MAS and AirAsia Shares Swap

[flee 5]

MAS, Firefly thrashing out ownership issues on 40 aircraft

 

GEORGE TOWN: Ownership issues on some 40 narrow-bodied aircraft used by Malaysia Airlines and its subsidiary Firefly are currently being negotiated, prior to the launch of the national carrier's new short-haul premium airline.

 

Business Times has learnt that the two carriers are currently talking about which party or parties will take ownership of the Boeing 737-800 and ageing Boeing 737-400.

 

There are currently some 40 narrow-bodied planes of which eight (of the Boeing 737-800) and two Boeing 737-400 belong to Firefly.

 

The rest of these fleet belong to Khazanah Nasional Bhd's subsidiary, Penerbangan Malaysia Bhd (MAS' holding company), which in turn leases the aircraft to MAS.

 

"Ownership issues need to be resolved first, over which party takes over the 40 narrow-bodied aircraft for the new airline," a source said.

 

Another source said that also being negotiated is whether the new airline will apply for a fresh air operator's certificate (AOC) or use the one belonging to Firefly.

 

(AOC is an approval granted from any national aviation authority to an aircraft operator to allow it to use planes for commercial purposes.)

 

In Malaysia, AOCs have so far been granted to Malaysia Airlines, AirAsia, MASWings, Firefly and Berjaya Air.

 

Once the new airline takes off, aviation watchers are expecting Firefly to reinstate its Sabah and Sarawak routes which it

The airline at the beginning of 2011, had expanded its network and operations by using the Boeing 737-800 jets to cities like Kota Kinabalu, Kuching and Sandakan where it had recorded very high load factors.

 

Following an announcement last August that Malaysia Airlines and rival AirAsia will swap shares in a partnership, MAS announced that Firefly would cease all jet operations by December 4. The national carrier also confirmed that it will absorb Firefly's jet fleet.

 

It is also learnt that Firely's plans to expand its fleet of turbo-propeller planes and may turn to Canadian aircraft maker Bombardier as its choice of aircraft.

 

Source: MAS, Firefly thrashing out ownership issues on 40 aircraft http://www.btimes.com.my/Current_News/BTIMES/articles/mfly/Article/

[Isaac 0]

That's because the average income is so much lower in Malaysia compared to places like Singapore and Hong Kong. Even Bangkok has a more significant corporate market. It's this kind of clientelle that provide the most profit for SQ and CX. MH doesn't have the luxury of that.

Not ruling out this factor but then, the fact that many upper middle class people in Malaysia always choose to fly with LCC doesn't help either. It's not that they can't afford it, but more like they always go for the cheaper option whenever it is available.

 

 

The number of travellers travelling out of Malaysia with budget carriers to connect unto legacy/premium carriers at places like SIN, BKK, HKG very significant too

Agreed.

 

 

Yes, because of this lower average income and exchange rate. Many full service airlines have to lower their fares to match what Malaysian would pay for. Compare CX's return fare out of KUL to HKG and try and book a return fare from HKG to KUL as if live in HK. There is quite a gap there albeit not signifcant but gives you an idea though!

I realized in the past few years that many of those i've known for years are not really what they seem to be. They always chase after those super low fares offered by Air Asia and if they miss the sale, they will simply postpone their plan to go overseas or just a simple vacation somewhere in Malaysia. Because of this, people always mistake them as not having much disposable income but then, their parents are Premier/Priority/Privilege Banking customers of several banks and as we grow older and we get to know each other better, i realized that the house they live in has a market value of about RM1m (yet they are still driving local cars such as those from Proton & Perodua). The new discovery doesn't end there. I also realized many of them have a few shoplots in KK and KK suburbs and each shoplot has a market value of RM500k - RM1m.

 

It is no exception for some of my relatives too. One of my aunts holds a senior post in LHDN and she pockets about RM300k/pa (including bonus and LHDN is known to be generous with their bonus) while her husband is a professor at UM and earns about the same. But then, they won't fly MAS unless they can claim the ticket expenses from the company

 

Anyway, i think the main difference is the mindset and it is not all a bad thing. It's not good for full service airline such as MAS but then, it is good for themselves because being frugal is a good thing. When there is a cheaper alternative, they will always go for the cheaper option even if the difference is not really big

[JingKai Seah 0]

@Isaac Basically.. it means that Malaysians are much more thrifty regardless of income levels~

[Izanee 0]

More from the rumour mill... Unions guys demanding MAS pull out from joining OneWorld? Are they stupid? Even SQ and TG are in an alliance - look at the growth that they have had. MAS going on its own means it is heading for oblivion. The union guys better start applying for jobs in VN or GA.

