MAS and AirAsia Shares Swap

[jit 0]

@Ruiz... Don't get angry.. this is just for discussion sake..

 

@Flee

1) Highly debatable. Carrying AAX pax during the approaching peak summer season may be counter productive.. there may be huge opportunity lost by filling up seats with cheap pax during peak season. 75% load factors are average over a year.. load factors are closer to 90% during these times.

 

2) Management strenghtened? I can't see how AA management is superior to MH. Eg: Engineering head from AA? MH Engineering is far superior to AA which has zero experience in heavy maintenance.. zero experience with Boeings.

 

3) Firefly is MH's low cost arm.. in other words, it is to compete with AA.. after the same pie. Only AA is losing market share in this sector.

 

4) Surabaya, Bandung losing money? Even JNB can make money if managed correctly.. it is the only gateway to the African continent!

All in the know will acknowledge that capacity and network cuts affect connectivity and revenue in the long term. Bad management IMO.

 

5) MH's MRO is doing fine without AA..

[flee 5]

As I have said earlier, I find it amusing that both share swap/CCF and cancelled share.swap/CCF are bad for MAS. So, what next?

[Mohd Suhaimi Fariz 2]

5) MH's MRO is doing fine without AA..

 

It's more a question of AirAsia needing MH MRO - their earliest A320s are fast approaching their D-checks which costs money.

 

So...

[flee 5]

It's more a question of AirAsia needing MH MRO - their earliest A320s are fast approaching their D-checks which costs money.

 

So...

We always look at the short term. So what? MH MRO will benefit long term with more and more of AK aircraft coming in for MRO.

 

AirAsia does not need MH MRO, it can still use existing facilities. Remember, it is MAS that is making the losses. Any additional business will help reduce the bleeding as economies of scale kick in.

 

Why does everything be MH lose and AK win. Why can't both win?

 

@Flee

1) Highly debatable. Carrying AAX pax during the approaching peak summer season may be counter productive.. there may be huge opportunity lost by filling up seats with cheap pax during peak season. 75% load factors are average over a year.. load factors are closer to 90% during these times.

Don't forget, D7 is also conceding the market on those routes. So MH should now have no problems filling up its aircraft as D7 no longer ply the routes.

Edited May 3, 2012 by flee

[Mohd Suhaimi Fariz 2]

We always look at the short term. So what? MH MRO will benefit long term with more and more of AK aircraft coming in for MRO.

 

AirAsia does not need MH MRO, it can still use existing facilities. Remember, it is MAS that is making the losses. Any additional business will help reduce the bleeding as economies of scale kick in.

 

Why does everything be MH lose and AK win. Why can't both win?

 

The problem is, are they're paying the prevailing market rate for maintenance? If they don't then what's the benefit, short or long, for MH?

 

That's the whole problem with the CCF/Share Swap - the lack of transparency. Everything is smoke and mirrors.

[flee 5]

The problem is, are they're paying the prevailing market rate for maintenance? If they don't then what's the benefit, short or long, for MH?

 

That's the whole problem with the CCF/Share Swap - the lack of transparency. Everything is smoke and mirrors.

Why should it be the market rate if they are related companies or a JV company is running these facilities? That was the original intention, wasn't it? A good assumption is that AirAsia contributes additional business. This helps reduce the cost of the operations. All the aircraft that come in for MRO be it from MAS or AirAsia are charged a cost plus x% mark up. Only 3rd parties pay commercial market rates.

 

Agree that transparency is lacking. But then that is the MAS corporate culture for a long time.

[BC Tam 2]

Don't forget, D7 is also conceding the market on those routes. So MH should now have no problems filling up its aircraft as D7 no longer ply the routes.

By all accounts, D7 quit London and Paris because D7 decided it cannot make a profit

For MH to try capture market segment vacated by D7, it will likely have to do it more or less the same price range, otherwise the market segment will just decide not to fly

If D7 with its supposedly lower cost base is unable to make money, what more with MH and its supposedly higher cost base ?

