MAS and AirAsia Shares Swap

[Waiping 12]

MAS to launch new premium airline next year

Source

 

Feels like they are trying to do too much with too little time.

[Mohd Suhaimi Fariz 2]

For those wanting to know the gist of the new Business Plan

 

MAS New Business Plan

[BC Tam 2]

I wonder if the Sabah based warlords got their way, at least till GE13 is done

[Mohd Azizul Ramli 2]

I have yet to read the 44 pages official business plan document but from all the news articles which have been included here, trimming down the extremely obvious bloated and excessive manpower within MH does not seem part of the plan.

 

Just watched the news over the tv, VSS is mentioned as the LAST resort but it seems that it will be done.

[Mohd Suhaimi Fariz 2]

I have yet to read the 44 pages official business plan document but from all the news articles which have been included here, trimming down the extremely obvious bloated and excessive manpower within MH does not seem part of the plan.

 

Just watched the news over the tv, VSS is mentioned as the LAST resort but it seems that it will be done.

 

Spin off MASkargo, ground handling, MRO & Pilot Training & Safety Academy - problem solved.

[Nuriman Ahmad 2]

Feels like they are trying to do too much with too little time.

 

 

Isn't MAS currently a premium airline? Is there a need for another premium airline? What's wrong with simply upgrade the current level of service to a more premium standard? I'm confused..

[flee 5]

Isn't MAS currently a premium airline? Is there a need for another premium airline? What's wrong with simply upgrade the current level of service to a more premium standard? I'm confused.. <_>

Somehow it lost its way. It started offering RM 0 fares and its new B737-800 aircraft has only 30" seat pitch in Y.

 

This is what it plans to do with the new premium airline next year:

 

Launch of a new regional premium airline.

In the first half of 2012, we will launch our new short-haul brand, flying an entirely new Boeing 737-800 fleet. Given a clean slate, a new business model can be designed from inception for sustainable commercial success without any inertial drag of legacy airline models. The relatively smaller size of the Boeing 737 means the airline can fly to more places where our customers want to travel, at times convenient to their schedules. We also intend to create a separate management structure to focus on the unique customer needs of regional premium travellers. This new airline shall set new standards for product and service quality, cost efficiency, and operational excellence. It will therefore set the template for airline success.

 

The new regional premium airline will be a short-haul airline connecting Malaysia to the rest of ASEAN and key cities in South Asia and Greater China. The new carrier will exclusively fly our incoming fleet of Boeing 737-800 aircraft with the latest in passenger amenities. While the early focus will be on key business routes less than four hours from Kuala Lumpur, the airline will eventually fly all domestic and regional routes flown by Malaysia Airlines today

Edited December 7, 2011 by flee

[Mike P 0]

I thought B738 is meant to replace all the B734 by MH?

[Mohd Suhaimi Fariz 2]

I think this new airline - Project Sapphire will be taking over regional narrowbody routes, leaving the main airline to focus on long haul routes.

 

Also, there will be limited interlining between AK & MH though I can't really forsee how that could work.

[Waiping 12]

I thought Project Sapphire is dead and buried.

[flee 5]

I thought B738 is meant to replace all the B734 by MH?

The way I interpret it, the new airline will get brand new planes with Boeing Sky Interior and different interior. It will probably be more luxurious and have fewer seats. This will make it easier for pax when they fly to destinations more than 4 hours.

 

MH will probably soldier on (for a limited period of time) with the existing planes while the new airline builds up its route network. They will probably phase out the B734s once the new airline has sufficient new planes to take over.

[Ruiz Razy 1]

The way I interpret it, the new airline will get brand new planes with Boeing Sky Interior and different interior. It will probably be more luxurious and have fewer seats. This will make it easier for pax when they fly to destinations more than 4 hours.

 

MH will probably soldier on (for a limited period of time) with the existing planes while the new airline builds up its route network. They will probably phase out the B734s once the new airline has sufficient new planes to take over.