 

 

 

MAS-AirAsia deal rumoured scrapped, but nothing concrete so far

 

Behind The News - By Leong Hung Yee

 

 

 

 

DESPITE all the brouhaha surrounding speculation that the Government is re-looking the share swap deal between Malaysia Airlines (MAS) and AirAsia Bhd, all relevant parties aren't saying a thing.

The latest to be asked on the matter was the Transport Ministry, whoseMinister Datuk Seri Kong Cho Ha said his ministry was unaware of any development and had not received any information on the said deal.

“No, I have not received any reports. I won't say anything at the moment because I have not been informed yet of any changes to the current arrangement,” he told reporters on the sidelines of the World Cargo Symposium 2012.

Kong said that was a decision to be made by the relevant companies and he could not comment on anything for the time being.

MAS group managing director and chief executive officer Ahmad Jauhari Yahya, who was also present at the event, succeeded in dodging the media who were determined to pose the same question to him.

Speculation is rife that the Prime Minister is considering aborting the share swap deal between both companies as the alliance had failed to show any improvement.

An Air Asia aircraft (background) prepares for take-off while a MAS aeroplane is taxiing on the tarmac of KL International Airport. Speculation is rife that the Prime Minister is considering aborting the share swap deal between both carriers as the alliance has failed to show any improvement.

A local news portal reported last week that the Government was also considering taking MAS private and asked Khazanah Nasional Bhd to buy back a 20.5% stake that has been exchanged with Tune Air Sdn Bhdfor a 10% stake in budget carrier AirAsia.

The report also said that MAS Employees Union (Maseu) had met and urged the Prime Minister to abort the deal. MAS employees' complaints include the management style of deputy chief executive officer Mohammed Rashdan Yusof. Another complaint is the talk of being redeployed outside MAS to the short-haul premium airline headed by Rashdan as that would mean a loss of benefits.

Both Khazanah and Ahmad Jauhari have yet to respond to earlierStarBiz queries.

“While the cries of the union workforce of MAS over the need to protect their jobs are felt by the Prime Minister, we have reiterated that the key low-hanging fruit for MAS to pick lies in trimming its excessive workforce (MAS has some 20,000 employees versus AirAsia's 9,000 and Singapore Airlines' 21,000),” OSK Research said.

Furthermore, the research house said with routes between AirAsia and MAS already rationalised as well as key employees from AirAsia being deployed to MAS, it believes the unravelling of the share swap deal inked last year would not bode well for the Malaysian corporate scene.

“Aside from scrapping the share swap deal, rumours are abound that the union is requesting MAS (in an attempt to protect jobs) to abort its plan to start a new premium short-haul carrier (and instead focus on Firefly) as well as abort its planned entry into the oneworld alliance.

“We think any reversal of the share swap is highly unlikely but we do not discount this possibility entirely,” OSK Research said.

MAS and AirAsia has entered into a share swap deal that saw AirAsia group chief executive officer Tan Sri Tony Fernandes becoming a substantial shareholder of MAS with a 20.5% share. Khazanah Nasional Bhd, the controlling shareholder of MAS, in turn, owns 10% of AirAsia. Under the collaborative agreement, both parties would cooperate in the areas of ground handling, training and engineering, among others.

As a result of that, MAS and AirAsia now work together instead of competing furiously against each other. This has also raised concerns of a monopoly in the domestic airline industry and prompted the Malaysia Competition Commission (MyCC) to probe if there was a breach of anti-competitive behaviour and abuse of dominant position in the deal, which was signed in August.

The recent route rationalisation by both airlines have also come under close scrutiny for anti-competitive behaviour.

MyCC had given AirAsia and MAS a month from Jan 20 to provide the relevant documents. However, there have been no public disclosure on this issue so far.

When contacted, MyCC chief executive officer Shila Dorai Raj said: “Not taking any questions on this for now.”

MAS aims to be a premium carrier and the best in class. It has thus far cut 9% of its unprofitable routes to stem losses and by mid-year will launch a short-haul premium service to tap into the East Asian market. But for now, the carrier need to get money to foot bill for all the aircraft it has ordered.

