MAS and AirAsia Shares Swap

[Cheng Long 0]

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).

 

Well, we already know MH as a whole is losing money.

 

In any business deal, both parties will have to agree on the price. Obviously the staff in MH were not quite happy, they felt their arms were twisted and the deal lopsided. They didn't like the idea of doing stuff for Air Asia and getting peanuts in return. People have to be happy to do their work, otherwise morale will suffer.

 

As to whether they are underutilized right now, I don't know, maybe others can shed some light here.

[flee 5]

Start afresh, for MAS deserves the change

 

Friday Reflections - By B.K. Sidhu

 

THE biggest story of Malaysia Airlines (MAS) now is that it has finally taken delivery of the world's largest aircraft, the A380.

 

MAS group chief executive officer Ahmad Jauhari Yahya and the airline's technical team were onboard the first A380, which flew out of Toulouse in France on Tuesday night to land at KL International Airport on Wednesday afternoon.

 

For Jauhari, it must have been a momentous walk out of the A380 to the aerobridge, with his hands outstretched, perhaps gesturing to the crowd below how large the super bird is.

 

The aircraft, now parked at Hangar 6, will begin commercial flights on July 1 on the MAS flagship route, Kuala Lumpur-London-Kuala Lumpur.

 

It came five years behind schedule from its original delivery date of 2007, and nearly a decade after the booking for six A380s was made in 2003.

 

Back then, MAS was criticised for dragging its feet to place the orders for the A380 because its rivals were quick to jump at the opportunity.

 

Singapore Airlines (SIA) was the A380 launch customer and took delivery of the aircraft in 2007, though 18 months behind schedule.

 

But, as the saying goes, it's better to be late than never. MAS has now joined the A380 elite club led by players like Emirates (21 A380s), SIA (17), Qantas (12), Lufthansa (nine), Air France (seven), Korean Air (five) and China Southern Airlines (three).

By July, MAS will get its second A380, the third and fourth later this year, and the remaining two in 2013.

 

That should give MAS a big boost in terms of aircraft fleet and help position itself in the marketplace as it now has the best in class.

 

But what surprises many is that the A380 is going back to Toulouse for some fittings next week and that means spending more on fuel when all the fittings could have been done before the flying to Malaysia.

 

That aside, one of MAS' biggest problems has been that its fleet is often seen as “old and tired”, comprising mostly fuel guzzlers that rack up the fuel and maintenance bills.

 

Things should change for MAS from now on because of the A380 and the 23 next-generation aircraft to be delivered this year. By 2015, MAS would be on top of the young-fleet list.

 

And a major improvement MAS made this time is that it has got the best seats for the A380. The seats are bigger than rival SIA and have been described as single-sized beds in the skies. Kudos for that.

 

And to win over passengers, MAS may want to promise and deliver the “moon and sky'' in terms of customer experience.

 

The reality is that there is now a big window of opportunity for MAS to regain its shine well ahead of the 2015 Asean open skies and the A380 may well be the catalyst.

 

No amount of rescue or fund injection will help if MAS does not seize this opportunity to change and move ahead now that it has a financing plan in place.

 

What it needs to fix is a strategy and a buy-in from within.

 

That's going to be a bit tough, given the “grudges and grievances'' from within but the company needs to fix things at lighting speed.

 

Among others, it has to get the business plan done and the focus has to be on sales and returns. For that, it needs to get a sales head immediately.

 

At a time when online booking is the norm, the company also needs to cut the clutter from its website to make it vibrant and simple to use.

 

There should be cost-cutting at all levels and any restructuring should be to put the right man for the right job.

 

The list goes on: Cut the many layers of reporting, remove the silos, and rework the network to focus on high yields markets. Enhance the food quality and presentation. Be competitive in ticket pricing.

 

In doing all these, raise the service levels and win back the Skytrax rating.

 

Enough time has been wasted fighting battles. MAS has to now think of winning the war, which is out there with rivals that have had the time to sharpen their tools.

 

The onus is on everyone at MAS to close ranks and work harmoniously to bring this airline back to profitability. It is not the job of an exclusive team but an inclusive initiative.

