MAS and AirAsia Shares Swap

[filipeseda 0]

I hope you don't mind my ignorance. I'm frankly confused. I can't find any information to suggest that MH has decided to overturn it's decision on canceling all the aforementioned routes.

[Waiping 12]

Is it possible to run an airline without any aircraft? In BKI's case maybe ICN with KE/OZ, HKG with KA, TPE/HND/PER with AK etc...

[Alif A. F. 0]

Non-stop flights from BKI to HND and KIX have all been taken out of the reservation system but ICN is still bookable for travel dates from March 2012 and beyond. I guess this is because the BKI/ICN flights are code-share flights with KE, so MAS can't simply cancel the route. They will need to sort things out with KE first.

 

I thought routes to HND and KIX are codeshared with ANA.

[Rashdan Radzi 0]

It's like every route operated by MH has to be dropped and transfer to AK.

 

There must be reasons that people don't fly MH and MH should find out what the reasons are and take wise actions. Not sure if TF is smart enough to identify.

 

I think it's a reflection of structural changes in the consumer profile that have worked against demand for premium travel - a direct consequence of the state of the Malaysian economy.

 

Similar things have been happening elsewhere too, like the property market. In the 1990s, you'd want to invest in a bungalow in a posh area of KL like Damansara Heights because it fetched good rental from expats and that in turn helped sustain steady capital appreciation. But these days, the expat market has shrunk considerably and there are many bungalows now lying empty. The money today is in double-storey links catering to young Malaysian professionals just starting out with a family.

 

In short, it's the same pattern everywhere - no growth in premium demand.

 

MH should decide whether to seek growth outside the premium market or stick to premium but search for customers elsewhere - but whatever it is, it should be MH's call, not for a competitor to decide on its behalf like what has happened.

[Jim Liu 0]

I hope you don't mind my ignorance. I'm frankly confused. I can't find any information to suggest that MH has decided to overturn it's decision on canceling all the aforementioned routes.

 

If you don't have access to reservation system, or if you don't do the search on same route everyday on MH website, you won't be able to tell if MH decided to reverse its decision.

 

The reversal could be just temporary as they might want to wait until the airline officially announce the cancellation.

 

Non-stop flights from BKI to HND and KIX have all been taken out of the reservation system but ICN is still bookable for travel dates from March 2012 and beyond. I guess this is because the BKI/ICN flights are code-share flights with KE, so MAS can't simply cancel the route. They will need to sort things out with KE first.

 

BKI HND and BKI KIX haven't been removed from the system and still bookable. Including BKI ICN, current availability status pretty much means these routes are done, unless they also reverse the decision and re-open all class of service.

 

MH doesn't have to "sort things out" with KE in order to cancel it.

Edited November 12, 2011 by Jim Liu

[Isaac 0]

I thought routes to HND and KIX are codeshared with ANA.

Yeah. Indeed they are. Forgot about that

 

 

BKI HND and BKI KIX haven't been removed from the system and still bookable.

I stand corrected! Thought both routes have been removed because it is no longer possible to book the flights on MAS website for travel date after December.

[KK Lee 5]

MH doesn't earn much revenue from a single point, or point to point. Says from DBX to KUL and all passengers dropped in KUL and travelled in Malaysia. Most likely DBX - KUL - Australia destinations, etc. Hence, the transit time must be short, frequency must be sufficient to accommodate the travellers' needs. Most importantly, KUL needs to be posed as a good and world class hub for passengers' comfort during the transit time.

 

There are over hundred thousands Filipino, Indonesians and Aussies working in the Middle East. MH don't seem to be keen to tap in this market

[flee 5]

‘Top heavy’ MAS faces uphill task

 

KUALA LUMPUR: Malaysian Airline System Bhd (MAS) is expected to remain in the red for 3QFY11 ended Sept 30. Analysts do not rule out the likelihood of further losses in the coming quarters.

 

Apart from volatile fuel costs, one of MAS’ biggest problems is said to be its staff costs.

 

Some analysts noted that while MAS has cut its unprofitable routes and flight frequencies over the years to reduce costs, this will not boost earnings if the national carrier still has to maintain a big pool of staff.

