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Kee Hooi Yen

MAS Restructuring Plan

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here something i always has the question. some of my friends (actually not really a friends) always too extreme about world politic, especially during US-Iraq issue. the make a movement to boycot US stuff.

 

didn't they realize that the product they use? they drink coke, they wear Nike shirt.

 

i always say to them that, "if you wanna boycot, go to Mecca on a ship or on bus, don't ride on Boeing. you go haji riding one 747 which is made in USA". They stand quiet like lost their mind when i say that.

 

Azuddin

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here something i always has the question. some of my friends (actually not really a friends) always too extreme about world politic, especially during US-Iraq issue. the make a movement to boycot US stuff.

 

didn't they realize that the product they use? they drink coke, they wear Nike shirt.

 

i always say to them that, "if you wanna boycot, go to Mecca on a ship or on bus, don't ride on Boeing. you go haji riding one 747 which is made in USA". They stand quiet like lost their mind when i say that.

 

Azuddin

 

We got Airbus then ... :D

 

Ah, forgot that you're in a 'bush' from Texas.

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We got Airbus then ... :D

 

Ah, forgot that you're in a 'bush' from Texas.

 

 

LOL.........not only texas, bush from houston too :p

I can't boycott any country because , if I boycott them I am a cave man-no life :D

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LOL.........not only texas, bush from houston too :p

I can't boycott any country because , if I boycott them I am a cave man-no life :D

 

 

you're right, i can't boycot. i would left far behind if i do.

 

Azuddin

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As much I hate Bush.......I would never boycott "his" Houston airport. George Bush Intercontinental Airport, the only part of him I like.............the rest, thumb-down.

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i always say to them that, "if you wanna boycot, go to Mecca on a ship or on bus, don't ride on Boeing. you go haji riding one 747 which is made in USA". They stand quiet like lost their mind when i say that.

 

Hey dude, even Boeings uses Jet-A1 from the Middle East. Perhaps your friends should go the Americans should go and buy oil from Timbucktoo only? :lol: :p I think it is also okay for your friends to drink Coke and Nike, so long as they are bottled in Malaysia and Nike made by slave labour in Indonesia :p :P :p

 

Jangan marah.... :) Like Azmal said

Edited by S V Choong

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As much I hate Bush.......I would never boycott "his" Houston airport. George Bush Intercontinental Airport, the only part of him I like.............the rest, thumb-down.

 

 

same here, that's the best airport i know for spotting. first the name is Houston Intercontinental Airport, when the GWB name were used?

 

Azuddin

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same here, that's the best airport i know for spotting. first the name is Houston Intercontinental Airport, when the GWB name were used?

 

Azuddin

 

 

I don't know lah, Houston his Kampung ler :lol:

 

 

 

 

 

 

 

 

 

 

 

back to topic ;)

 

Z

 

G O L D IS COMING

Edited by Seth K

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Mas has been through at least two restructuring in the last decade, namely ‘Transformation’ when TR took over and ‘BCG proposal’ when the Government regained control but little was achieved. With many non-commercial objectives imposed on Mas, it is very likely history will be repeated; same circus, different crowns.

 

 

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:lol: Very good question indeed!!!! No point in saying boleh, rather we should prove that we are boleh.

Agree with Isaac, wouldn't that create another competition? It will be 3 airlines competing together and MAS' LCC will be competing against MAS as well!

Yeah and passengers will be happy as there will be more low fares floating around the internet.

 

It is probably better for MAS to become a semi-LCC. May be just reserve a limited number of seats for those who are willing to pay the extra bit of full service like Isaac? :)

LOL. Only the BKI/KUL sector only. For flight like KUL-JHB, i will fly with AK anytime because the extras MAS got are assigned seating and complimentary OJ only.

 

Instead of becoming a semi-LCC like NZ, i think MAS should follow QF-style.

 

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Yeah and passengers will be happy as there will be more low fares floating around the internet.

LOL. Only the BKI/KUL sector only. For flight like KUL-JHB, i will fly with AK anytime because the extras MAS got are assigned seating and complimentary OJ only.

 

Instead of becoming a semi-LCC like NZ, i think MAS should follow QF-style.

 

Both the QF and NZ models have pros and cons.

 

The NZ model saves the airline lots of money but has the effect of diluting NZ's brand domestically and trans-tasman. The almost-LCC operations on these sectors tend to piss off people who've connected from a long haul business class flight into AKL or CHC.

 

The QF model runs an LCC alongside QF mainline. This provides choice to consumers, however Jetstar tends to canibalise the pax of its parent airline. A solution to this has been to pull QF mainline from some majorly leisure-based routes like Gold Coast and Hamilton Island, and most notably MEL-CHC. Qantaslink is a wholly-owned subsidiary of QF, formed from regional carriers which do mainly rural routes. Unprofitable rural routes operated under the service obligation charter, where there is no other airline on that route, are almost completely subsidised by the government, such as Norfolk Island.