 

I like this quote from Shell CEO Peter Voser which appeared in Forbes. He said, “First you have to communicate right from the start and very clearly what you want to do. Then, when you start to make changes, you start at the top.''

 

It may be unprecedented that the staff of a government-linked company have had to fight a bitter battle for the survival for the airline. It is time to move on to rebuild the airline, and this can only be done with the spirit of togetherness.

 

Let the A380 brings the goodness to help MAS soar again.

 

Deputy news editor B.K. Sidhu says it would be a dream come true for her to be on the A380 single bed in the skies.

 

Source: http://biz.thestar.com.my/news/story.asp?file=/2012/6/1/business/11396425&sec=business

[BC Tam 2]

....... raise the service levels and win back the Skytrax rating

Now is that worrying or does the chap know something that has not been disclosed publicly ?

[Mushrif A 3]

Start afresh, for MAS deserves the change

 

Friday Reflections - By B.K. Sidhu

 

[...]

And a major improvement MAS made this time is that it has got the best seats for the A380. The seats are bigger than rival SIA and have been described as single-sized beds in the skies. Kudos for that.

[...]

 

Deputy news editor B.K. Sidhu says it would be a dream come true for her to be on the A380 single bed in the skies.

 

Source: http://biz.thestar.c...25&sec=business

 

Typical Sidhu article, she always stumbles over the details....she might as well say that MH has "the best A380 with a kite logo on the tail"

[Fairul 0]

Start afresh, for MAS deserves the change

 

Friday Reflections - By B.K. Sidhu

 

For Jauhari, it must have been a momentous walk out of the A380 to the aerobridge, with his hands outstretched, perhaps gesturing to the crowd below how large the super bird is.

 

 

lets start a game..spot the mistake...

[flee 5]

Malaysia Airlines Needs Employee Support To Survive Turbulence

 

KUALA LUMPUR, June 4 (Bernama) -- Malaysia Airlines is now facing one of its most severe turbulences that threatens its very survival.

 

Unless it does something drastic to spur revenue growth, it could face bleak times ahead, especially when other airlines are improving their service quality and offering competitive prices.

 

The road ahead for Malaysia Airlines is simple: it must sell more seats to be profitable.

 

Aviation analysts believe that the arrival of the Airbus 380, the world's largest and most eco-efficient aircraft, will help in repairing and boosting the airline's image.

 

New aircraft deliveries aside, the other compelling factor is having the right promotion to get more people to book their flights on Malaysia Airlines.

 

An analyst from Maybank Investment Bank said Malaysia Airlines must create the buzz for more people to want to fly with it.

With its reputation of having the best cabin crew in the world, he said this needed to be told to more people.

 

Raising ticket prices to add to revenue may not be feasible at present, said another analyst, as Malaysia Airlines is not be in a strong position to do so.

 

As a full-fledged premium service airline, it can only do so if service quality increases several notches higher, not only in the cabin but also in other operational areas like ticketing and ground handling.

 

Despite the recent decoupling of a share swap with AirAsia, one researcher with a bank even suggested working with another premium airline partner to raise its service quality.

 

But will it work? The Malaysian Airlines employee unions recently voted to not support the collaboration with AirAsia, thus leading to the abandonment of the share swap deal announced last year.

 

A new business plan for Malaysia Airlines is set to be announced next Monday. It requires one single-minded focus from the 20,000 or so people employed at Malaysia Airlines, to keep about 90 premium service aircraft flying and passengers satisfied. They will have to support it to make things work.

 

And at the other end of the spectrum of the Malaysian aviation industry, the almost 5,000 employees at AirAsia will also have to keep working hard to ensure that the 98 low-cost service airplanes turn in another year of profit.

[KK Lee 5]

New rule for MoF firms to toe the line

 

By Debra Chong and Jahabar Sadiq June 04, 2012

 

KUALA LUMPUR, June 4 — Government-owned companies will have to include a rule to follow directives issued by the finance minister despite the latter not being a legal entity on their boards, a move that could ignore corporate governance procedures and transparency.

 

The Malaysian Insider understands a letter to the effect was issued in late April by the Ministry of Finance (MoF) following a query about instructions given by the minister to such companies despite a lack of rules to allow such directives.

