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MAS and AirAsia Shares Swap

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Many people, especially those who do not have corporate/finance understanding, have misinterpreted the reason for the share swap.

 

 

Very true, especially here in Malaysia where political and personal interest of the bigwigs take precedence over the health of the company.

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Unfortunately, MH's fortunes (or the lack of it) really depend on their political masters more than anything else! :(

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Analysts wary of MAS' long-term financial strength

 

KUALA LUMPUR: Malaysia Airlines (MAS) may have averted financial disaster by securing funding for its aircraft purchases but analysts are not convinced it can sustain itself independently.

 

"The only positive thing is that they managed to secure a lot of loans which will help them survive for the next year-and-a-half or two but it's not enough to sustain the business in the long term," a Maybank Investment Bank analyst told Business Times late yesterday.

 

OSK Research aviation analyst Ahmad Maghfur Usman concurred, saying the airline is yet to sort out its cost structure in the long term.

 

"It remains to be seen whether it can operate independently (without financial assistance from the government)," he said.

 

The national carrier announced it is awaiting approval for an up to RM2.5 billion sukuk issuance and the set-up of a special purpose vehicle by the Ministry of Finance, which will help free up cash flow for the airline.

 

MAS' management met with analysts yesterday evening, after deciding against a media conference.

 

The national carrier also announced an operating loss of RM306.8 million for the financial quarter ended March 31 2012, a 10 per cent improvement from the RM340. 5 million in the first quarter of 2011. Net loss, helped by unrealised foreign exchange gains, stood at RM171.79 million.

 

Net cash for the quarter ended at RM1.3 billion after the airline received a RM1 billion bridging loan from CIMB Bank Bhd on March 30.

 

The management also dodged questions on its Business Plan, only reiterating that it would not be reviving Firefly's operations to its pre-share swap days.

 

Meanwhile, MAS human capital head Zahra Zaid said the airline has offered permanent MAS staff an option to go on unpaid leave for up to two years. This includes upper management employees and pilots.

 

The company has not targeted a specific number for this scheme.

 

"This is the initiative at this point of time. Concurrently, there will be ongoing natural reductions from staff reaching retirement age as well as expiry of contracts for those employed on a contract basis," she said in an e-mailed reply.

 

Source: http://www.btimes.com.my/Current_News/BTIMES/articles/pmas22/Article/#

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RHB revises MAS losses upwards after Q1 losses exceeded expectations

 

KUALA LUMPUR, May 23 — RHB revised Malaysia Airlines (MAS) forecast losses upwards today after the national carrier posted first quarter results that were worse than expected.

 

MAS reported larger than expected core net losses of RM347 million, which made up 67 per cent of RHB’s full-year net loss forecast of RM520.8 million and 87 per cent of the full-year consensus net loss forecast of RM401.2 million.

 

The research house said in a report that it projected the airline to have a net loss of RM858 million this year as compared with previous estimates of RM521 million.

 

For 2013, and 2014, RHB revised its forecast losses to RM372 and RM178 million as compared with RM370 and RM165 million previously.

 

RHB said that the revised estimates reflected the national carrier’s inability to substantially grow its yields as well as reduce costs, as seen in yesterday’s quarterly results.

 

“Other than recapitalisation of its balance sheet via the just announced funding plans, MAS continues to not consider other items on our “wish list”, for example the reduction in headcount and roping in a new foreign equity partner, or it is simply dragging its feet, for example the revamp of procurement systems,” said RHB.

 

When RM199.6 million in forex gains were factored in, MAS posted a net loss of RM171 million for the first quarter.

 

RHB said however that it took “comfort” that MAS has drawn up massive funding plans to at least tide it over the short term comprising, among others: a RM2.5 billion sukuk issue, RM2 billion in bridging loans and a proposal for the state to pay for RM5.3 billion worth of pending aircraft delivery and lease it back to MAS.

 

The report said that the outlook for the sector was gloomy with the International Air Transport Association (IATA) projecting the global airline industry to fare worse in 2012 with only US$3billion in profits, versus US$7.9 billion in profits estimated for 2011, due to the Euro crisis and high oil prices.

 

“Zooming in on MAS, in addition, it has several structural and operational issues that have not been adequately addressed with a shallow turnaround plan,” said RHB.

 

RHB has an “underperform” call on MAS shares with an indicative fair value of RM1.00.

 

Source: http://www.themalaysianinsider.com/business/article/rhb-revises-mas-losses-upwards-after-q1-losses-exceeded-expectations/

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Khazanah safety net for MAS

 

Khazanah will take up any shortfall in funding via an equity capital injection, says the national carrier

 

Kuala Lumpur: Khazanah Nasional Bhd will provide a safety net rather than an outright bailout of Malaysia Airlines (MAS).