 

By the time 738 sky interior r in place of the 734s , it will b out of date ; as newer 737MAX Is out ! ... Back to square one

BTW can't the "clean slate" be throughout the narrow n wide bodies.?

[dean hizudy 0]

so MAS will pull out from all domestic and regional destinations once this new premium airlines take off?

[Cheng Long 0]

New airline + same old management and crooks = failure in the making..

[Isaac 0]

Malaysia Airlines, the flag carrier bearing the name of this country should be the premium airline of this country. Why would they want to set up a new airline to offer a premium service ? Is Malaysia Airlines not already offering premium service ?

[Mushrif A 3]

so MAS will pull out from all domestic and regional destinations once this new premium airlines take off?

 

No, the BP said that the narrow-body premium airline will serve existing domestic & regional destinations.

 

One of the first things they should do is to do away the cheap looking snack-box.

 

The BP said that significant investments will be made next year on the meals of all sectors...not sure what "sectors" mean, but there was a slide earlier many mths back showing how the proposed Y meal enhancement would have looked like.

 

I think this new airline - Project Sapphire will be taking over regional narrowbody routes, leaving the main airline to focus on long haul routes.

 

Also, there will be limited interlining between AK & MH though I can't really forsee how that could work.

 

I dont recall reading the word "limited" with "conectivity" between the two in the BP. Rather, just plain "connectivity". It will be interesting to see how this works in practice.

 

Additionally, the BP implicitly stated that AK/ D7 will operate existing low-yielding MH routes.

 

I have yet to read the 44 pages official business plan document but from all the news articles which have been included here, trimming down the extremely obvious bloated and excessive manpower within MH does not seem part of the plan.

 

Just watched the news over the tv, VSS is mentioned as the LAST resort but it seems that it will be done.

 

It's definitely there in the BP, in several places - just worded in politically-correct ways. There's a chart showing MH has two many staff per available pax seat. Expect the culling to commence next month; bloated staff, South AFrican routes, trans Atlantic route, etc.

 

The way I interpret it, the new airline will get brand new planes with Boeing Sky Interior and different interior. It will probably be more luxurious and have fewer seats. This will make it easier for pax when they fly to destinations more than 4 hours.

 

MH will probably soldier on (for a limited period of time) with the existing planes while the new airline builds up its route network. They will probably phase out the B734s once the new airline has sufficient new planes to take over.

 

There is one instance in the BP where it says that MH will pay more attention on aircraft layout. So, hopefully, we dont get accountants to squeeze as many seats into the premium carrier aircraft or the confusing "5-star-value carrier" mantra.

 

The BP also alluded to the removal from fleet of the 332 and 744 next year.

 

I think the two words "premium airline" makes people think that it is totally separate from MH and will feature fountains in the cabin. But this new premium airline will still be part of the MH holding company which retains the present Malaysian Airline System listing status. Also, premium simply means more quality offerings, focusing on higher yielding routes/ fares/ pax. Obviously, some pax not willing to pay top dollar will be marginalised, but that's where Uncle Tony comes in.

 

And the BP also alluded to a likely capital call. You and I, through our reps at MoF & Khazanah, will be contributing some more $$$ into MH, likely in the form of a rights issue.

[BC Tam 2]

Additionally, the BP implicitly stated that AK/ D7 will operate existing low-yielding MH routes.

Another shivers down the spine moment

[Mushrif A 3]

Oh, one other thing....there's one bit in the BP that is an insult to one's intelligence....some folks managed to slip in some praise for the previous management..."Only through the foresight of the previous management would we be in so fortunate a position to replenish more than half of our fleet of aircraft in a three-year period."

 

This is totally dumb. Just who are they trying to kid or get brownie points from?...Heelllooooo? It is the procrastination and lack of foresight that MH has only recently started replacing its Dakotas with planes that others have been using for some years, and MH will still be receiving these belatedly-ordered planes when other folks are already using next-gen 787s.