So, unless MH goes cheap there, meaning lower yield or (heaven forbid) below cost, it's unlikely they will be able to fully capture what that D7 has left behind

 

 

 

Anyone else find it any bit disturbing that we are going hammer and thongs about what AK/MH stand to gain/lose from this share swap fiasco whilst on separate thread in same forum here is discussion about Qatar Airway's intention on world domination ?

Edited May 3, 2012 by BC Tam

[Naim 6]

...

Anyone else find it any bit disturbing that we are going hammer and thongs about what AK/MH stand to gain/lose from this share swap fiasco whilst on separate thread in same forum here is discussion about Qatar Airway's intention on world domination ?

 

True, BC, as I said, the way this thread is going, the cows will never come home. This is like Pepsi-Coke argument, and nobody's the wiser.

[flee 5]

By all accounts, D7 quit London and Paris because D7 decided it cannot make a profit

For MH to try capture market segment vacated by D7, it will likely have to do it more or less the same price range, otherwise the market segment will just decide not to fly

If D7 with its supposedly lower cost base is unable to make money, what more with MH and its supposedly higher cost base ?

So, unless MH goes cheap there, meaning lower yield or (heaven forbid) below cost, it's unlikely they will be able to fully capture what that D7 has left behind

Nothing is black and white or cut and dry. Yes, you do have a good point in that D7's market is not the same as MH's. However, there are some people who will fly MH if there is no lower cost choice. They are just being careful with their money.

 

Now that D7 is out of the way, it only needs to compete with the middle eastern carriers on fares!

 

Anyone else find it any bit disturbing that we are going hammer and thongs about what AK/MH stand to gain/lose from this share swap fiasco whilst on separate thread in same forum here is discussion about Qatar Airway's intention on world domination ?

Yes, I think TF and other far sighted people like yourself are more worried about this than the "family feud" between them. The important battles for AirAsia and MAS are still to come!

[BC Tam 2]

Now that D7 is out of the way, it only needs to compete with the middle eastern carriers on fares!

If 'fares' is the only weapon to compete with those ME entities, it's going to be a losing battle, and a very bruising one too

Anyway, that goes against the grain of the much vaunted 'premium carrier' tagline - unless someone decides to revive that very ludicrous '5 star value carrier' thing again

[BC Tam 2]

New aviation body to mediate AA-MAS disputes

 

May 03, 2012

 

 

PUTRAJAYA, May 3 — A new aviation council will be established to oversee the aviation sector and resolve disputes between the nation's two largest carriers the prime minister announced today.

This comes after the share crossholding deal between Malaysia Airlines (MAS) and AirAsia collapsed and was announced dissolved yesterday following fierce internal resistance from MAS employee unions and associations.

Prime Minister Datuk Seri Najib Razak said that there is now a need for an aviation council to ensure a more systematic approach to develop the sector.

It would also help resolve disputes between MAS and AirAsia which had previously clashed over route allocations by the government.

"Disputes can be resolved via the national aviation council," he said at a press conference here. "As you know it is not easy to resolve disputes between MAS and AirAsia."

Khazanah and Tune Air, the controlling shareholders of MAS and AirAsia respectively, agreed to the share swap between the two airlines last August, after four previous unsuccessful attempts for an alliance between MAS and

AirAsia, which soared from a decade ago when Fernandes and partners bought the two-aircraft operation and its debts for just RM1.

As part of the shareswap and subsequent business turnaround plan, MAS, which posted its biggest ever annual loss in February, had cut its capacity by 12 per cent which Malaysia Airports said had impacted passenger traffic growth at KLIA.

Khazanah and Tune Air said yesterday that while the share swap between MAS and AirAsia has been unwound, the two airlines would continue to collaborate in areas such as procurement and aircraft repair.

Khazanah also said yesterday that it has initiated discussions with the government for a more clearly defined regulatory, policy and coordination environment for the aviation industry with sufficient safeguards for public and consumer interests.