MAS announced yesterday, it has almost secured about RM8.8 billion to fund its capital expenditure (capex) and working capital requirements.

 

The announcement, however, was fitted with a statement that Khazanah will take up any shortfall in funding via an equity capital injection.

 

“That equity injection is to help finance any unfunded aircraft capex and also for any unfunded working capital needs which there are none at this time.

 

“Such financing would only be forthcoming if and when required and subject to targets to be agreed,” MAS said yesterday.

 

The national carrier is awaiting approval for up to RM2.5 billion 10-year sukuk issuance, after securing RM2 billion in the form of bridging loans from banks.

 

CIMB Bank Bhd had forwarded RM1 billion to the airline in March, while another RM1 billion from a consortium of banks will be drawn this month.

 

MAS is also talks with the Ministry of Finance to set up a special purpose vehicle (SPV) owned by the ministry to park some RM5.3 billion worth of aircraft.

 

MAS will then lease the aircraft from the SPV. It will fund six A380s and two A330s due in May. Approval in principle for the SPV has been given.

 

However, a leasing arrangement is still pending the government and regulatory approvals.The SPV is expected to be in place by July 2012.

 

“The leasing terms are bound to be very attractive considering it has been set up to purely cater to MAS,” OSK Research Sdn Bhd

 

aviation analyst Ahmad Maghfur Usman told Business Times yesterday.

 

MAS is proposing that such a funding SPV issue bonds or sukuk in the ringgit-denominated capital markets and that such bonds/sukuk be subscribed by institutional capital market investors.

 

This funding will be asset-backed or collateralised by the aircraft assets which it is financing and the operating cash flows generated from the assets would be sufficient to repay the lease obligation over the tenure of the funding.

 

MAS will then bear the operating risks and residual value risks of the aircraft assets.

 

With the sukuk and SPV in place, MAS is confident that the remaining capex it needs for 2012 can be raised from commercial sources, such as operating leases, finance leases and commercial debt.

 

Funding commitments and proposals have been received from numerous third party financiers for the remaining aircraft capex obligations in 2012, and also for some capex obligations in 2013.

 

Source: Khazanah safety net for MAS http://www.btimes.com.my/Current_News/BTIMES/articles/20120523003306/Article/index_html

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Dear Malaysian tax payers,

Dig deep, dig very very deep (into your pockets)

Thank you !

:p

 

You forgot to add "Again" BC.

Edited by Nik H.

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Meanwhile, in the red camp:

 

The Group recorded revenue of RM1,168.4 million for the quarter ended 31 March 2012 (“1Q12”), 11% higher than the revenue of RM1,053.3 million recorded in the quarter ended 31 March 2011 (“1Q11”). The revenue growth was supported by 12% growth in passenger volume while the average fare was 7% higher at RM177 as compared to RM164 achieved in 1Q11. Ancillary income per passenger year-on-year was unchanged at RM40 on a like for like basis. The seat load factor was 80%, the same as in the corresponding period last year.

 

The profit after tax for the period was RM172.4 million compared to RM171.9 million in the same quarter of 2011.

 

Bursa Malaysia Announcement: http://announcements.bursamalaysia.com/EDMS/edmsweb.nsf/all/562AF12F08B4FAFA48257A07003617EC/$File/AirAsia%20Berhad%20-%20Bursa%20Announcement%20-%20Q1%202012%20-%20Final.pdf

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OSK Research aviation analyst Ahmad Maghfur Usman concurred, saying the airline is yet to sort out its cost structure in the long term.

 

"It remains to be seen whether it can operate independently (without financial assistance from the government)," he said.

Wonder what still remains to be seen before said analyst is enlightened ? :D

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No plans to revive Firefly jet ops: MAS

 

PETALING JAYA (May 23, 2012): Malaysian Airline System Bhd (MAS), whose first-quarter core net loss of RM356.6 million came in higher than consensus estimates, will not be reviving its subsidiary FlyFirefly Sdn Bhd's jet operations to Sabah and Sarawak anytime soon, the national airline told analysts at a briefing on Tuesday.

 

This follows the share-swap reversal between MAS and AirAsia on May 2.

 

MAS took over the jet services of former low-cost unit Firefly between the KL International Airport in Sepang and Sabah and Sarawak last December as part of its wider network rationalisation, leaving Firefly with an all-turboprop fleet. Analysts and aviation experts said the move had benefited rival AirAsia Bhd.

 

In a report yesterday, OSK Research aviation analyst Ahmad Maghfur Usman said he only expects MAS to be profitable by the financial year ending Dec 31, 2014 (FY14) and post a net profit of RM473 million.

 

The research firm has widened its core losses expectations for MAS in the current financial year (FY12) to RM775.4 million from RM360 million previously, and FY13 to a loss of RM70 million from its earlier estimate that it will turn around and record a net profit of RM115 million.