 

A recent report by OSK Research said it expects MAS to continue cutting capacity, notably on Asean and domestic routes as demand for full-service travel on these routes declines.

 

“Frankly, MAS is already in survival mode and must make hard decisions; take drastic action and trim fat,” said an analyst with an investment bank.

 

In the latest annual report for FY10 ended Dec 31, MAS reported staff costs of RM2.16 billion for its 20,000-strong workforce. That works out to an average cost of about RM108,000 per employee, compared with revenue per employee of RM670,000 for the year.

 

Interestingly, MAS’ staff strength has gone to 20,000 from 19,094 in FY08 despite its efforts to cut routes and frequencies to certain parts of the world.

 

Across the causeway, Singapore Airlines Ltd (SIA) had 22,282 employees with available passenger capacity of 108 billion seats per km, against MAS’ capacity of just 50.8 billion seats per km.

 

SIA’s revenue per employee was S$660,308 (RM1.6 million) and cost per employee stood at S$99,560 for FY11 ended March 31.

 

Compared with MAS’ partner AirAsia Bhd, the figures appear more alarming. While MAS’ revenue of RM13.41 billion was 3.4 times higher than AirAsia’s RM3.95 billion, its total staff costs were six times higher. Moreover, MAS’ average staff cost per employee was some 41% higher than the low-cost carrier’s.

 

AirAsia’s staff costs totalled RM360.79 million for its 4,702 staff in FY10 ended Dec 31, which translated to an average cost of RM76,762 per employee.

 

Some quarters may argue that this is not a fair comparison as one is a budget airline and the other a full-service carrier.

 

Malaysian Airlines System Employees Union (MASEU) secretary-general Ab Malek Ariff said the national carrier is “top heavy”. He believes that if MAS were to chop jobs, it should start from the top.

 

“If anything, I believe it is top heavy. MAS has about 2,000 employees of executive manager level and above for its 18,000 staff of supervisor and below,” he told The Edge Financial Daily.

 

“That is roughly a 10-to-one ratio of staff to executive managers, and that number is much too high. If MAS needs to trim, it will have to be at the top,” he said.

 

MASEU represents 15,000 MAS employees.

 

“We were told at a recent town hall meeting with management that there would be no trimming [of staff] yet. If MAS wants to lay off staff, they can do so through a mutual separation scheme [MSS], but they will have to pay compensation,” said Malek.

 

Some analysts believe MAS’ large workforce is not isolated to top management alone, citing that the carrier has 15 pilots per aircraft compared with the industry average of about 10.

 

Analysts said it is hard to believe that MAS, as a government-linked company, will make a decisive move to heavily trim staff, although many agree this a bitter pill it has to swallow.

 

With the ballooning losses, an analyst said MAS’ cash pile might be enough to last for just another two quarters of losses.

 

“MAS does have a significant cash pile, but the cash is meant for renewing its ageing fleet. Its current pace of losses is unsustainable,” the analyst told The Edge Financial Daily.

 

Any MSS could put a strain on MAS’ balance sheet, although it has a cash balance of RM1.58 billion, said analysts.

 

The national carrier implemented a voluntary separation scheme in 2006 aimed at laying off 3,000 to 5,000 staff. The scheme was expected to cost RM850 million. However, there was lukewarm response to the scheme, with only 4,500 employees opting for it.

 

Labour issues have proven to be one of the most challenging problem for all airlines, including MAS.

 

Australia’s national carrier Qantas has been battling with unions over a possible restructuring to cut 1,000 jobs from its workforce of 32,500.

 

Strikes escalated in length and intensity since July, at a huge cost to the world’s 10th largest carrier as result of hundreds of cancelled flights. The industrial dispute reached its peak when management implemented a complete lockout on Oct 29 only to resume flights on Oct 31 after an Australian court intervened.

 

The lockout is estimated to have cost Qantas A$20 million (RM64 million) a day.

 

MAS has been mostly mum on its turnaround plans since the collaborative agreement with AirAsia was signed, noted several industry analysts.

 

It is learnt that MAS’ new CEO Ahmad Jauhari Yahya will be revealing his game plan to turn around the struggling airline in about two weeks, when MAS releases its third quarter results on Nov 22.

 

Rationalisation of the workforce is expected to be one of the highlights of its turnaround plan.