 

Auditor-General Tan Sri Ambrin Buang (picture) confirmed his department had raised the query, saying the move was to ensure firms owned by the MoF complied with Putrajaya’s rules and regulations.

 

“I can now confirm that we did raise the query in the 2010 Auditor-General’s Report because we felt that such a clause is necessary to ensure compliance with government rules and regulations in government-owned companies or GLCs,” Ambrin said in an email response to questions by The Malaysian Insider.

 

“A clause like that will mean that it is mandatory that the company will act in compliance with government’s legislations and regulations as section 33(1) of the Companies Act 1965 states that the company’s M&A binds the company and its members,” Ambrin said.

 

“This clause will empower the minister to issue directives on general policies such as appointment, remuneration and dismissal of directors. In doing so it will enhance clarity, consistency and corporate governance as a whole,” he added.

 

Ambrin also said that the matter was being studied by the MoF.

 

But The Malaysian Insider sighted a copy of a letter issued by the ministry on April 24 to MoF-owned companies indicating the matter was a done deal, allowing the finance minister to override corporate decisions reached by consensus at their board meetings.

 

I chair a board of professionals but if the minister can give directives, then why even have a board? Perhaps Putrajaya should micromanage all these companies. — A company chief, who declined to be named

 

The letter told the MoF-owned firms to amend their Memorandum and Articles of Association (M&A) by inserting a clause to allow the minister to issue directives to the corporation that must be followed.

 

The letter states that the national Audit Department had raised an issue on the lack of a clause in the M&A and told the GLCs and MoF-owned firms to reply as to whether or not their M&A had the clause.

 

“Official instructions will be issued to the companies to create the clause in their respective M&A if the clause does not currently exist in the M&A,” the MoF said in the letter, signed by the MoF’s investment, incorporated companies and privatisation division secretary, Eshah Meor Suleiman.

 

However, one MoF-owned company chief told The Malaysian Insider that such directives will make its board of directors mere “rubber stamps” for the government instead of making business decisions in the stakeholders’ best interest.

 

“I chair a board of professionals but if the minister can give directives, then why even have a board? Perhaps Putrajaya should micromanage all these companies,” said the company chief, who declined to be named.

 

He also pointed out there were corporate governance issues as the companies have to answer to the Companies Commission of Malaysia. “How can we justify a decision if we didn’t make it but it’s made by the minister or the ministry?” he asked.

 

The company chief believed the issue arose due to excuses given by some company chiefs when queried by the Auditor-General and his staff.

 

“There are some who pass the buck to the minister and probably the Auditor-General wants this to be in black and white. But this is not how it should be done. Professionals should run the board, not government ministers or civil servants,” he said.

 

http://www.themalaysianinsider.com/malaysia/article/new-rule-for-mof-firms-to-toe-the-line/

 

 

With this mandate, doubt MH board of directors can make major decision without seeking approval from MoF.

[Arthur Van Straten 0]

I have read the above introduction of the new "Rule" three times, just to make sure i did understand correctly

If my understanding is correct, then what business have the management of MAS, the unions, the fare paying public, in any of the MAS endeavours to get the airline back up on its feet again? None?

 

I am almost sure I did not read correctly, for if i did, MAS, and a lot of other Malaysian companies, are in the twilight zone.

So, some more educated person on this board will definetely correct me.

 

Cheers

Art

[flee 5]

If I was an owner of listed GLCs, I would sell, sell, sell!

[KK Lee 5]

EK KUL/DXB

EK343 ETA0200

EK409 ETA1010

EK347 ETA1930

 

EY KUL/AUH

EY411 ETA2035

 

KUL/DOH

QR621 ETA1020

QR625 ETA2100

 

These Middle East Airlines are having multiple daily flight to KUL proved there is a substantial demand and yield from/to KUL, and are low hanging fruit for MH. As these airlines are FSC, comparable peers to MH, how well MH is performing can be judged on these routes. Until MH can come out with a realistic strategy to compete with these airlines effectively, one can’t take MH BTP seriously.