 

"(However,) we expect investor sentiment on MAS to turn positive with the impending resolution of its capital expenditure (capex) funding needs... We think the current low prices offer a good opportunity to start accumulating MAS shares," said Ahmad, upgrading his recommendation on the stock from "sell" to "trading buy" with a higher fair value of RM1.38 from 90 sen.

 

Kenanga Research also does not expect a strong recovery for MAS in the current financial year even with its new fleet of A380 superjumbos, which are expected to somewhat enhance its revenue base and hence reduce its loss.

 

Kenanga has raised its loss forecast higher by 13% to RM1.2 billion in FY12 as it factors in the additional finance cost arising from MAS' funding plan. It is maintaining an "underperform" rating on MAS, and lowered its target price to RM1.02 from RM1.05 previously.

 

Yesterday, MAS share price closed one sen higher at RM1.03 after hitting a high of RM1.08 in active trade with 6.903 million shares done.

 

On Tuesday, the national airline reported a net loss of RM171.79 million for the first quarter of 2012 and unveiled a funding proposal involving a RM2.5 billion sukuk programme, and aircraft leasing arrangement with the government.

 

It also plans to raise funding for the remaining capex of some RM6 billion this year to take delivery of 23 new aircraft from commercial sources.

 

Source: http://www.thesundaily.my/news/387541

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I wonder if those international flights from BKI (HND, KIX, SEL and PER) will be resurrected.

Not possible, unless D7 returns the candy (HND slots) to the baby (MH).

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MAS unions: ‘Hear us out’

 

They were concerned with the collaborative tie up with AirAsia especially with engineering as this department was a seen as an important income generator for MAS.

They also want the maintenance contract with AirAsia at US$33 an hour reviewed because the norm that MAS charges is US$46 per hour while the industry rate is US$80 to US$85 per hour.

 

SOURCE:http://biz.thestar.com.my/news/story.asp?file=/2012/5/19/business/11321502&sec=business

 

 

From a bean counter point of view; if US$33 an hour covered variable cost and overhead (even if partially) and other business remain the same, Mas Engineering bottom line should ended up better.

 

Guess some people prefer charge high and work less.

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From a bean counter point of view; if US$33 an hour covered variable cost and overhead (even if partially) and other business remain the same, Mas Engineering bottom line should ended up better.

 

Guess some people prefer charge high and work less.

 

Or some people prefer to pay less for the same work done.

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Rashdan resigns from MAS

 

PETALING JAYA (May 29, 2012): Malaysian Airline System Bhd's (MAS) executive director and deputy CEO Mohammed Rashdan Mohd Yusof is believed to have resigned from his posts, nine months after being appointed to the national air carrier.

 

It is learnt that he submitted his resignation letter to MAS chairman Tan Sri Md Nor Yusof yesterday afternoon.

 

His resignation came after MAS' major shareholder Khazanah Nasional Bhd announced early this month that the share-swap deal between the national airline and AirAsia Bhd had been called off, eight months after its signing in August 2011, following heavy political and union pressure.

 

During his short stint in MAS, Rashdan was in charge of short-haul operations, commercial, finance, corporate finance and strategic procurement units. This includes the purchase of aircraft.

 

Rashdan's latest stint in MAS was his second involvement in restructuring the national air carrier over the last 10 years. In 2002, BinaFikir Sdn Bhd, in which he was one of the two co-founders, was instrumental in the restructuring of MAS under the Widespread Asset Unbundling (WAU) scheme. The other BinaFikir co-founder was Khazanah's managing director Tan Sri Azman Mokhtar.

 

Prior to joining MAS last year, Rashdan was an executive director for investments in Khazanah.

 

Source: http://www.thesundaily.my/news/391008

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Wow, amazing staff turnover!

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Rashdan resigns from MAS

 

PETALING JAYA (May 29, 2012): Malaysian Airline System Bhd's (MAS) executive director and deputy CEO Mohammed Rashdan Mohd Yusof is believed to have resigned from his posts, nine months after being appointed to the national air carrier.

 

It is learnt that he submitted his resignation letter to MAS chairman Tan Sri Md Nor Yusof yesterday afternoon.

 

His resignation came after MAS' major shareholder Khazanah Nasional Bhd announced early this month that the share-swap deal between the national airline and AirAsia Bhd had been called off, eight months after its signing in August 2011, following heavy political and union pressure.

 

During his short stint in MAS, Rashdan was in charge of short-haul operations, commercial, finance, corporate finance and strategic procurement units. This includes the purchase of aircraft.