 

from: http://www.themalays...a-mas-disputes/

 

 

nothing beyond adding yet another layer of unnecessary bureaucracy imho

Edited May 3, 2012 by BC Tam

[V Wong 0]

what a whole load of rubbish from the top gun's mouth. 'disputes between AK and MH'. What disputes? Who created those disputes?

 

More meddling in murky water, more opportunity to cash in on the golden goose.. or rather, the soon-to-be-dead goose..

 

It is indeed sad to see MH being trampled, treated like some kiddo party trick, with little consideration on its future viability, swinging of pendulum from one end to the other, largely for the sake of voters ? (so many factors involved, i think we will never know the actual reason behind the CCF and its unbundling). Now another bolt thrown into the sick machinery in the form a council. Wither justice!

Edited May 3, 2012 by V Wong

[flee 5]

If 'fares' is the only weapon to compete with those ME entities, it's going to be a losing battle, and a very bruising one too

Anyway, that goes against the grain of the much vaunted 'premium carrier' tagline - unless someone decides to revive that very ludicrous '5 star value carrier' thing again

 

Yesterday's document abandoned the idea that MH will be a premium carrier:

Cessation of focus areas

 

The respective focus areas of MAS, AirAsia and AAX as stated in the Collaboration Agreement, namely:

• MAS to focus on being a full-service premium carrier;

• AirAsia to focus on being a regional low-cost carrier (“LCC”); and

• AAX to focus on being a medium-to-long haul LCC;

shall cease to be operative.

 

nothing beyond adding yet another layer of unnecessary bureaucracy imho

Yes, this formalises the previously opaque way in which the govt. arbitrates applications from the airlines. That means the two airlines cannot be nimble and make quick decisions in the highly competitive industry. Bad for Malaysia.

Edited May 3, 2012 by flee

[nrazmoor 0]

While we keep on bickering who get the biggest pie and shits like that... GA/SQ/TG all keep on smiling and step up their game.

[flee 5]

While we keep on bickering who get the biggest pie and shits like that... GA/SQ/TG all keep on smiling and step up their game.

[CH Teo 0]

 

3 FY JETS OF COURSE DON'T MAKE MONEY IN FIRST 9 MONTHS OF OPERATIONS! NO AIRLINES DOES THAT ! EVEN AK HAD A YEAR TO BREAK EVEN! NOT A GOOD ARGUMENT!

 

 

I agree. FY Jets cancellation is really bad for East Malaysian. Remember, East Malaysians can only fly in order to get into Peninsular! And with higher cost of living and lower income, there is nothing wrong for getting a much wider choice for us to go to KUL! Since FY Jets was mean to be run under LCC models that go head on competition with AK, so follow low cost business model!

[flee 5]

Analysts Optimistic Over MAS-AirAsia MoU

May 03, 2012 13:58 PM

 

KUALA LUMPUR, May 3 (Bernama) -- Analysts are optimist that the Memoranda of Understanding (MoU) between Malaysia Airlines (MAS) and AirAsia will benefit both and the country as well.

 

It was announced on Wednesday that the share swap deal between MAS and AirAsia has been called off. Instead, MAS and AirAsia inked the two MoUs for joint maintenance services and the establishment of a special purpose vehicle (SPV) to extract procurement synergies such as fuel oil, aircraft components and parts.

 

MIDF Research said the MoU for the setting up of a joint venture, will be more definitive in nature, as opposed to a framework previously.

 

"Both airlines can now cooperate to make Malaysia a regional aircraft servicing hub to rival Singapore's maintenance, repair and overhaul facility," it said in its research note today.

 

In the short term, MIDF Research expects the unwinding of the share swap to have a negative market perception for both airlines to resolve, as internal pressure appears to have overwhelmed management decisions. The research house is still maintaining its "sell" recommendation for MAS with a target price of RM3.15.

 

HwangDBS Vickers Research, meanwhile, said with the share swap reversal, the collaboration would not be as strong as initially structured.

