MAS and AirAsia Shares Swap

[Mohd Azizul Ramli 2]

The name Sapphire might be a little confusing for oneworld FFPs regulars, since it is used in the 3 FFP tiers for oneworld - Ruby, Sapphire and Emerald. And MH is expecting full election into the alliance by the end of 2012. Having the airline's name weirdly identical to the mid tier level of the frequent flyer program that the airline is joining is quite lacking in originality, in my opinion.

[Isaac 0]

How many people can pronounce MH's parent co properly? "Khazanah"

LOL! That's is so true!

[Mohd Azizul Ramli 2]

Khazanah is an Arabic word خزانة (pronounce as 'Haz-nah' by the Arabs) which means Treasury.

[Mushrif A 3]

Khazanah is an Arabic word خزانة (pronounce as 'Haz-nah' by the Arabs) which means Treasury.

 

 

Exactly! So, just as you keep hearing "KA-ZA-NAH", you will hear "SE-PA-YE" Air. Just as I keep hearing @Changi people saying "SIK-AIR".

Edited August 19, 2011 by Mushrif A

[BC Tam 2]

Exactly! So, just as you keep hearing "KA-ZA-NAH", .....

Isn't that the way it's aired over telly and radio here ?

[Mushrif A 3]

Isn't that the way it's aired over telly and radio here ?

 

Which is the incorrect way, but there are also a quite number of times where it was pronounced correctly over the TV/ radio. It depends on who's reading the script.

[Waiping 12]

The word "Sapphire" sounds quite close to the Malay slang "Siapa ya?"

 

Son: "Mum I am going to KL with Sapphire."

Mum: "Kau nak pergi ke KL dengan SIAPE-YE?"

[Keno Omar 0]

My vision of what Sapphire might look like back in 2007 : http://www.malaysianwings.net/forum/index.php?showtopic=7351

[alberttky 0]

The word "Sapphire" sounds quite close to the Malay slang "Siapa ya?"

 

Son: "Mum I am going to KL with Sapphire."

Mum: "Kau nak pergi ke KL dengan SIAPE-YE?"

 

[alberttky 0]

Flight rationalisation may result in fewer low-cost options

 

KUCHING: Sarawak Tourism Board chief executive Datuk Rashid Khan believes that flights to the state could be reduced following the share-swap deal between Malaysia Airlines (MAS) and AirAsia.

 

“When there is rationalisation or reforms, something will inevitably have to go,” said Rashid, a former MAS commercial director.

 

He said that Firefly, MAS’ affordable sub-carrier launched two years ago, might be asked to pull out or reduce flights to destinations operated by AirAsia as well.

 

AirAsia was likely to dominate in negotiations on the development of the low-cost aviation segment, since it was more successful in the segment, he said.

 

Although the details of the deal are scant at the moment, Rashid was concerned about its implications.

 

“It is a concern for stakeholders like us,” he told reporters after a breaking of fast with industry players here on Thursday.

 

“While countries are liberalising their aviation industries, it seems that we may be heading towards monopoly. The thing about the airline industry is that its assets are moveable. Their planes can operate anywhere.”

 

Asked about the possibility of Firefly pulling out and AirAsia replacing the flights, Rashid said: “I prefer not to speculate. Low-cost carriers drive numbers through their promotional fares, they manage inventory relative to demand.

 

“If Firefly pulls out, AirAsia’s load factor will go up, and when load goes up, they will make adjustments to their prices. Demand can exceed supply.”

 

Rashid said that Firefly currently enjoyed an average of 70% load factor on flights to Sarawak.

 

During a presentation to tourism players earlier, Rashid said he would raise the board’s concerns about connectivity to the relevant authorities.

 

“Sarawak is highly dependant on air travel. We are on an island. It is a strategic issue for us, especially since our (tourism) numbers are growing positively. There’s a lot of work to be done in terms of lobbying and engaging with other people.”

 

http://thestar.com.my/news/story.asp?file=/2011/8/20/sarawak/9333115&sec=sarawak

 

Well... do something about it Rashid!

[jackch747 0]

Yes, do something, Rashid.

[alberttky 0]

How many people can pronounce MH's parent co properly? "Khazanah"

 

I kept pronouncing "Kanasai".

[Isaac 0]

Khazanah is an Arabic word خزانة (pronounce as 'Haz-nah' by the Arabs) which means Treasury.

Exactly! So, just as you keep hearing "KA-ZA-NAH", you will hear "SE-PA-YE" Air. Just as I keep hearing @Changi people saying "SIK-AIR".