Edited December 7, 2011 by Mushrif A

[KK Lee 5]

If MH terminates all the loss making route without cutting overhead by at least 40%, MH CASK will remain higher than RASK i.e. losing $$$$.

 

As per Fig 16, if MH is serious and cutting routes, MH should retire 772 next year. Fleet optimization was not mentioned.

 

Key to regional (as practiced in E.U and U.S) success is frequency, without frequency, premium regional is unlikely to be successful. And none of LH, KL or AF use 738 on regional.

 

Ancillary business spin off may not necessary benefit MH in the long term; if contract is exclusive and profit guaranteed like LSG Catering, MH may ended up paying more.

 

MH issue is overhead and procurement but is not addressed.

 

Until the talk is walked, this is just another con-sultan presentation with load of hot air, big plan and little substance like previous BTP, TRansformation, etc.

Edited December 7, 2011 by KK Lee

[Izanee 0]

TRansformation!! hilarious KK

 

BC --> shivers are going down my spine too!

[Kee Hooi Yen 0]

I thought running an airline requires a long term strategy and planning, in particular, acquiring new aircrafts to its fleet as it is an expensive investment and it needs many years for the return. We can see many high efficient airlines (eg. SQ, EK, CX etc) in the world have very clear fleet program to suit their business model (thus they are making money).

 

As for MAS, I don't see this is happening. I believe there are many excess aircraft in MAS now and I am wondering if they have any plan yet for these aircrafts.

 

Hopefully, by the time all the B738s, A330s and A380s have been delivered to MAS, we won't see all the existing MAS B734, A330 & B744 still iddling on the tarmac !

Edited December 7, 2011 by Kee Hooi Yen

[BC Tam 2]

Hopefully, by the time all the B738s, A330s and A380s have been delivered to MAS, we won't see all the existing MAS B734, A330 & B744 still iddling on the tarmac !

Don't forget we have an upcoming regional player in guise of MASWings - can sponge up some of the excess ?

 

 

MH issue is overhead and procurement but is not addressed.

 

Until the talk is walked, this is just another con-sultan presentation with load of hot air, big plan and little substance like previous BTP, TRansformation, etc.

Perhaps Captain Nik can verify if the powerpoint brigade is still intact within ?

[Izanee 0]

yeah, i'm not convinced to be honest. nothing specific has been mentioned, and nothing confirmed. the plans seem very superficial, something a school kid could come up with if given a couple of days. good luck to them. we'll be seeing their routes go to D7 and AK - and i have no doubt tony is drooling now, waiting to get his paws on the traffic rights.

[flee 5]

we'll be seeing their routes go to D7 and AK - and i have no doubt tony is drooling now, waiting to get his paws on the traffic rights.

Given the severe capacity limitations at the LCCT, I am not sure how many new routes can be started by AK/D7 in 2012. So MH may cut the routes but we may only see them relaunched only when KLIA2 is opened.

 

Yes, the serious problems of over staffing, leakages and other inefficiencies do not seem to be addressed. Neither was there any mention on recruitment freezes. Nor is there any mention of accelerated retirement of fuel guzzling aircraft other than what we already know.

 

When AK received its A320s it aggressively retired its old B733's and took hits in profit due to penalties from the leasing companies. MH should do the same with the B734s and return them to PMB.

Edited December 8, 2011 by flee

[alberttky 0]

CEO sets in motion business plan to bring airline to profitability by 2013

 

PETALING JAYA: Malaysia Airlines (MAS) will cut unprofitable routes, spin off its ancillary units, explore joint ventures with other airlines and launch a regional carrier by second half of next year in a bid to return to profitability by 2013.

 

The airline, which will focus on offering premium air services, targets a net loss of RM165mil for 2012. However, by 2016 it hopes to report a net profit of RM900mil.