 

Will the national carrier take a different path to get out of the turbulence? Jauhari and the new board certainly have their work cut out for them.

 

 

This article appeared in The Edge Financial Daily, November 9, 2011.

[KK Lee 5]

‘Top heavy’ MAS faces uphill task

 

In the latest annual report for FY10 ended Dec 31, MAS reported staff costs of RM2.16 billion for its 20,000-strong workforce. That works out to an average cost of about RM108,000 per employee, compared with revenue per employee of RM670,000 for the year.

 

Interestingly, MAS’ staff strength has gone to 20,000 from 19,094 in FY08 despite its efforts to cut routes and frequencies to certain parts of the world.

 

Across the causeway, Singapore Airlines Ltd (SIA) had 22,282 employees with available passenger capacity of 108 billion seats per km, against MAS’ capacity of just 50.8 billion seats per km.

 

SIA’s revenue per employee was S$660,308 (RM1.6 million) and cost per employee stood at S$99,560 for FY11 ended March 31.

 

Compared with MAS’ partner AirAsia Bhd, the figures appear more alarming. While MAS’ revenue of RM13.41 billion was 3.4 times higher than AirAsia’s RM3.95 billion, its total staff costs were six times higher. Moreover, MAS’ average staff cost per employee was some 41% higher than the low-cost carrier’s.

 

AirAsia’s staff costs totalled RM360.79 million for its 4,702 staff in FY10 ended Dec 31, which translated to an average cost of RM76,762 per employee.

 

The gomen is unlikely to permit MH to cut 50% of staff number to be in industry average, at least on this side of GE. Which mean MH need to expand its network and generate more revenue even at lower yield, as long as marginal cost is covered, at least MH is a going concern.

[flee 5]

Is saving MAS still a priority?

 

The aviation scene in Malaysia is not about free and fair competition. It never has been.

 

It was a monopoly in the 1990s. It is a monopoly now. The government made it that way.

 

The only difference is, in the 1990s it was to safeguard the flag carrier's interests, now.... well, you can't really be sure why it's still a monopoly.

 

The share-swap between Khazanah Nasional Bhd and AirAsia Bhd founders Tan Sri Tony Fernandes and Datuk Kamarudin Meranun was essentially to save MAS.

 

Khazanah appeared to relax its policy to reduce its stake in companies. There is also the concern that corporate governance could be compromised by both MAS and AirAsia having common shareholders. All in the name of saving MAS.

 

At least you would have thought that was why Khazanah did it.

 

Barely three months into the deal though, Firefly's jet operations are virtually non-existent, its reputation in tatters, news of Caterham Jet breaks, and there is still no news of MAS' game plan.

 

Saving MAS doesn't seem to have been a priority.

 

Just to be clear, Caterham Jet is not a figment of anyone's imagination. Filings to Companies Commission Malaysia show that CaterhamJet Malaysia Sdn Bhd was incorporated on October 4 2011.

 

Its shareholders are Jasmindar Kaur, the company secretary, and Lotusjet Holdings Pte Ltd, a company controlled by Fernandes and Kamaruddin.

 

Representatives of the company have not only started preliminary talks with Skypark Subang, they have also even been to see the Department of Civil Aviation to check on technical details.

 

So where is Khazanah's hand in this? Did it not know of Fernandes' plans for Caterham Jet, a business that could hurt MAS' plans for a recovery?

 

Could Fernandes really have planned for Caterham Jet without Khazanah's blessings?

 

The latter after all owns Malaysia Airports Holdings Bhd.

 

Where does all this leave the embattled carrier MAS then?

 

Will a super premium business jet operation really not affect MAS? We don't even know how premium MAS will be.

 

Fernandes is a businessman. He is no one's saviour. If any party were to play that role it should have been the government.

 

And no, not in the form of a bailout.

 

It should be in the form of precise and sound policies that may not be popular but clearly dictate how the aviation sector should be developed.

 

Source

[KK Lee 5]

‘Top heavy’ MAS faces uphill task

Interestingly, MAS’ staff strength has gone to 20,000 from 19,094 in FY08 despite its efforts to cut routes and frequencies to certain parts of the world.

 

...