[Mushrif A 3]

EK KUL/DXB

EK343 ETA0200

EK409 ETA1010

EK347 ETA1930

 

EY KUL/AUH

EY411 ETA2035

 

KUL/DOH

QR621 ETA1020

QR625 ETA2100

 

These Middle East Airlines are having multiple daily flight to KUL proved there is a substantial demand and yield from/to KUL, and are low hanging fruit for MH. As these airlines are FSC, comparable peers to MH, how well MH is performing can be judged on these routes. Until MH can come out with a realistic strategy to compete with these airlines effectively, one can’t take MH BTP seriously.

 

Just to rub it in, QR will be triple daily from Sept.

 

Also, dont forget WY.

[Izanee 0]

KK lee, absolutely spot on.

 

Mushrif, MH's service standards should be benchmarked against these rivals, not BG or RA

[flee 5]

The Gulf carriers have one big advantage - connections.

 

If I want to go from KUL to JFK, GRU, EZE, CPT, etc. they are probably the most convenient airlines to fly on.

 

What can MH do if it mount flights to the Guld countries? They used to fly on to Europe only - and they do not have fifth freedom rights.

[Sandeep G 1]

Any news on new fleet developments with the "new" new management?

[Mushrif A 3]

 

Mushrif, MH's service standards should be benchmarked against these rivals, not BG or RA

 

Err...I think you got the wrong person. Pls try again.

[Izanee 0]

Mushrif, sorry! I meant to say I agree that MAS should compare themselves to the gulf carriers.. Came out all wrong!

[flee 5]

Clearer Skies In The Horizon For Malaysia Airlines By 2015?

 

KUALA LUMPUR, June 11 (Bernama) -- The national carrier, Malaysia Airlines, could overcome its present financial turbulence and head into clearer skies when the Asean air services is liberalised by 2015 if it adopts right strategies, say industry observers.

No matter what, Malaysia Airlines will have to adapt to the Asean Open Skies policy which will change the landscape of the aviation industry in Asean with the lifting of tariffs as well as resultant lower cost in passengers and cargo traffic. Hence, it needs to do things right.

 

OSK aviation analyst Ahmad Maghfur Usman said despite the stiff competition from many leading airlines in the region, Malaysia Airlines could still survive, if the right strategies are adopted.

 

"It should adopt the right pricing strategy and target the premium market segment/rates and work on that," he told Bernama.

 

On a positive note, he said the first quarter results of Malaysia Airlines showed that it had managed to boost yields year-on-year by 12.5 per cent to 27.1 sen per Revenue Passenger Kilometre (RPK) after trimming its unprofitable routes to focus on high-yielding ones.

 

OSK Research in its quarterly review of the national carrier's results said it was wise to focus on boosting yields, hence higher ticket prices instead of competing head on with AirAsia for both domestic and international passengers.

 

While yields were up, cost remained stubbornly high as Malaysia Airlines' Cost per Available Seat Kilometre (CASK) of 27.7 sen continued to inch higher by 5.4 per cent year-on-year.

 

It was reported that other rivals such as Cathay Pacific and Singapore Airlines operate with higher cost but have better yields due to higher-yielding first and business class seats.

 

Ahmad said Malaysia Airlines could stand a better chance to boost yield and its competitiveness with the fuel efficient Airbus A380 and other new aircraft in its fleet.

 

Malaysia Airlines' first A380 is expected to have its inaugural flight on July 1 on the Kuala Lumpur-London route.

 

It will finance its RM6 billion worth of capital expenditure for its fleet of aircraft deliveries this year, which will total 23 next generation aircraft.

 

This will also enable Malaysia Airlines to be leading the list of young aircraft fleet among regional airlines by 2015, according to industry observers.

 

"The move to buy new fleet, which is more fuel efficient, is better late than never as Malaysia Airlines has three more years to prepare for the tougher competition when the market is liberalised by 2015," OSK's Ahmad said.

 

OSK Research said after Malaysia Airlines announced its proposed three pillars of financing in the near term, the delivery of new aircraft would not be an issue although this might be delayed by a few months to first half 2013.

 

The three pillars of financing involved a RM2.5 billion sukuk programme, aircraft leasing arrangement as well as commercial funding.

 

In relation to this, Ahmad stressed that cost cutting measures should be sought to enable Malaysia Airlines to stay afloat amid the challenging outlook in the aviation industry.