 

About 40% of MAS' network is unprofitable but beginning next year it would cut capacity by 12% and save about RM302mil by suspending flights to Dubai, Cape Town, Johannesburg, Buenos Aires and some European cities.

 

It would focus on serving the premium market in Asia where there is growth despite the intense competition from low-cost and premium carriers that are also adding capacity in the region.

 

“We are very deep in crisis. Our cumulative losses until the third quarter amounted to RM1.25bil and we do not see any improvements in the fourth quarter. MAS needs to make hard and unpopular decisions simply to survive. We hope this plan will set the course straight,” MAS group chief executive officer Ahmad Jauhari Yahya told a press conference yesterday. The new business plan that he unveiled yesterday focused on reversing the airlines' fortunes and outlined steps to sustain its performance.

 

He cited the loss of focus of the premium segment, declining product quality, an ageing fleet as reasons why MAS was in a loss-making situation. The airline's overall ranking in the industry had also dropped but with the new business plan, there would be greater focus to win the customers back.

 

Ahmad Jauhari said the series of actions that the airline would take next year was expected to generate an improvement of between RM1.1bil and RM1.5bil in the profit impact for the group.

 

On the new premium carrier - not Sapphire he said it would begin operations in the second half of 2012 with a fleet of 45 B737-800 aircraft. It would fly to cities in South-East Asia and Greater China while MAS would continue to serve long-haul flights. It planned to add frequency to cities like Manila, Jakarta and Tokyo.

 

This is the fourth time in a decade that MAS is being restructured, though the theme this time is be a leaner airline, but some analysts attending the briefing were unimpressed.

 

“It seems their consultants did the work for them and we are disheartened by the fact that the management only aspiresfor RM900mil net profit when benchmarked against first-tier airline, they should be aiming for RM2bil to RM3bil,” said an analyst.

 

A Maybank Investment analyst added: “It is a strategic mistake to set up a new airline when they could service the short-haul routes using the MAS brand name. Why the need to gamble when there is no guarantee of immediate success? However, what is convincing is that they are suspending flights to unprofitable destinations.”

 

MAS has also begun discussions with AirAsia and AirAsia X to cooperate on fuel-purchasing, maintenance, training and ground-handling, which could save the national carrier RM100mil annually.

 

On the rationale to spin the ancillary units engineering, pilot training/safety academy, cargo and ground services Ahmad Jauhari said it was to allow strategic investors to take a stake in them so that the units could grow.

 

The airline will take delivery of 23 new aircraft including five A380 in 2012 and that would help the airline save RM392mil in cost since the new aircraft are more fuel efficient.

 

The airline also needed to raise RM12bil to pay for the new aircraft it had ordered till 2014 and it might finance them via debt and Islamic bonds but MAS deputy CEO Mohd Rashdan said the airline would not opt for a cash call.

 

MAS has cash reserves of RM1bil now but it expects return of aircraft deposits to help it ride through next year.

 

“We would not deny we are in talks with Qantas as these days you have to work with other airlines but the discussions are still at an exploratory stage,” he said, adding that: “We are exploring the possibility of joint ventures with (other) partners in order to serve multiple markets together, while reducing the financial risks of going alone.”

 

The airline will also join the oneworld air alliance by September 2012.

 

Asked if the MAS workforce was behind him in the push for better fortunes, Ahmad said: “They understand the gravity (of the problem) and are horrified by the losses, but they also understand that painful actions are necessary.”

 

Asked if there would be job cuts, Ahmad said it depended on all the spin-offs but a (voluntary separation scheme) was the last option.

 

There is also apprehension towards the comprehensive collaboration framework from with AirAsia.

 

Asked if the CCF was really necessary, he said “it makes it easier with the CCF.''

 

http://biz.thestar.com.my/news/story.asp?file=/2011/12/8/business/10051667&sec=business

Edited December 8, 2011 by alberttky