 

The QF model was aimed to cap the market share of DJ to 30% and it has been very successful in doing so. Another effect of the QF model is of course - producing one of world's most profitable airlines. It is in my opinion that MH follows the QF model. The effect of it would be to cap the growth of AK and saving costs for MH. Hence this would see premier routes like PEN, KCH, BKI etc operated by MH mainline and supplemented by MH LCC. Other routes can be operated exclusively by MH LCC. The competition supplied by AK would ensure that consumers continue to enjoy decent fares.

Edited by Keith T

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Some time ago I read an article about the history of the formation of Air Asia as a LCC. TF wanted to start a brand new airline, but was declined by Dr.M. Instead TF was offered the ailing Air Asia from DRB Hicom for a token sum of RM1 plus all debts. Fast forward, now AK has become a relatively succesful airline.

 

Should some folks at MAS wish to set up a new LCC, perhaps they can buy over Pelangi Air, or start a new airline altogether using turboprops. If people have no preference between turboprops and jet, Pelangi or whatever airline it may be, can operate from SZB using more modern turboprops and Klang Valley folks will find it easier to fly instead of having to take the long journey to KUL. I believe commercial turboprop services can use SZB instead of KUL.... like Berjaya Air. But then AK will be disapponted because SZB was where it wanted to operate from but was denied.

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The QF model runs an LCC alongside QF mainline.

This is the thing MAS should do now. Create their own LCC.

 

It is in my opinion that MH follows the QF model. The effect of it would be to cap the growth of AK and saving costs for MH. Hence this would see premier routes like PEN, KCH, BKI etc operated by MH mainline and supplemented by MH LCC. Other routes can be operated exclusively by MH LCC. The competition supplied by AK would ensure that consumers continue to enjoy decent fares.

And this is good, i think B)

 

 

Should some folks at MAS wish to set up a new LCC, perhaps they can buy over Pelangi Air, or start a new airline altogether using turboprops.

Forgive my ignorence but is Pelangi Airways still exist ? Thought they have stopped operating in year 2002 or 2003 ?? Do they still have the operating certificate ?

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I'm also not sure if Pelangi Air is available for take over, at least for the 'brand' and operator's certificate if still valid. I think their F50 is not fit to fly any longer going by the pics at SZB. If not, then a brand new airline can be set up. Berjaya Air serves a niche market, serving Berjaya's own resorts so that should not be much problem for them thus far. Even Malaysia Airlines collaborate with them for Golden Holidays packages to Pulau Tioman. I'm thinking of trying them out one of these days.

 

 

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This is the thing MAS should do now. Create their own LCC.

 

If MAS make LCC, I can really see bright future for profits. Lot airlines did this manage to bring them out from red. MAS can maintain regular flight to main cities with additional LCC flying the same routes plus LCC route like IPH, KUA etc.

Then when MH success with LCC, AK will complain to government and at the end AK only can maintain their 4 main routes and drop hundreds other routes to MH LCC......................................ah, to soon to say :unsure:

 

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Lot airlines did this manage to bring them out from red.

 

It didn't work for all airlines: look at KLM with the Buzz low-cost-carrier...in the end, it was sold to the biggest competitor: Ryanair :o

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MAS needs to consolidate, pull back and keep to its core competency . . . creating and operating its own LCC is the last thing it needs to do now.

 

KC Sim

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It didn't work for all airlines

I think it's more appropriate to say "most airlines" and not "all airlines". Look at QF, they are operating profitably along with their fully-owned LCC subsidiary (JQ).

 

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An interesting (or sad :( ) article picked from A.net : http://www.airliners.net/discussions/gener...47/6/#ID2648247

 

 

Have a read:

 

The MAS Chief Financial Officer, Low Chee Tong,

announced his resignation today, 23 December 2005, after a long and blighted career. There is much more to this man than is known to the public. He has had a special relationship for a long time with Citibank, to which

he had channelled MAS banking business for a long time. He has also cost MAS much money. When he was personally responsible for the MAS office in SaudiArabia, where the company has operations, for ten years, he did not file tax returns to the kingdom, as he should have, and MAS had to pay a RM10 million fine to the Saudi authorities, in addition of course to the tax

due. But despite, or rather because of, such bungles, he was promoted to

CFO.

 

In 2004, when one of his cronies was Accounts Manager

in MAS office in London, the office lost RM40 million through forgery

and dubious investments. (None of this was reported in the local

media and the matter is still outstanding). When the Accounts Manager was on leave, someone forged his signature and moved RM40 million from MAS' time deposits account in London into some dubious short term investments. Themoney was almost completely lost. Until today, MAS senior management

does not know how much money was recovered from the dubious investment.

 

But never mind. Mr Low recalled his protege from London, reprimanded him and, as punishment, posted him to MAS' Los Angelesoffice. This was not reported in the local press because Mr Low had put aninternal gag order on this RM40 million caper. No one in the finance department in MAS was allowed to talk about this matter.

 

Now MAS faced another problem. They did not know that Mr Low had outsourced to a company called Tipro to do something called AssetTagging. For a billion Ringgit company with Botero paintings on itswalls, MAS did not know where all its assets are. If someone were to walk outof MAS with a computer or fax machine, he could for there are no proper

tracking procedures to tell MAS which machine was lost. Asset Tagging is no bigdeal. MAS' own staff had offered to do an internal Asset Tagging using contract workers that will cost less than RM300,000 and can be done in about ayear. But the Chief Finance Officer did not agree. He told Tipro to do

Asset Tagging instead.