 

Recent reports indicated that regional airlines showed profit declines in first quarter this year with some suffering losses due to higher fuel prices and weak passenger yields as well as challenging cargo market.

 

Ahmad said Malaysia Airlines should also forge collaboration with other airlines in areas like cargo handling, catering and Maintenance, Repair and Overhaul (MRO) so that there could be economies of scale in its operations.

 

OSK Research said Malaysia Airlines is back on the drawing board on its turnaround plan after ceasing talks with Qantas in setting up a regional premium carrier and following discontinuation of the share swap with AirAsia.

 

The research house is expecting losses at Malaysia Airlines to narrow further after reporting its fifth consecutive quarter of losses in the first quarter of this year. This also depends on the effectiveness of cost cutting efforts, where losses are to narrow further with capacity cuts. As part of the airline's network rationalisation, 12 routes were cut.

 

While it is still a few years away from returning to the black (where profitability is only expected in 2014), OSK Research expects investor sentiment on Malaysia Airlines to turn positive with the impending resolution of its CAPEX (capital expenditure) funding needs.

 

A recent Skytrax website showed that Malaysia Airlines' ranking was under review and that the national carrier in danger of losing its 5-star airline status from Skytrax.

 

Industry observers believe that Malaysia Airlines need to regain its 5-star ranking to get into the premium market.

 

As to whether how soon it could head to regain its shine and boost its competitiveness, Ahmad said there is no way for Malaysia Airlines to look back to the past, but to look forward and face the battle upfront.

In other words, it needs to pull up its socks now.

[KK Lee 5]

The Gulf carriers have one big advantage - connections.

 

If I want to go from KUL to JFK, GRU, EZE, CPT, etc. they are probably the most convenient airlines to fly on.

 

What can MH do if it mount flights to the Guld countries? They used to fly on to Europe only - and they do not have fifth freedom rights.

 

 

 

Any additional node with have a multiplier effect to the whole network; MH been a transport company, it is MH’s duty to provide accessibility before customers could choose to use them.

 

Clearer Skies In The Horizon For Malaysia Airlines By 2015?

 

KUALA LUMPUR, June 11 (Bernama) -- The national carrier, Malaysia Airlines, could overcome its present financial turbulence and head into clearer skies when the Asean air services is liberalised by 2015 if it adopts right strategies, say industry observers.

No matter what, Malaysia Airlines will have to adapt to the Asean Open Skies policy which will change the landscape of the aviation industry in Asean with the lifting of tariffs as well as resultant lower cost in passengers and cargo traffic. Hence, it needs to do things right.

 

 

MH is unlikely will be around in 2015 in the present form, one way or the other.

[KK Lee 5]

MAS issues RM2.5b perpetual sukuk, risky financing for working capital

By Lee Wei Lian

June 12, 2012

KUALA LUMPUR, June 12 — Loss-making Malaysia Airlines (MAS) will be the first company in Malaysia to establish an Islamic perpetual bond today totalling RM2.5 billion for its operations even as concern rises in the region over the growing demand of the higher risk bonds.

This comes after reports that the Monetary Authority of Singapore is increasingly concerned over the unprecedented demand for perpetual bonds, also known as perps, which typically entice investors with higher coupon rates in exchange for accepting a higher level of risk as there is a possibility their capital may not be repaid, hence the term perpetual.

MAS posted a RM2.52 billion loss for 2011. — Picture coutesy of www.airliners.netThe Thai SEC (Securities and Exchange Commission) also issued a warning earlier this month for investors to fully understand the details of subordinated debentures, which is corporate debt that ranks as a low priority for repayment.

MAS said that the perpetual junior sukuk will be recognised not as debt but as equity and payment obligations will at all times be junior to the claims of present and future creditors of the flag carrier but ahead of other share capital instruments. The national airline has RM1.3 billion of loans outstanding and no bonds, according to data compiled by Bloomberg.

The tenure of the sukuk is perpetual and MAS has a call option to redeem the junior sukuk at the end of the 10th year and on each following periodic distribution date.

MAS can also redeem the junior sukuk if there is a change in accounting standards resulting in it no longer being recognised as equity.

The airline may also defer periodic distributions but the deferred distributions will be cumulative.

The sukuk will also not be rated.