 

Rashdan's latest stint in MAS was his second involvement in restructuring the national air carrier over the last 10 years. In 2002, BinaFikir Sdn Bhd, in which he was one of the two co-founders, was instrumental in the restructuring of MAS under the Widespread Asset Unbundling (WAU) scheme. The other BinaFikir co-founder was Khazanah's managing director Tan Sri Azman Mokhtar.

 

Prior to joining MAS last year, Rashdan was an executive director for investments in Khazanah.

 

Source: http://www.thesundaily.my/news/391008

 

I think he must have sensed the end of his tenure when the damning voyage report got out.

 

Want to cut down on staff - start with the biggest costing staff first!

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Yes, I remember SQ top management taking (30%, if I am not mistaken) pay cuts first, before those lower down were asked to adopt other cost savings measures.

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Rashdan resigns from MAS

 

PETALING JAYA (May 29, 2012): Malaysian Airline System Bhd's (MAS) executive director and deputy CEO Mohammed Rashdan Mohd Yusof is believed to have resigned from his posts, nine months after being appointed to the national air carrier.

 

It is learnt that he submitted his resignation letter to MAS chairman Tan Sri Md Nor Yusof yesterday afternoon.

 

His resignation came after MAS' major shareholder Khazanah Nasional Bhd announced early this month that the share-swap deal between the national airline and AirAsia Bhd had been called off, eight months after its signing in August 2011, following heavy political and union pressure.

 

During his short stint in MAS, Rashdan was in charge of short-haul operations, commercial, finance, corporate finance and strategic procurement units. This includes the purchase of aircraft.

 

Rashdan's latest stint in MAS was his second involvement in restructuring the national air carrier over the last 10 years. In 2002, BinaFikir Sdn Bhd, in which he was one of the two co-founders, was instrumental in the restructuring of MAS under the Widespread Asset Unbundling (WAU) scheme. The other BinaFikir co-founder was Khazanah's managing director Tan Sri Azman Mokhtar.

 

Prior to joining MAS last year, Rashdan was an executive director for investments in Khazanah.

 

Source: http://www.thesundaily.my/news/391008

 

 

Dr. Don. come back..Dr. Mohamadon Abdullah appointment as the new Board of Directors of Malaysia Airlines

http://www.facebook.com/mohamadon.abdullah

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MAS Confirms No Change To Board Of Directors And Management, Takes Delivery Of 1st A380

 

KUALA LUMPUR, May 29 (Bernama) -- Malaysia Airlines (MAS) has confirmed that there has been no change of officials in the management structure and the Board of Directors.

 

In a statement, it said in the event of updates to the current situation, an appropriate announcement will be released to all stakeholders following any decision made.

 

It made the statement in response to recent news reports about possible changes to MAS' management and Board of Directors.

In a separate statement, the national carrier said it has taken delivery of its first Airbus A380, becoming the eighth operator of the world's largest and most eco-efficient airliner.

 

The aircraft was handed over to MAS Group Chief Executive Officer Ahmad Jauhari Yahya by Airbus Chief Operating Officer Fabrice Bregier in Toulouse, France today and is expected to arrive at MAS' Kuala Lumpur base tomorrow (May 30).

 

"The A380 showcases our latest premium offering in products and services. This will be our latest flagship aircraft, offering new levels of comfort, luxury and convenience for long-haul travel.

 

"With the A380 in our fleet, MAS will reinforce its position as one of the world's preferred premium carriers bringing great Malaysian Hospitality to our customers," said Ahmad Jauhari.

 

"We are extremely proud to welcome Malaysia Airlines as the latest operator of the A380.

 

"The A380 has set new standards of comfort, fuel-efficiency and respect for the environment. The combination of these features and MAS' world-famous in-flight service represents a winning formula, enabling the carrier to offer its passengers the best the industry has to offer," said Bregier.

 

MAS has ordered six A380s, which are powered by Rolls-Royce Trent 900 engines and feature a premium three class layout, with accommodation for 494 passengers.

 

Features include fully flat beds in First and Business Class, plus new wider seats in Economy, while seats in all classes are equipped with the latest individual in-flight entertainment systems, USB ports and satellite telephone facilities.

 

The A380 is capable of flying 8,300 nautical miles or 15,300 km, enabling non-stop service with a full payload from Kuala Lumpur to any destination in Europe or one-stop service to major destinations in the US, MAS said.

 

Since first entering service in 2007, the A380 has exceeded all expectations, flying more people further at lower cost, while significantly reducing carbon emissions, it said.

 

The spacious, quiet cabin and smooth ride have also made the A380 a firm favourite with passengers, resulting in higher load factors and increased profitability on all routes where the aircraft is operated, it added.

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Or some people prefer to pay less for the same work done.

 

If its still profitable for Mas Eng why not..?? I prefer for them being occupied rather than keep on under utilize like it is right now(correct me if im wrong).

Edited by nrazmoor

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