The flag carrier expects its capital expenditure (capex) for 2012 to be at RM6bil and for 2013 at RM3.5bil due to aircraft deliveries, including sixA380s for this year and next. The first A380 will arrive in Kuala Lumpur on June 18.

MAS recently reported a RM2.5bil net loss for financial year ended Dec 31, 2011. It is currently looking at several options to finance its capex, including spinning off some of its non-core assets. It is giving itself 60 days to come up with a plan to strengthen its balance sheet.

The airline's plan to form a joint venture with Qantas has fallen through as talk between both parties has been terminated. Qantas said the discussion with MAS could not continue as the parties were “unable to reach mutually agreeable commercial terms”.

Edited March 14, 2012 by Izanee

[Mohd Suhaimi Fariz 2]

More from the rumour mill... Unions guys demanding MAS pull out from joining OneWorld? Are they stupid? Even SQ and TG are in an alliance - look at the growth that they have had. MAS going on its own means it is heading for oblivion. The union guys better start applying for jobs in VN or GA.

 

Don't put that much faith in rumours.

[Izanee 0]

Of course, I am also quoting from the legendary Malaysian press, known for its very accurate reporting of the aviation scene! Lol

[flee 5]

But in Malaysia 90% of rumours come true at some point in time....

[Mohd Suhaimi Fariz 2]

I just got my hands on Utusan Malaysia - nowhere did they say that the union's urging to quit OW - only the CCF.

 

Besides, OW membership was Tg. Azmil's initiative, happened way before all this.

[flee 5]

MAS decision made by board

 

WE refer to the news report in StarBiz today (March 14) titled MAS-AirAsia deal rumoured scrapped, but nothing concrete so far.

Whilst we do not wish to comment on the overall news report as this is purely an issue to be addressed by the respective shareholders, we take great exception to the inference, “MAS employees’ complaints include the management style of deputy chief executive officer Mohammed Rashdan Yusof.

 

“Another complaint is the talk of being redeployed outside MAS to the short-haul premium airline headed by Rashdan as that would mean a loss of benefits.”

 

This is very speculative, based on rumours and appears aimed at tarnishing the reputation of our senior management staff without any definite basis. Quoting sources to implicate our staff negatively is highly inappropriate and unfair to the person.

This also interferes with the authorities that are deciding on the next steps subsequent to the recent requests submitted to the Prime Minister.

 

We wish to also clarify that at Malaysia Airlines group, the business directions are never made unilaterally by any single person. Instead, the decisions are made only after agreement by the company’s board.

 

In the case of the short-haul operations, it was part of the Comprehensive Collaborative Framework proposal announced on Aug 9, 2011 and subsequently endorsed by the board before it was incorporated in our business plan revealed on Dec 7, 2011.

 

It was also a decision of the company for Mohammed Rashdan Yusof to head this new outfit and ensure profitable operations. The board and management are thus accountable for such decisions and it is therefore improper to start blaming an official of our company even before a business process has taken ground.

 

At Malaysia Airlines, we welcome diverse viewpoints and feedback justified with credible supports and we are receptive to ideas and help to enable us to address issues and concerns.

 

However, we strongly object to inferences based on hearsay and speculation.

 

NOR ZALIDA AHMAD

Acting head, strategic communications

Malaysia Airlines

[BC Tam 2]

At Malaysia Airlines, we welcome diverse viewpoints and feedback justified with credible supports and we are receptive to ideas and help to enable us to address issues and concerns.

 

NOR ZALIDA AHMAD

Acting head, strategic communications

Malaysia Airlines

Be careful there, and mindful of what has happened to those people who apparently made the few police reports previously ?

[BC Tam 2]

Putrajaya mulls new unit to own MAS if share swap undone

By Jahabar Sadiq

Editor

March 16, 2012

 

A MAS aircraft parked at KLIA. The government is working on a new plan to take over Khazanah’s stake in MAS. — File pic

 

KUALA LUMPUR, March 16 — Putrajaya is considering a special entity to take loss-making Malaysia Airlines (MAS) off its main shareholders, Khazanah Nasional Berhad and Tune Air Sdn Bhd, if the Najib administration caves in to demands from the flag carrier’s worker unions to unravel an unpopular eight-month-old share swap.

The Malaysian Insider has learnt that Putrajaya officials are working on a plan for Khazanah to divest its stake in MAS first before a general offer is made for the remaining shares from other shareholders, including tycoon Tan Sri Tony Fernandes’ Tune Air, which owns a 20.5 per cent stake in the national airline. In the August 2011 deal, Khazanah got a 10 per cent stake in Asia’s biggest budget carrier AirAsia.