However, if they were to pronounce it according to what we learn in "ba be bi bo bu be(bé)", khazanah should be pronounced as ha-za-nah. Another common mistake is presiden (presidén), identiti, lagenda (lagénda) and so on. The correct pronunciation of Indonesia should be in-do-né-sia but i think most Malaysians pronounce is In-du-ni-sia. Alright alright, i do the same too . In short, Indonesians are much better in this regard

 

sorry for going off-topic

 

 

The word "Sapphire" sounds quite close to the Malay slang "Siapa ya?"

 

Son: "Mum I am going to KL with Sapphire."

Mum: "Kau nak pergi ke KL dengan SIAPE-YE?"

LOL

[Ikman Ikreza 0]

Believed some news about Sapphire is gonna be out on the street real soon, FY is already suspending promotions, taking away the Jet's operations banners and stop taking bookings for Jet's flights after end of much where next summer schedules shall starts (The booking was just opened not longer ago during the week of the share swap) while the turboprops services still bookable till Oct 2012...However, MH site still can book those flights...Let's see what will happen soon...

 

Yup, it seems last flight will be operated by FY's jet until March 2011 and we can see new airlines (Sapphire) after 1st quater 2012..

[BC Tam 2]

Yup, it seems last flight will be operated by FY's jet until March 2011 2012 .....

[Sharil Abdul Rahman 0]

Man i feel lucky that i managed to get a flight on a FY jet bird before the go in the way of the dodo.

 

OT: isnt it Kha-za-nah? like it should be Kha-mis? and its in-doe-ne-see-a?

[Isaac 0]

Man i feel lucky that i managed to get a flight on a FY jet bird before the go in the way of the dodo.

Speaking of... i better book a flight on FY real soon to try it out

 

 

OT: isnt it Kha-za-nah? like it should be Kha-mis? and its in-doe-ne-see-a?

OT: If my memory serves me correctly, the "k" in such case should be silent when pronouncing a word starting with "kh". One word that all Malaysians get it correct is khayal (ha-yal). As for Indonesia, you are right that -a should be pronounced as a single word but i guess most people pronounce it too fast and it sounds like -si-a (-sia) becomes a single pronunciation. Anyway, the correct pronunciation should be "in-do-né-sia". Not in-du-ni-sia. The Indo(ne)sia (talking about the NE here) should either be pronounced as ne or né but never as ni.

Edited August 20, 2011 by Isaac

[Josh T 0]

Speaking of... i better book a flight on FY real soon to try it out

 

 

 

OT: If my memory serves me correctly, the "k" in such case should be silent when pronouncing a word starting with "kh". One word that all Malaysians get it correct is khayal (ha-yal). As for Indonesia, you are right that -a should be pronounced as a single word but i guess most people pronounce it too fast and it sounds like -si-a (-sia) becomes a single pronunciation. Anyway, the correct pronunciation should be "in-do-né-sia". Not in-du-ni-sia. The Indo(ne)sia (talking about the NE here) should either be pronounced as ne or né but never as ni.

I never knew that! Thanks. I am enjoying my bahasa elocution lessions here.

[alberttky 0]

Union of the Titans

 

Once troubled by intense rivalry, the latest collaboration between the nation’s aviation goliaths appears to herald the advent of consolidation for the sector. But at what cost?

 

BizHive Weekly reviews the many facets – both good and bad – of the Malaysia Airlines-AirAsia jointure.

 

THE move that brought AirAsia Bhd’s (AirAsia) chief executive Tan Sri Dr Tony Fernandes and his deputy Datuk Kamarudin Meranun to taking directorships in Malaysian Airline System Bhd (MAS) took many by surprise.

 

After all, the two aviation go­liaths had always been viewed as ‘nemesis’ to each other ever since AirAsia took its maiden flight in 2002.

 

As RHB Research Sdn Bhd put it, “We have reservations about the inclination of GLCs (government-linked companies) and entrepreneurs making good bedfellows.” Yet, the research house was one among many that had already sensed the news prior to its official announcement.

 

Preceding August 9, sources had noted a likely share-swap deal between the two airlines and imminent changes to its board of directors, even as MAS was dismissing such reports as ‘speculations’.

 

Even before that, the now ex-MAS managing director and chief executive officer Tengku Datuk Seri Azmil Zahruddin had brushed off market talk that he might release his stewardship of the nation’s flagship airline be­fore the expiry of his contract.

 

As it turned out, the 40-year-old stepped down in immediate fashion much like his predeces­sor Datuk Seri Idris Jala back in 2009.

 

Post-MAS, Tengku Azmil would be joining the nation’s invest­ment arm Khazanah Nasional Bhd (Khazanah) next month.

