carrier.

 

The above is MGMT101 lar bro. What you said is very true and is quite obvious. Report card shows what the bottom line is? yes. I figure thats why it is called the corporate report card.

 

Nevertheless, we are discussing Airline MGMT501 here. HOW to get there and how the roads to get there for an LCC is different from a FSC (please don't say 'stress on competence discipline and focus'- that applies even for a burger stall). Hence, if i were running a FSC, id be looking to KL, LH and SQ for best practices. NOT airasia. Hence, expansion and diversification of business is most likely required in order to optimize a FSC's sizable value chain.

 

Why compare? Because MH chose to be a direct competitor to AK.

 

...They chose take on AK head on whereas other legacy carriers like SQ did not.

 

 

Please please show us how best practices in the world does NOT react to an LCC.

 

Aer Lingus? (well they didnt do a very good job....)

BA? (show us the average fares of BA before and after Ryanair+Easyjet and please tell us they don't react)

SQ? (who gave more routes to silkair especially ones dominantly held by an LCC)

LH? (who actually BOUGHT an LCC and grew it ex-germany, ensured synergy between LHRegional carriers + said LCC)

QF? (Jetstar......)

 

Please tell us how blue ocean might have worked for a FSC airline who does NOT react to an LCC.

[flee 5]

Hence, if i were running a FSC, id be looking to KL, LH and SQ for best practices. NOT airasia. Hence, expansion and diversification of business is most likely required in order to optimize a FSC's sizable value chain.

 

Please tell us how blue ocean might have worked for a FSC airline who does NOT react to an LCC.

May I remind you that MAS had TWO business turnaround plans because the airline was in serious trouble. You do not need complications like diversification of business to compromise your business turnaround. The whole purpose of the plans was to stabilise the ship so that it can be restructured. MAS is still shaky at the moment and is in no position to diversify. That will only cause more complications. Let's stabilise the ship first, then expand and diversify.

 

Any responsible management will look at best practices of all airlines. I am sure that MAS has learnt a few things from AirAsia and applied them to Firefly and themselves. The Firefly CEO has said that he is running FY on LCC principles.

 

Reacting to LCC competition and taking them on head on, as MAS are doing, are two different things.

 

Yes, SQ and Silk Air are reacting to LCC competition. Silk Air is a full service carrier and SQ is merely re-aligning its cost base when it handed over routes to them. They have to deploy their resources more carefully and are cutting wastage.

 

LH, QF and SQ have not taken them on head on. They have set up separate units that are LCCs, with different management teams, so that they stay focussed on their tasks. There is no brand and product confusion. MAS has thrown everything in the rojak pot and the 2010 results clearly reflect their folly.

Edited February 28, 2011 by Mohd Azizul Ramli

[KK Lee 5]

After FY take over most of MH domestic routes and if MH head count is not reduced, it will be tough for MH to be profitable.

 

Given GE13 is likely within the next 18 months, VSS by MH will be unpopular and highly unlikely. Hence, expect MH is burdened with heavy overhead until after GE13.

[Mohd Suhaimi Fariz 2]

After FY take over most of MH domestic routes and if MH head count is not reduced, it will be tough for MH to be profitable.

 

Given GE13 is likely within the next 18 months, VSS by MH will be unpopular and highly unlikely. Hence, expect MH is burdened with heavy overhead until after GE13.

 

Staff costs are actually under control at MH. You can't cut more staff and still have things run smoothly. Like I said, the highest cost for MH right now is fuel. Once they start reducing their fleet age with more 738 coming online and the new A380s to replace the 744 they can considerably cut down on fuel expenditures