Opus Asset Management chief investment officer Siaw Wei Tang said it was important for prospective investors to read and understand the terms and conditions of perpetual bonds.

He noted that some perpetual bonds in the past had the option of not paying periodic distributions if the company did not issue dividends.

Chris Eng, head of research of the investment management division at Etiqa Insurance and Takaful, said that what was important about the MAS perpetual sukuk was whether it has a government guarantee.

He added that perpetual bonds could be more interesting for insurance companies given their long dated liabilities.

“I would only look at Malaysia Airlines’ bond above 6 percent given the turbulence in the aviation industry,” Chan Cheh Shin, who manages RM850 million as head of sukuk at OSK-UOB Islamic Fund Management Bhd in Kuala Lumpur, said in a May 25 interview with Bloomberg. “The company’s financials aren’t great. A perpetual bond also has all the downsides of common shares such as huge volatility and default risk.”

Yields on global sukuk, which pay returns on assets to comply with Islam’s ban on interest, dropped 22 basis points, or 0.22 percentage point, this year to 3.77 percent, according to the HSBC/Nasdaq Dubai US Dollar Sukuk Index. The difference between average yields and the London interbank offered rate, or Libor, narrowed 12 basis points to 261.

Reuters reported that more perpetual bonds were sold in Singapore in the first three months of 2012 than in the previous 15 years.

The newswire said that perpetual bonds offered companies the “tantalising” opportunity to raise funds with no dated maturity and avoiding any impact on gearing ratios.

The bonds also offer higher coupons, attractive for investors in a low interest-rate environment, but come with high duration risk since there is no repayment guarantee.

The perpetual junior sukuk of up to RM2.5 billion is part of MAS’s RM9 billion fund raising plan and the proceeds are expected to be used for its working capital needs and refinancing of existing borrowings.

The airline posted a RM2.52 billion loss for 2011.

http://www.themalaysianinsider.com/malaysia/article/mas-issues-rm2.5b-perpetual-sukuk-risky-financing-for-working-capital/

[Mushrif A 3]

Impressive choice of an accompanying cover photo....engine parts disintegrating.

[Mohd Azizul Ramli 2]

Was forwarded with this email by a spy.

 

Dear Valued Clients,

Please be informed that our company name, FlyFirefly Sdn. Bhd. (Co No 346606-K) is now known as MAS Sdn. Bhd. (Co No 346606-K).

Our visual identity, the Firefly brand and its brand value, will remain the same. While our parents company Malaysia Airlines will remain its existing registered name as Malaysian Airline System Berhad.

Kind Regards,

Firefly Airlines

[Raymund Yeoh 1]

Was forwarded with this email by a spy.

 

What difference does it make to consumers like us with the change of name

[flee 5]

Firefly is now a brand of MAS Sdn Bhd.

 

I strongly suspect that MAS Sdn Bhd may be operating jets under a different brand name. So watch out for some announcements in the future!

[Mohd Azizul Ramli 2]

What difference does it make to consumers like us with the change of name

 

Usually when a company changes its name, it must have something to do with either change in management or change in business direction/strategy.

[J Chong 0]

Published: Tuesday June 12, 2012 MYT 5:27:00 PM

 

Rashdan resigns from MAS as deputy group CEO

 

KUALA LUMPUR: Malaysian Airline System Bhd (MAS) announced that Mohammed Rashdan Mohd Yusof has resigned as deputy group chief executive officer (deputy CEO).

The airline said on Tuesday that Rashdan, 41, would remain in MAS and on the board until June 30, 2012, to ensure a smooth handover and for seamless business continuity.

His resignation as executive director will be effective from July 1.

MAS said Rashdan was appointed to the board of MAS on Oct 15, 2010 as a nominee director from Khazanah Nasional Bhd, and subsequently as an executive director on Aug 9, 2011 following the execution of the comprehensive collaboration framework.

The national carrier said at that time, he was seconded from Khazanah, where he led the aviation team of Khazanah's investment division, which executed the framework.

MAS His secondment from Khazanah into MAS was to ensure the continuing implementation of the framework in MAS.

He then was transferred out of Khazanah and into MAS and assumed the full-time management position of deputy group CEO on Oct 1, 2011.