 

As of writing, the seat for MAS managing director and chief ex­ecutive officer is still vacant.

 

• ‘Expected surprise’

 

While regarded as an ‘expected surprise’, consensus agreed that the MAS-AirAsia partnership would undoubtedly change the landscape of the region’s aviation industry.

 

In a comment made on the eve of the announcement, Transport Minister Datuk Seri Kong Cho Ha described the move as a ‘good development for the local airline industry’.

 

“Fernandes’ bid to become a shareholder of the national car­rier will not only help pull MAS out of a business slump, but also enhance cooperation in the air­line industry.

 

“Both companies can cooper­ate on which routes to operate in order to enhance operating costs, which I hope will eliminate issues concerning both airlines fighting for the rights to operate desired routes,” he was quoted as saying.

 

In concurrent filings to Bursa Malaysia on August 9, both Tune Air Sdn Bhd (Tune Air) and Khazanah – major shareholders of AirAsia and MAS, respectively – agreed to acquire from each other existing shares of both companies, resulting in Tune Air holding 20.5 per cent equity interest in MAS and Khazanah

 

securing 10 per cent stake in AirAsia.

 

At first glance, it appeared to be a straightforward corporate exercise – ‘I give you some, you give me some’.

 

What had drawn it to happen, however, had been a whole dif­ferent matter.

 

• Trigger factor

 

Noticeably since last year, the nation’s pride, MAS had not been getting favourable attribution from the foreign media, who regularly added the prefixes ‘loss-making’, ‘troubled’ or ‘ailing’ when describing the airline.

 

The carrier began its streak of losses from financial year ended 1998 to 2002, before posting im­provements in 2003 and 2004.

 

Thereafter, it was in the red again.

 

It was about then that MAS brought in the ‘fix-it’ man, Idris Jala – recruited from Shell Ma­laysia in December 2005 follow­ing his remarkable turnaround record involving the Sri Lankan petroleum industry a few years earlier.

 

Bario-born Jala then spear­headed the airline’s Business Transformation Plan (BTP) One and Two that focused on bring­ing MAS back into the black via rationalisation programmes.

 

Admittedly, there were drastic changes.

 

Prior to Idris Jala, MAS was down to recording the biggest ever loss in its history in 2006, amounting almost to a negative RM134 million.

 

With him on board, it posted a recovery, registering a profit of more than RM852.7 million in 2007 and declared a decent divi­dend per share of 2.5 sen.

 

However, that was the last time MAS announced its dividend.

 

The next three years did not continue the same fiscal weight as it did in 2007.

 

Last year, MAS posted a profit of RM237.3 million.

 

“Much reasons and commen­taries – especially the damaging ones – have been highlighted on why MAS registered such inconsistent performance over the last five years,” said an in­dustry source, “so much so that most of the informed investors have begun to lose interest.” It was within these parameters why many analysts and market watchers believed that the part­nership with AirAsia would be a high-time move for MAS.

 

“AirAsia has since overtaken MAS to become the largest player in the Malaysian market in terms of total seats,” wrote Centre for Asia Pacific Aviation (Capa) in a report.

 

A global provider of independ­ent aviation market intelligence covering worldwide develop­ments, Capa also observed that from a market capitalisation standpoint, the AirAsia Group – that included affiliate carriers in Indonesia and Thailand but excluded the carrier’s long-haul unit AirAsia X – also overtook MAS last year, although MAS generated three times more revenues.

 

“The deal could prove to be more beneficial to MAS and in­vigorate the flag carrier, which has seen its stock price drop significantly over the last several months – reaching a nine-year low in May-2011.” Notably, MAS shares shot up by eight per cent on August 10, the day after trad­ing was suspended for the tie-up announcement.

 

AirAsia’s stock price, which had been rising steadily over the last year, fell by 10 per cent that day.

 

Not that it bothered Fernandes that much.

 

“I can’t control share prices. All I know is what we did will only make AirAsia stronger and believers, like those who had faith in us when we were RM1, will be very happy,” 47-year-old Fernandes said in a recent post on his Facebook wall.

 

• Regional champion

 

AirAsia has remained one of the world’s most outstanding growth stories – almost every­body has heard about it.

 

A former Warner Music executive with an accounting background, Fernandes bought over the then loss-making AirA­sia in 2001 from conglomerate DRB-Hicom Bhd for about RM1; while assuming the airline’s debt of RM40 million.

 

Thenceforth, he grew the op­erations from having only two Boeings, one sole route and a meagre workforce of 250-strong; to running a full-fledged low-cost carrier (LCC) service with 375 aircraft delivered or on order, 65 destinations and almost 7,000 personnel.