"Putrajaya is looking at the option of forming a special entity to take over Khazanah’s stake in MAS. After that, it will make an offer for the remaining shares from Tune Air and others,” a source told The Malaysian Insider.

 

read the rest here : http://www.themalays...re-swap-undone/

 

We are probably looking at the mother of all bailouts if this progresses to fruition

Edited March 15, 2012 by BC Tam

[V Wong 0]

Stormy road ahead, and to occur at such an inopportune time as well. Political meddling, middle man brokering, con-sultan spinning.. when will the Gordian knot be cut to release MH to be a true business entity, run entirely on its own merit?

 

All the best MH, FY and Sapphire / whatever-it-is-airline!

[Ikman Ikreza 0]

As we expected since a few months ago, these MAS-AirAsia share swap only profitable to other party but not MAS.

[KC Sim 2]

Putrajaya mulls new unit to own MAS if share swap undone

By Jahabar Sadiq

Editor

March 16, 2012

 

A MAS aircraft parked at KLIA. The government is working on a new plan to take over Khazanah’s stake in MAS. — File pic

 

KUALA LUMPUR, March 16 — Putrajaya is considering a special entity to take loss-making Malaysia Airlines (MAS) off its main shareholders, Khazanah Nasional Berhad and Tune Air Sdn Bhd, if the Najib administration caves in to demands from the flag carrier’s worker unions to unravel an unpopular eight-month-old share swap.

The Malaysian Insider has learnt that Putrajaya officials are working on a plan for Khazanah to divest its stake in MAS first before a general offer is made for the remaining shares from other shareholders, including tycoon Tan Sri Tony Fernandes’ Tune Air, which owns a 20.5 per cent stake in the national airline. In the August 2011 deal, Khazanah got a 10 per cent stake in Asia’s biggest budget carrier AirAsia.

"Putrajaya is looking at the option of forming a special entity to take over Khazanah’s stake in MAS. After that, it will make an offer for the remaining shares from Tune Air and others,” a source told The Malaysian Insider.

 

read the rest here : http://www.themalays...re-swap-undone/

 

We are probably looking at the mother of all bailouts if this progresses to fruition

 

Does not such a machinery already exist? Does that not sound like Penerbangan Malaysia Berhad Mk II?

 

I agree with flee that many past rumours have proven to be true ... a case of no smoke without fire. Even if the CCF is undone right now, AirAsia X is already happy as it was awarded the right to fly to Sydney!

 

And it would be really crazy if any B737-800 or B737-400 ends up back in the Firefly fleet and operations!

 

There certainly is a lot of to-ing and fro-ing, doing and un-doing and re-doing ... that is a complete waste of valuable resources and time, a source of confusion to both the public and the international travel industry ... I wonder if the politicians and management involved are confused too.

 

KC Sim

[Mike P 0]

8 months wasted and no profits return! What a shame! Failure and failure! Fail on share swap! Fail on the talk deals with Qantas and just fail on everything! This is really frustrating us!

[Ikman Ikreza 0]

8 months wasted and no profits return! What a shame! Failure and failure! Fail on share swap! Fail on the talk deals with Qantas and just fail on everything! This is really frustrating us!

 

I'm waiting statement by Uncle Tony about MAS-AirAsia share swap after 8 months, seems he's keep quite now and no comment by him ..?

[Mohd Suhaimi Fariz 2]

I'm waiting statement by Uncle Tony about MAS-AirAsia share swap after 8 months, seems he's keep quite now and no comment by him ..?

 

Anything he says will not put out the fire actually, so better to keep his mouth shut.

 

Anyways, am I the only one who's getting sick & tired of this whole saga? It's just like politics in Malaysia (obviously), follow too closely & you'll probably end up in the loony bin!

[KK Lee 5]

If MH-AK share swap is unravelled by the trade union pressure; delist MH and take it private is probable to plug holes in MH balance sheet, MH is likely to defer joining OW and another change of top management is almost certain.

[Naim 6]

Tony is busy relocating to Jakarta. No time for trivialities.

[S V Choong 4]

Anyways, am I the only one who's getting sick & tired of this whole saga? It's just like politics in Malaysia (obviously), follow too closely & you'll probably end up in the loony bin!

