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MAS and AirAsia Shares Swap

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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.

 

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Idiots like 'Danny boy' are causing MH to haemorrhage. MH is an great company with amazing staff (mostly in the air!) and great potential. However, as forum members here have alluded to, the unseen 'fingers and hands in the pie' problem, if not sorted out, will stall every single turnaround plan that they come up with.

 

In the operating theatre, haemorrhage control is a priority in trauma patients once the airway/breathing is sorted. You do whatever it takes including tying off vessels and packing the damaged part.

 

If you don't get rid of these blood suckers and parasites.... MH has NO hope against the likes of EK and SQ. Look at EK, from NOTHING it has emerged to be a giant in the aviation industry.

 

At least MH has renegotiated its one sided and unbelievable deal with LSG-SkyChefs. They would have been better off with MAS catering.

Edited by Izanee

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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!

 

 

I hope those idiots won't dissolve Firefly brand. Firefly is a good and strong brand, they should retain it. and if they were thinking of reviving the Jet services, they should be a new entity, or maybe a division of Malaysia Airlines. they should name the new entity something like MAS Regional or MAS Liteflyer.

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Idiots like 'Danny boy' are causing MH to haemorrhage. MH is an great company with amazing staff (mostly in the air!) and great potential. However, as forum members here have alluded to, the unseen 'fingers and hands in the pie' problem, if not sorted out, will stall every single turnaround plan that they come up with.

 

Well Danny boy's getting the boot - he is out as of 30 June, and it's official.

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Good riddance. Waiting for the Chairman and the CEO to go also.

 

Well..If everyone go then who will be the head? The Union chief ? :D

Edited by nrazmoor

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Civil service fund takes up RM1b of MAS perp

UPDATED @ 07:05:20 AM 13-06-2012

By Lee Wei Lian

June 12, 2012

 

m_sukuk.jpg

Abdul Farid Alias, deputy president & head, global wholesale banking, Maybank; Ahmad Jauhari Yahya, MAS Group CEO; and Datuk Azian Mohd Noh, KWAP CEO, at the signing ceremony today. — Picture by Choo Choy MayPETALING JAYA, June 12 — Malaysia Airlines’ (MAS) fund-raising efforts received a boost today when the civil service pension fund (KWAP) took up the entire first tranch of RM1 billion of the airlines’ perpetual sukuk today.

MAS also said in a press conference here that it received firm commitments for the rest of the RM1.5 billion of the perpetual sukuk, which MAS said today does not carry a government guarantee.

Perpetual bonds, also known as perps, are considered higher risk bonds as there is no guarantee of repayment.

The perpetual sukuk will pay a rate of 6.9 per cent and is not rated.

It allows the financially troubled airline to raise money without affecting its gearing ratios as it is treated as equity under Malaysian accounting conventions.

“We consider it the cheapest form of equity,” said MAS deputy group CEO Mohd Rashdan Yusof. “It’s a great deal for our shareholders.”

MAS group chief executive Ahmad Jauhari Yahya said the successful subscription of the first tranche indicated the trust investors had in the airline.

“This firmly secures the first pillar of our funding plans and is testament of the confidence in MAS,” he said.

jauhari0612.jpg

Ahmad said the successful first tranche indicated investors’ confidence in MAS.He added that the remaining RM1.5 billion of the perpetual sukuk will be subscribed by local institutions but declined to reveal them, saying only that details will be announced later.

Ahmad also said he hoped the proposed government-funded special purpose vehicle (SPV) that will be used to finance the delivery of MAS aircraft will be finalised by the end of July.

MAS, which has posted large losses for the past several quarters, is proposing to raise about RM9 billion through a combination of perpetual sukuks, commercial loans and government financial assistance.

Interest in perpetual bonds has risen in the region, prompting the Monetary Authority of Singapore to express concern over the demand for the higher risk fixed income instruments.

The 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 creditor of MAS but ahead of other share capital instruments.

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.

Interest in perpetual bonds has grown as companies look to take advantage of the opportunity to raise funds without any impact on gearing ratios and investors look for higher payouts in the current low interest-rate environment.

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

Perps are uncommon in Malaysia and mostly issued by banks.

MAS is also the world’s first corporation to issue an Islamic perpetual bond.

http://www.themalaysianinsider.com/malaysia/article/civil-service-fund-takes-up-rm1b-of-mas-perp/

 

 

When in need, one can always depends on pension fund.

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Whatever it is, there is concern as this MAS bailout is gigantic!

http://www.themalaysianinsider.com/malaysia/article/kwap-procurement-of-mas-perp-sparks-concerns-of-high-risk-bailout/

 

Frankly, I do not think that this is the only bailout they need - their fleet upgrade is not complete yet. They still need to replace the old A330 and B777 planes. That will be another round of financing needed.