 

All that, however, did not come easy.

 

As with many success stories, AirAsia also had its share of ridicule.

 

When AirAsia took its maiden flight in 2001, many critics were cruelly dismissive of the idea, claiming that the LCC concept would not survive even for two months.

 

Apologists were a little ‘kinder’, saying the operations would be grounded within a period of six months.

 

“I knew nothing, absolutely nothing, about airlines,” Fern­andes related in a 2004 inter­view with Airline Business magazine.

 

That was seven years ago.

 

The very same man, who previously ‘knew nothing about airlines’, is now worth US$470 million, according to Forbes.

 

• ‘Different feathers, but flock together’

 

Analysts and media have over the past two weeks, dis­cussed long and short about the MAS-AirAsia tie-up and its repercussions, with some agreeing that it would create several avenues with potential benefits especially in generat­ing significant cost savings and restructuring strategic routes for both airlines.

 

There were also ‘doubters’ who believed that the directorship entry of AirAsia’s Fernandes and Kamarudin into MAS could raise the ire of the employees unions of the latter, that had been working with limited pay rises under Idris Jala’s BTP Two – only to see not one, but two new shareholders coming in to rescue the company again.

 

“Often, there is no broad strategy behind each new move as airlines react to local circum­stances; but other players are quick to re-assess the opportu­nities and whole new permuta­tions arise,” noted Capa.

 

“Nevertheless, the collabora­tion – which would have been unthinkable just a few years ago – could lead to unprecedented consolidation in Asia and other major strategic movements across the region’s rapidly evolv­ing airline industry.”

 

Nevertheless, a recurring point that rang clear among consensus was the urgent need for MAS to revamp itself beyond improving its financial perform­ance.

 

“There is no evidence yet of a clear grand plan, beyond a need for MAS to find another way ahead.

 

It appears probable that this will be the first step in an eventually closer relationship, although the cultures of the two airlines remain very dif­ferent and a total merger seems unlikely in the short term,” said Capa.

 

“At the very least, there will now be coordination between the two Malaysian companies in terms of their route networks and potentially connectivity.” The market intelligence firms opined that for AirAsia, the deal would potentially open a whole new world beyond its core market.

 

“Regulatory hurdles, which have always been AirAsia’s biggest challenge to growth, will also be eliminated as it benefits from its new link with a govern­ment-owned investment firm.”

 

But as this regulatory ‘stum­bling block’ was set to be over­come, another ‘hiccup’ appeared all of a sudden.

 

• Another surprising hurdle

 

Malaysia Airports Holdings Bhd (MAHB) on Tuesday an­nounced that it would be im­plementing new international passenger service charge (PSC) as well as aircraft landing and parking charges at airports operated by the group.

 

“We actually approved the increase back in February 2009. The only thing is that it has not been implemented as we left it to MAHB to implement it and make the appropriate announce­ment,” disclosed Minister of Transport, Datuk Seri Kong Cho Ha last week.

 

A statement by MAHB said, “The landing and parking charges have not been changed for the last 17 years and Malaysia offered one of the lowest charges in the world.”

 

If so, what an ‘appropriate’ timing it was for MAHB – whose major shareholder is also Khaz­anah – to undertake such a restructuring.

 

Without having to explain much on this lest it might bore the readers, it appeared that the whole situation had obviously overflowed beyond a straightfor­ward share-swap arrangement between MAS and AirAsia– but to what extent?

 

It appeared that MAHB would likely become another heap on Khazanah’s full plate.

 

Perhaps the best, if not expect­ed, response would be the cus­tomary Bursa remark – ‘pending further announcement’.

 

http://www.theborneopost.com/2011/08/21/union-of-the-titans/

[Ikman Ikreza 0]

Anyone have an idea what is corporate color for Sapphire soon? I guess maroon.

 

Malaysia Airlines (blue/red), MASwings (blue/green), AirAsia (red), Firefly (orange), Silverfly (yellow)..

Edited August 22, 2011 by Ikman Ikreza

[alberttky 0]

Anyone have an idea what is corporate color for Sapphire soon? I guess maroon.

 

Malaysia Airlines (blue/red), MASwings (blue/green), AirAsia (red), Firefly (orange), Silverfly (yellow)..

 

Shouldn't Sapphire be blue?

[flee 5]

MAS mulls delaying alliance, A380s as losses mount

 

KUALA LUMPUR, Aug 23 — Malaysia Airlines (MAS) is considering delaying its membership with global airline group Oneworld and deliveries of the super airliner Airbus A380 as its new management focuses on cutting losses, which spiked in the second quarter of 2011.