 

No, you are certainly not alone. No doubt this is a total waste of time and resources. Don't ever get sick and tired though, the least you watch and the least you are attached to it emotionally, the happier you are!

 

After all, nothing to do with you on the personal level, right! Worst you can't do anything about it. Just be a bystander, let the nature takes its course and poke fun of it at times!

Edited March 16, 2012 by S V Choong

[S V Choong 4]

I realized in the past few years that many of those i've known for years are not really what they seem to be. They always chase after those super low fares offered by Air Asia and if they miss the sale, they will simply postpone their plan to go overseas or just a simple vacation somewhere in Malaysia. Because of this, people always mistake them as not having much disposable income but then, their parents are Premier/Priority/Privilege Banking customers of several banks and as we grow older and we get to know each other better, i realized that the house they live in has a market value of about RM1m (yet they are still driving local cars such as those from Proton & Perodua). The new discovery doesn't end there. I also realized many of them have a few shoplots in KK and KK suburbs and each shoplot has a market value of RM500k - RM1m.

 

It is no exception for some of my relatives too. One of my aunts holds a senior post in LHDN and she pockets about RM300k/pa (including bonus and LHDN is known to be generous with their bonus) while her husband is a professor at UM and earns about the same. But then, they won't fly MAS unless they can claim the ticket expenses from the company

 

Anyway, i think the main difference is the mindset and it is not all a bad thing. It's not good for full service airline such as MAS but then, it is good for themselves because being frugal is a good thing. When there is a cheaper alternative, they will always go for the cheaper option even if the difference is not really big

 

Realistically, how many of those people really exists out there? I mean those who earn annually RM300k. In terms of percentage in the population, how many percentile are we talking about? I know many in HK are filthy rich and they don't drive any cars and yet the own some of the most expensive properties in the world, in terms of per square foot. It is the Chinese or East Asian mentality (which is also seen in Korean and Japanese) where they want to live lean and mean. Even back at home, my parents and my brothers are like this too. Not saying this is not good, it beats the borrowing/ credit card/ money printing money of Westerners.

 

Satistically in Malaysia though, how many of such population exists? In terms of per capita income and purchasing power. I am sure the figures won't agreed with what you said above though, sorry to say. I mean if Malaysia is still heading the way the government is spending (which is like crazy), in times to come, we might witness cases like Ireland, Greek and the likes happen in Malaysia. The main reason why airlines like CX has to lower their fares to match the purchasing power of local population. Even between Australia and NZ (whose income level is not too different but exchange rate is), you can see the fare out of NZ is much cheaper when you try to book on Emirates. Fares out of AKL to MEL is always cheaper than buying it from NZ site than on Australian site.

 

I thought I really can fly with long haul with jetstar and Air Asia X back to Asia, but when you have kids, it makes things really difficult as well. By the time you have come to the total cost, the fare of the full service airlines is not that far away actually and transit time can be awful (with tiring kids), so you may as well take the full service airlines. I would say short to medium sectors I can tolerate LCC, but not for long haul, which is why I never even bothered with Air Asia X or jetstar.

 

Finally it really makes a lot of difference when the exchange rate is low. Folks are coming here to visit soon and every AUD$1 translates to MYR 3.00 and is biting them painfully. If I live in Malaysia and earn MYR, Air Asia X makes a lot of sense. However if you live in Australia and earn AUD, a lot of things become a lot more affordable. An iPad here is from $400-$500 but in Malaysia it is four figures. I rest my case.

[Mushrif A 3]

Tony is busy relocating to Jakarta. No time for trivialities.

 

Grabbed and ran?

[Mohd Suhaimi Fariz 2]

After all, nothing to do with you on the personal level, right! Worst you can't do anything about it. Just be a bystander, let the nature takes its course and poke fun of it at times!

 

Well on a personal level it does, because I work for MH!

[S V Choong 4]

Well on a personal level it does, because I work for MH!

Mate, just take it as it comes.... unless of course you can call the shots!

[flee 5]

Anyways, am I the only one who's getting sick & tired of this whole saga? It's just like politics in Malaysia (obviously), follow too closely & you'll probably end up in the loony bin!

I am sick and tired of politicians meddling and thinking that they know best. Why can't they just give it some time. The aviation industry is not in the healthiest of times and even airlines like CX and SQ are not making as much money as they used to. It is difficult to turn MH round even without political interference, it is next to impossible if the interference continues. Management must be allowed to manage.