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I think we need to be clear with words here flee. This is not a 'bailout' financing. Airlines issue bonds all the time and 5-minutes of googling would reveal that a number of other airlines have and will issue bonds for capex and opex requirements (Emirates, AA, HK airlines, etc.....).

 

It is just simply, another way of getting funding. Plus there is no government guarantee here. Hence the word 'bailout' is completely false.

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I think we need to be clear with words here flee. This is not a 'bailout' financing. Airlines issue bonds all the time and 5-minutes of googling would reveal that a number of other airlines have and will issue bonds for capex and opex requirements (Emirates, AA, HK airlines, etc.....).

 

It is just simply, another way of getting funding. Plus there is no government guarantee here. Hence the word 'bailout' is completely false.

 

Sure other airlines seek funding from third parties, but in M'sia, especially when MH is effectively government-owned with a relatively small public free-float of shares - government related agencies are always roped in to provide the funding as that is prob. the path of least resistance. Look at the details of the earlier bailouts during Jala's time - which agencies had to but the MAS HQ building, MAS academy etc.

 

Non-Msian gov linked investors or financiers will always ensure that there is a government guarantee behind MH, such as the financing of MH's 772s with some Mid-eastern banks.

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Sure other airlines seek funding from third parties, but in M'sia, especially when MH is effectively government-owned with a relatively small public free-float of shares - government related agencies are always roped in to provide the funding as that is prob. the path of least resistance. Look at the details of the earlier bailouts during Jala's time - which agencies had to but the MAS HQ building, MAS academy etc.

 

Non-Msian gov linked investors or financiers will always ensure that there is a government guarantee behind MH, such as the financing of MH's 772s with some Mid-eastern banks.

 

Sure. Not arguing that it is a path of less resistance. However, it is still not a bailout. Let's call a spade a spade here. There's competitive yields and theres no guarantee.

 

I disagree on the second point, that foreign financiers will always ensure theres GG - but hey, thats your opinion and i welcome it :)

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So the removal of those parachuted from AK to MAS is now complete - the CFO & Head of Engineering are running back to The Big Red.

 

New CEO for AirAsia?

By B.K. SIDHU

 

PETALING JAYA: A day after Mohammed Rashdan Yusof quit as Malaysia Airlines (MAS) deputy group chief executive officer, there is talk that two other senior executives will relinquish their positions at the national carrier in the coming weeks and the airline's former senior general manager of marketing, Datuk Bernard Francis, will join AirAsia Bhd by July.

 

These are some of the changes that are expected at both the airlines, but come Monday, AirAsia is expected to make a major announcement on its organisational structure now that it has set up its regional headquarters in Jakarta. AirAsia is also expected to name the CEO for its Malaysian operations.

 

Tan Sri Tony Fernandes declined to name the candidate for the Malaysian operations when he met StarBiz yesterday but the market is abuzz with talks that Aireen Omar will succeed him.

 

Aireen is regional head of corporate finance and treasury at AirAsia.

 

Aireen and Bo Lingam, the chief of operations and planning at AirAsia, are among the several candidates for the job; but Bo is not keen to be CEO of the Malaysia operations and he is likely to be promoted the regional chief of operations and planning.

Fernandes will remain the supremo of the AirAsia group and the deputy CEO will still be his long-time business partner, Datuk Kamarudin Meranun. What will change is that Fernandes will no longer be involved in the day-to-day operations of running the Malaysian office as that role will be taken over by Aireen.

 

Fernandes also confirmed yesterday that Francis will be rejoining AirAsia in July.

 

“He will be our commercial head for our Indonesian operations,'' Fernandes said.

 

Francis is no stranger to AirAsia as he was with the airline when it started off a decade ago; subsequently he left AirAsia to join MAS. However, he quit MAS a month before the airline entered into an share swap deal in August last year with AirAsia, but the swap has since been unwound.

 

The two executives at MAS that are expected to leave are said to be the chief financial officer Rozman Omar and head of engineering and maintenance Azhari Mohd Dahlan. Both these senior executives were formerly from AirAsia but joined MAS after the share swap was inked.

 

“Rozman has submitted his resignation and despite being coaxed by senior executives and even some board members to stay back, he is leaving MAS. He will join AirAsia and take on a bigger portfolio as regional head of finance and will be based at the regional office in Jakarta by July this year,'' said an official.

 

As for Azhari, the official said, “he is very much in MAS now but it would be no surprise if he decides to also leave in due time.''