 

"However, both airlines could benefit, from areas under the MoU.

 

"In particular, the joint procurement of fuel oil can see cost savings, given the sizeable combined requirements of the two groups," it added.

 

HwangDBS maintained its fully valued call on MAS and AirAsia with target prices of RM1.10 and RM3

[Lock SH 0]

 

Analysts Optimistic Over MAS-AirAsia MoU

May 03, 2012 13:58 PM

 

.....................Instead, MAS and AirAsia inked the two MoUs for joint maintenance services........................

 

If Air Asia could afford NOT to pay (or lack of......) pax service charge/airport tax to MAB, what guarantee that we have it will honor the MoU (in terms of making the payment) ...... another blunder in the making ....... may be because Air Asia is known to be arrogant or the govt is toothless .........

 

 

[T Azahan 1]

I think the Head of MRO, CFO and Acting Commercial Dir should go out too. It remains a conflict in my opinion. Even if it is not, there is a likelihood that the public and/or MH staff may perceive on the possibility that confidential information of MH may be leaked to the other side so long as these individuals remain in their respective position.

 

It makes a lot of sense for them to exit and return to where they belong.

[calvinoeh 0]

The argument was on the merger will benefit TF and his friends is a non-starter IMHO. Yea, that might be true but what options does MAS have since it is loosing money anyway. MAS simply cannot get its act together. How hard can this be - sometimes simple common sense and logic works. Maybe a bunch of mwingers could even do a better job. So what's next for MAS?

 

Agree that SQ, EK, TG, etc are just having a field day with this..

[flee 5]

JERLUN, May 4 (Bernama) -- The cancellation of swap deal involving Malaysia Airlines and AirAsia shares should not be a reason for the two carriers not to cooperate because the real competition is at the international level.

 

Deputy International Trade and Industry Minister Datuk Mukhriz Tun Mahathir told reporters this after opening a programme hosted by the women's wing of Jerlun Umno here today.

 

He said both companies should move forward and share resources because the aviation business involves large expenditures.

 

"In terms of capital, the cost of management and operations is very high.

 

"If they have something that they can share, I think this can reduce costs in addition to offering services at competitive prices to users," he said.

 

Commenting on the MoU signed between Malaysia Airlines and Airasia to cooperate on areas including joint procurement and aircraft component maintenance, support and repair services, Mukhriz said if the companies could avoid competition among themselves, this would be encouraged.

[mohd sukri abd hamid 0]

Bring back firefly to klia

[flee 5]

Some MH officials were spotted at LGW. Is MH planning to add a third frequency into London?

 

Some discussion going on here: http://www.airliners.net/aviation-forums/general_aviation/read.main/5455876/

[Gavin Andrew David 6]

What a huge mess.

 

Couple of things I don't understand, MH Engineering has all the expertise, infrastructures, spares etc but why the need for a JV? What will or can AK contribute in this matter? They can always enter an agreement for maintenance of their aircrafts and get a good deal along the way. The other one is training, in the almost done deal, MH was supposed to sell off their training facilities to CAE and in the JV will only get 10% of the share of the new training venture. Again here, MH is the one with the most simulators, trainers, facilities etc.

 

This matter is far from being resolved I'm afraid and there are still plenty of stuff that is not public knowledge.

 

What a huge bloody mess.

 

You need to check some facts when it comes to this...

 

MAS definitely stands to benefit from this training deal.

 

MAS barely has any money for new simulators.

 

The 737-800NG simulator is not owned by them either, and on top of that, they need 2 more, one of which has already arrived.

 

 

Any idea how much 3 simulators cost with maintenance on them?

[Mike P 0]

Some MH officials were spotted at LGW. Is MH planning to add a third frequency into London?

 

Some discussion going on here: http://www.airliners...d.main/5455876/

 

Poaching the passengers at LGW? Just like there are also FY officials in LCCT... yet they are in fact operating in SBZ.