 

The national carrier implemented a voluntary separation scheme in 2006 aimed at laying off 3,000 to 5,000 staff. The scheme was expected to cost RM850 million. However, there was lukewarm response to the scheme, with only 4,500 employees opting for it.

 

MH gate agents at KUL are on contract. Where are all the new staffs assigned to? FY?

 

Is saving MAS still a priority?

 

If dinosaur don't mean to survive in the modern world, better let it extinct and move forward. Those staffs that are good will be absorbed by new airline, those caused the fall of dinosaur may be better suited to work in another industry.

[flee 5]

If dinosaur don't mean to survive in the modern world, better let it extinct and move forward. Those staffs that are good will be absorbed by new airline, those caused the fall of dinosaur may be better suited to work in another industry.

I do not envy the new management at all.

 

People, especially the staff, are very hostile to them. It will be very difficult for them to make a proper and accurate assessment of the situation without open and honest co operation from the staff. Perhaps that is part of the reason why they are not making any announcements. Work is keeping them busy!

 

I agree, if MAS cannot be saved - it will be cheaper in the long run to let them die.

[Mike P 0]

When one wants to build business, make sure it builds big to tap into a competitive market. Simply for a flight, the frequency must be at least 3 times and above weekly to ensure smooth connection. I can't imagine like 2 or even 1 weekly frequency, such flight will never survive.

[Mohd Suhaimi Fariz 2]

People, especially the staff, are very hostile to them. It will be very difficult for them to make a proper and accurate assessment of the situation without open and honest co operation from the staff.

 

Actually, management could do well enough to be more transparent with the staff. Right now, the people lower down the totem pole are kept in the dark about everything and they're rightly worried about the future, but all the management did is to give them general information that doesn't really alleviate their concerns. Can you blame the staff if they sound a bit miffed?

[filipeseda 0]

It is learnt that MAS’ new CEO Ahmad Jauhari Yahya will be revealing his game plan to turn around the struggling airline in about two weeks, when MAS releases its third quarter results on Nov 22.

 

 

And then he'll announce that their cutting back CPT, JNB, EZE, DMM, KHI and of course DXB! Why? Not enough demand! The real reason: EK A380 is too much heat for MAS to take and our PR department is full of idiots who can't create demand. Though I hope this business turnaround plan (god knows how many have been enacted) actually adresses the obvious problems with MAS (i.e. bloated staff figures which I believe all of us are aware of us even before that article, lack of compatible products with its competitors, lack of good advertising globally, lack of good network infrastructure, general mismanagement, etc.)

 

If you don't have access to reservation system, or if you don't do the search on same route everyday on MH website, you won't be able to tell if MH decided to reverse its decision.

 

The reversal could be just temporary as they might want to wait until the airline officially announce the cancellation.

 

 

Thank you for your clarifications. Only book SIN-KUl shuttle flights on MH regularly.

 

Actually, management could do well enough to be more transparent with the staff. Right now, the people lower down the totem pole are kept in the dark about everything and they're rightly worried about the future, but all the management did is to give them general information that doesn't really alleviate their concerns. Can you blame the staff if they sound a bit miffed?

 

 

Well, that is frankly the modus operandi of most businesses for fear of labour obstructions. It's a double sided sword.

 

Has MH reduced its staff intake in light of this?

[Sandeep G 1]

The problems of MAS paradoxically mirror that of an iceberg floating in the ocean... what we can see above the surface are the clear-cut operational inefficiencies such as fleet utilisation, excess staff, rubbish branding, second-rate (at times even third-rate) product etc. The amount of hidden mass of problems beneath the surface of the water is troubling - and is seemingly, the largest burden facing the carrier.

 

Scaringly, I honestly now believe that MAS is doomed to collapse and ruin within a very short time. ASEAN open-skies is impending in 2015 and not suprisingly, given all else it has to worry about, we haven't heard of any plans to deal with this game-changer. Some fingers and reputations will be burn't, but all that lays beneath the water will simply sink to the bottom of the ocean and lay there almost never to be revealed.

 

It is hoped lessons from cases such as the collosal collapses of Pan-Am/TWA/Ansett/Varig/Sabena/Swissair et. al. would be echoing through the ears of Ministers and MAS board members alike. However, again I fear that if you asked some of these 'influential' decision makers about the above - they would simply reply "Siapa?" and go on with their 'tiada-apa' attitude.