The establishment of a regional base is part of AirAsia's strategy to boost growth in the region. AirAsia has grown from a one country operations to having business spread across Asia.

 

Fernandes said with the huge growth expansion planned for the region, the airline would need more aircraft and he was looking at placing an order for at least 50 more aircraft but a decision on that would only be made over the next two months. The airline has 103 aircraft in operation currently.

 

Rashdan quit as deputy group chief executive officer of MAS on Tuesday but will continue to remain a MAS board member till the end of the month.

 

http://biz.thestar.com.my/news/story.asp?file=/2012/6/14/business/11475849&sec=business

 

What now?

Edited by Mohd Suhaimi Fariz

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I think we need to be clear with words here flee. This is not a 'bailout' financing. Airlines issue bonds all the time and 5-minutes of googling would reveal that a number of other airlines have and will issue bonds for capex and opex requirements (Emirates, AA, HK airlines, etc.....).

 

It is just simply, another way of getting funding. Plus there is no government guarantee here. Hence the word 'bailout' is completely false.

This is part of the whole bailout package. If you follow the earlier reports, there are several other packages too - the biggest is the RM 5b+ liability that the govt. SPV will take on for the purchase of the A330s and A380s.

 

It is very clear that MAS does not have the capability finance its capital expenditure and it also has a deficit in terms of working capital. They may also be making further capital calls too - that remains to be seen.

 

So the media is probably right in calling it a bailout. Without these various pieces of financing, MAS would surely not be able to remain solvent.

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Malaysian Airline to Double Asia Pacific Destinations

 

Malaysian Airline System Bhd. (MAS) intends to almost double its Asia-Pacific destinations in three years as part of a turnaround plan prompted by five straight quarterly losses.

 

The carrier may fly to 25 cities in countries including China, Japan and India by 2015, compared with 13 regional destinations now, Chairman Md Nor Yusof said in an interview yesterday in Subang, near Kuala Lumpur where the carrier is based. Flights on some existing routes will also be increased by as much as 50 percent, he said.

 

“The airline business is closely linked to the economic cycle and there is a consensus that the Asia-Pacific region is the bright spot,” Md Nor said. “There’s plenty of reasons to be optimistic.”

 

The carrier may also make some job cuts as part of the restructuring to be announced at a June 21 annual shareholders’ meeting, Md Nor said without elaboration. The new proposal comes after parent companies of Malaysian Air and AirAsia Bhd. last month unwound a share swap agreement following complaints by the national carrier’s biggest union.

 

Malaysian Air was unchanged at 1.15 ringgit at close of trading in Kuala Lumpur today. The stock has dropped 12 percent this year, compared with a 3 percent gain in the benchmark FTSE Bursa Malaysia KLCI Index.

 

“Despite the ongoing reforms, such as network reviews, we expect Malaysian Air to continue to report losses in its 2012 financial year,” Annuar Aziz, an analyst at Credit Suisse Group AG said in a report today. “The weakness in the passenger network has been matched by weak cargo demand.”

 

Downgraded

Annuar downgraded the stock to underperform from neutral, cutting its price target to 90 sen from 1.50 ringgit. This means its total return is expected to underperform Malaysia’s benchmark index by as much as 15 percent over the next 12 months, Credit Suisse said.

 

East Asia and the Pacific region is forecast to expand 7.6 percent this year and the growth may accelerate to 8.1 percent in 2013, compared with 2.5 percent and 3 percent for the global economy, the World Bank said in a report on June 12.

 

Malaysian Air will stick to its existing planes orders, Md Nor said. The carrier took delivery of the first of six on-order Airbus SAS A380 superjumbo last month. It will start services with the plane on July 1 with a trip to London.

 

Waiting List

“The bookings for the A380s have been good and there is a waiting list at the moment,” Md Nor said, declining to elaborate.

 

The airline, which earlier planned to own new planes, has now turned to the Malaysian government to purchase the A380s and two A330s worth 5.3 billion ringgit ($1.7 billion). The carrier can lease the planes from the government with an option to buy them at the end of the contract, Md Nor said. Talks are still on with the Finance Ministry, he said.

 

Malaysian Air will cooperate with AirAsia (AIRA) in areas including procurement, aircraft maintenance and training as it seeks to pare costs, Md Nor said. Khazanah Nasional Bhd., which controls 69 percent of the carrier, exchanged back its 10 percent stake in AirAsia for 20.5 percent of Malaysian Air last month.

 

Fifth Loss

Malaysian Air posted a loss of 171.8 million ringgit in the three months ended in March because of higher fuel costs and competition from low-cost carriers. It may report an annual loss of 529 million ringgit, according to the average of 12 analyst estimates compiled by Bloomberg. The carrier had a loss of 2.5 billion ringgit in 2011.