 

The Malaysian Insider understands that MAS will announce a bigger loss today for this year’s second quarter, traditionally its weakest business period, from the net loss of RM242.3 million in the first quarter ended March 31. It posted a pre-tax loss of RM532.6 million for the second quarter in 2010.

 

“The exco met last week and are looking at their options of delaying the alliance with Oneworld because it will cost money to provide interlining services and also upgrade the lounges to their standards,” a company source told The Malaysian Insider.

 

“They are also looking at delaying the A380 deliveries. It’s already delayed since 2008 but the exco is concerned if it can make money for MAS,” he added, referring to the executive committee headed by MAS chairman Tan Sri Mohd Nor Mohd Yusof now managing the airline after managing director Tengku Datuk Azmil Zahruddin resigned effective August 9.

 

Azmil’s resignation was announced after the airline’s biggest shareholder, state asset manager Khazanah Nasional Berhad, swapped 20.5 per cent of MAS stock for a 10 per cent stake in Asia’s biggest budget carrier AirAsia on August 9. The swap enabled AirAsia bosses Tan Sri Tony Fernandes and his partner Datuk Seri Kamaruddin Meranun to sit on the MAS board and help turn around the loss-making flag carrier.

 

Another source confirmed the possibility of delays, pointing out that MAS is now just a designated member of Oneworld since June and has to go through a process that could take as long as 18 months before being a full member of the world’s third biggest airline group.

 

It is understood that a cause of concern is MAS’ sponsor to join oneworld, Qantas, which recently announced it wants to set up two new airlines in Asia with part of its US$9 billion (RM26.81 billion) plane order from Airbus in order to salvage its loss-making international business.

 

Under the plan, the Australian carrier has decided to set up a Japanese budget airline with Japan Airlines and Mitsubishi Corp and a premium airline based in Southeast Asia, possibly Malaysia.

 

“MAS is going to be a premium airline and if Qantas goes ahead with its plans, there will be competition. An alliance might not work then, apart from the costs of meeting the alliance’s standards,” the source said.

 

When MAS announced its entry in Oneworld last June, it said that MAS passengers will gain access to the alliance’s global network which covers almost 950 destinations in 150 countries. MAS Enrich frequent flyer members will be able to earn and redeem rewards on Oneworld’s carriers and vice versa.

 

This strategy was to work with the April 2012 delivery of the first of six A380s that MAS ordered in 2003. There has been three delays for the world’s biggest passenger jet from Airbus, which were first to be delivered in January 2007 before being delayed to last January and the third delay was to this month before it was confirmed for next year.

 

MAS will be the seventh operator of the US$300 million aircraft when it finally arrives but some exco officials are leery about whether it can fill up the plane on its lucrative Kuala Lumpur-London route which is now operated by the aging and fuel-guzzling Boeing 747s.

 

“MAS is losing out because the B747s are old and uses too much fuel. They aren’t too sure about the A380s because no one has made money using it yet in the competitive routes.

 

“It wants to use the B777s as they are fuel-efficient but it's smaller than the B747s,” one source told The Malaysian Insider.

 

The Malaysian carrier’s main competitor in the region, Singapore Airlines, was the launch customer for the A380 and offers competitive rates for seats on that aircraft going to popular destinations such as London and Sydney.

 

“MAS has to compete on the premium market with Singapore Airlines while also keeping its passengers from opting for budget carriers like AirAsia X. It’s a tough business so it has to see what makes money and cut what doesn’t,” the source added.

 

Source: http://www.themalaysianinsider.com/business/article/mas-mulls-delaying-alliance-a380s-as-losses-mount/

[BC Tam 2]

Suicidal lemmings

[Mike P 0]

Tsk... Tsk... Why MAS always being left with a big mess with such an incapable leader? Same goes to Proton.

[flee 5]

Now we know why Khazanah wanted to take action so urgently. They moved in to replace the management well before the announcement of their Q2 results so as to prevent the share price from collapsing even further.

 

They really do not have many options for their fuel guzzling B744s since the A380 was ordered to replace them. Delaying the A380 will mean that they won't be able to retire the B744s so quickly. The old B777s can only be a stop gap while they consider what they should do. With only 6 A380s on order, how much more can they delay? Perhaps they can take 2 instead of 5 next year and delay the other 4 till 2013 and 2014?

 

MH should also consider that business on their KUL-LHR and KUL-SYD routes may have declined because the B744 product is old and tired. With the new A380s, it would be easier to market the new product and arrest the decline.

 

Not an easy decision for the new management to make.