 

Salute however to the still sterling reputations of MAS Flight Operations, MAS Engineering & MAS Cabin Crew Division! In my opinion - you guys are very much the pillars of success in the company - and if it were to happen - a rebirth would definately be found from within your walls! Safe Landings!

Edited November 14, 2011 by Sandeep G

[leon t 0]

the solution have always been there for many years - just get SQ or CX to run MH and am sure it will be turned around - but of course we all know why this is not possible - and MH will be forever bleeding.....sigh

[BC Tam 2]

If demise of MH is inevitable, will Malaysia be the first nation to have a LCC as its national carrier ?!

[Mike P 0]

MH won't die. But may be one of the days, they would have to sell it by 1 MYR. Just like previous owner AK did.

[Jim Liu 0]

As of 0400GMT 14NOV11...

 

Reservation for BKI HND is wide-open again (travel on/after 01FEB12), after most booking class closed for 2-3 days.

[Cheng Long 0]

Just flew with MH Perth-KL-Penang return.. The Perth-KL part was like 50% full...Most were caucasians..

 

Cost cutting were quite obvious.. It's like each time I flew with them, something is missing.. No more towels, then no menu cards, then leg rest removed, less movies, some aesthetically hopeless pillow cover.. less drink rounds.. And no ice cream this time (they used to serve ice cream after meal).

 

Having said that, the flight was good cause I got several seats to myself.. It's like that's their selling point now.

 

MH really need to tackle their core problems, not some window dressing turnarounds, cut routes here and there.. If not, they will close shop... And too much turnaround, you will end up at the same place..

 

Also I feel that MH should focus more on high yielding overseas market..ie people who are willing to pay more for quality products.. Malaysians in general are demanding yet stingy..Hard to please.

[Nik H. 3]

 

Salute however to the still sterling reputations of MAS Flight Operations, MAS Engineering & MAS Cabin Crew Division! In my opinion - you guys are very much the pillars of success in the company - and if it were to happen - a rebirth would definately be found from within your walls! Safe Landings!

 

The sad reality is those Divisions are only at the tail end of business. They just operationalise the plans. Plans which are drawn up by the consistently bungling higher management. No matter how good they are, there is not much they can do to improve things.

 

MAS Cabin Crew is really good, but that's not about Management, its about the crew themselves that are naturally nice. Divisional Management there have changed many times, they are still the best. Mas Engineering is really good, but don't let them do business, they will lose money by investing efforts in pie-in-the-sky projects. Check out the spares inventory managements, 3rd party agreement deficiencies and leasing activities. As for Flight Operations, its the Pilots that's keeping the ship together. Flight Operations management can come and go, the Pilots will still hold the fort. Diligent, competent, and always concientious of giving their best, even when bullied by the Management.

[Ikman Ikreza 0]

The sad reality is those Divisions are only at the tail end of business. They just operationalise the plans. Plans which are drawn up by the consistently bungling higher management. No matter how good they are, there is not much they can do to improve things.

 

MAS Cabin Crew is really good, but that's not about Management, its about the crew themselves that are naturally nice. Divisional Management there have changed many times, they are still the best. Mas Engineering is really good, but don't let them do business, they will lose money by investing efforts in pie-in-the-sky projects. Check out the spares inventory managements, 3rd party agreement deficiencies and leasing activities. As for Flight Operations, its the Pilots that's keeping the ship together. Flight Operations management can come and go, the Pilots will still hold the fort. Diligent, competent, and always concientious of giving their best, even when bullied by the Management.

 

Yup, agreed MAS cabin crew always good. I was thinking Skytrax should introduce another new arward future named "WORLD'S BEST AIRLINES - TOP MANAGEMENT"

[flee 5]

Bottom line - you are only as good as your weakest link. I hope that everyone in MH knows that.

[alberttky 0]

Yup, agreed MAS cabin crew always good. I was thinking Skytrax should introduce another new arward future named "WORLD'S BEST AIRLINES - TOP MANAGEMENT"

 

Perhaps we should start a thread discussing the "WORLD'S WORST AIRLINES - TOP MANAGEMENT"!