 

The airline this month sold 1 billion ringgit of Islamic bonds that didn’t have a set maturity in the country’s first offering of such debt. It has commitments from investors to buy the remaining 1.5 billion ringgit of the so-called perpetual sukuk, according to Chief Executive Officer Ahmad Jauhari.

 

The funds will be used for working capital and to refinance existing loans, the carrier said in a May 22 statement. The company has 4.3 billion ringgit of bonds and loans including the sukuk sold this month, according to data compiled by Bloomberg.

 

Source: http://www.bloomberg.com/news/2012-06-14/malaysian-airline-to-double-asia-pacific-destinations.html

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Malaysian Airline to Double Asia Pacific Destinations[/

 

The carrier may fly to 25 cities in countries including China, Japan and India by 2015, compared with 13 regional destinations now, Chairman Md Nor Yusof said in an interview yesterday in Subang, near Kuala Lumpur where the carrier is based. Flights on some existing routes will also be increased by as much as 50 percent, he said.

 

Source: http://www.bloomberg.com/news/2012-06-14/malaysian-airline-to-double-asia-pacific-destinations.html

 

If so, for a start take back HND slots ,restart FUK/NGO/KHH/PUS/...etc . N not forgetting bring back BKI hub!

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If so, for a start take back HND slots ,

Agreed.

 

 

N not forgetting bring back BKI hub!

Or they should just re-route some of their non-stop flights between KUL-ICN/NRT via BKI like the old times :D The demand is definitely there, else OZ, KE and ZE would have left BKI long time ago.

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If so, for a start take back HND slots ,restart FUK/NGO/KHH/PUS/...etc . N not forgetting bring back BKI hub!

 

Doubly agree...... put the BSI B738s to good use.

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If so, for a start take back HND slots

 

Is the HND slot really lucrative with high demand? If it really a high yield dont you guys think that JAL will be the one to start fly from there? Btw, how is D7 performance on that route? I think MH will still maintain their NRT base especially after the recent announcement codeshare with JAL and coming soon with AA which is also base in NRT(correct me if im wrong)

 

Doubly agree...... put the BSI B738s to good use.

 

I think MH should concentrate on the KLIA and make a good use the new B738s on the ASEAN routes first before even thinking about BKI as a secondary hub. Currently u will feel cheated for flying with the old 737-4 to BKK/SGN/CGK with a FSC fare. Sometimes flying with AK much more worth it as u have less expectation and way cheaper!

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Yesterday, Md Nor said, see above post, flee, 1793, the following

 

Malaysian Air will cooperate with AirAsia (AIRA) in areas including procurement, aircraft maintenance and training as it seeks to pare costs, Md Nor said. Khazanah Nasional Bhd., which controls 69 percent of the carrier, exchanged back its 10 percent stake in AirAsia for 20.5 percent of Malaysian Air last month.

 

HOWEVER,

Only a few kilometers away, more or less at the same time, Uncle Tony said” (starbiz)

 

Q. Are you sending your aircraft for maintenance to MAS?

A. No, we have not done that. I don't think it will happen. I think it will be a headache for the management. If you read some of the comments it is like, we are benefiting, so we are not sending.

 

Q. Is there any progress in the area of training with MAS?

A. Training makes complete sense but there is massive resistance from the pilot management, so we move on. Why waste time talking, we do not need it. But Malaysia has lost out, because to have a training school in Sepang with Boeing and Airbus, we could have been number one in the Asia.

 

 

Now, isn't that something, he said,she said. Mind-boggling. In the NATO Air Force, when I was young, we had a slang word for such alterations which I better not repeat here. Google it.

 

Cheers

Art

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I think we need to be clear with words here flee. This is not a 'bailout' financing. Airlines issue bonds all the time and 5-minutes of googling would reveal that a number of other airlines have and will issue bonds for capex and opex requirements (Emirates, AA, HK airlines, etc.....).

 

It is just simply, another way of getting funding. Plus there is no government guarantee here. Hence the word 'bailout' is completely false.

 

Some people call it fundraising, some people call it bailout.. One is positive and bailout has negative connotations associated with it. Cup half full or half empty, it's a matter of perception.

 

Detractors and those in opposition politics will call it bailout as it will somewhat paint the MH and the government in a bad light. The term bailout has been used and abused so many times in Malaysia. Some people even argue the share swap was to bailout Air Asia.

 

In reality, MH needs money to improve its products and services, it's just a way to get extra money. If you don't like them, just say they were bailout.

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Plenty going on and this is just one of the them. Consider it a fundraising then for securing votes in the upcoming GE.

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