Cost? RM5 million or more than 12 times what it could be done in house.

And how will Tipro get the job done? They will go to

the same employees, get all the bar codes and numbers from MAS' own employees, even ask MAS employees to print the bar code stickers, and then they would just the sticker on the fax machines, photocopy machines, etc.

And we are wondering why MAS keeps losing money?

 

There has been redefining of work functions and somesoul searching in MAS since the MAS' news hit the fin. The RM7,250-a-day Orang Putih con-sultan, Chris Andrews, has had his duties reduced. Hissidekick, Mazidah Mohamed Noor, has also had her duties reduced. But MAS senior management is still clueless on what to do. They are still doing what they have always done wrong. Mazidah has appointed another Orang Putih con-sultan for something called 'Sourcing Value' to renegotiate the lopsided contract with LSG Skychief (the catering company) and the IT sourcing contract with IBM. (In the 9 months from April to December 2005, MAS has paidRM100 million in con-sultan fees and paid IBM RM100 million for IT Outsourcing. So many people are feeding off MAS and by extension the taxpayers that it is not funny anymore). The cons-sultan for 'Sourcing Value' is the same con-sultan who engaged IBM as the IT source in the first place.

 

Why can't Senior General Managers, like Mazidah, read

the contracts themselves and renegotiate, instead of hiring more and

more con-sultans to do their work for them?

 

The Chairman, Munir Majid, has recently hired another

con-sultan called Ogilvy and Mather, an international public relations

firm, for RM80,000 a month, or RM960,000 per year, to manage the image of

the Chairman's office.

Among Ogilvy and Mather's advice to Munir Majid is to

have road-shows to explain his side of the story. Road-shows to where? So

far Munir Majid has had four road shows ?with the MAS Employees Union,

with the MAS senior general managers,?general managers and with the

managers. Why do you need to pay RM80,000 per month to tell you to go and talk with your own employees? Do you have to go to university to wash

your backside?

 

During the road-show with the Managers, someone asked

Munir Majid, what the qualifications, experience and contribution of the

RM7,250-a-day con-sultan, Christopher Andrews. Munir Majid said Christopher Andrews had vast experience working for Air New Zealand and had helped him understand MAS better. In other words, MAS had to pay an

Orang Putih foreigner con-sultan RM7,250 a day so that Munir Majid will know the MAS, a Malaysian company, better! Munir Majid forgot to mention to the Union members that Air New Zealand went bankrupt in 2002, and Christopher Andrews was thrown out of work. He landed a plum jobin MAS. The same goes to Peter Read, the new Chief Operating Officer hiredfrom British Airways.

British Airways had made record losses and laid off many senior general

managers like Peter Read, who are very lucky indeedthat they can run to

places in the Third World like Malaysia where theyland plum jobs, and

given preference over their citizens.

 

Another con-sultan, McKenzie & Co, has recently been

hired to help MAS overcome its immediate cash shortage. But why not ask

its team of seasoned mid-level Managers (not the General Managers or SeniorGeneral Managers) how to go about saving money or raising cash? And savingmoney in the process?

 

At the Human Resources Department, or HRD, the General

Manager ?a?Haji Yusif who was kicked out by Tan Sri Zeti Aziz from

Bank Negara Malaysia ?" has hired yet another con-sultan to conduct a surveyamong MAS employees to find out their views about what is wrong with the company! You can find this out by putting a good Suggesting Box in the Cafeteria or by talking to the people on the ground.

 

The General Managers and Senior General Managers in

MAS really don't know their jobs; instead of using their brains, they hire

con-sultans. The HRD man is who negotiated a 25% rise for the MAS pilots

and which will cost MAS tens of millions of ringgit a year. In a big bungle,

the 25% pay rise includes 30,000 man days of leave which the pilots had

accumulated. The previous capable man in charge of pilot negotiations,

a Mr Keong in HRD, was not consulted at all.

 

This year, MAS has sold an airplane. They thought they

had made some money, but they forgot they sold the plane with a defects

liability guarantee whereby MAS is liable for every single repair, even

after the plane is sold.

The result is that MAS has paid more to repair the

plane that it received for selling it. How did this happen, with so many

highly paid con-sultans?

 

While briefing the Senate for two hours on 20 December

2005, Idris Jala, the head hunted chief executive, told Senators that 75% per international routes are not profitable. This is true. The Los Angeles

route has never been profitable even after 20 years. Then there are also

foolish routes like KUL to Johannesburg in South Africa and which flies on to

Buenos Aires in Argentina, which are almost empty on every flight. But

the then Prime Minister, Dr Mahathir Mohamed, wanted to show the flag

in South America and MAS had no choice about this route. Can Idris Jala

chop off these loss-making but flag showing routes? Would he be

allowed to?

 

But SIA flies these routes, and they make money. SIA

makes money on its Los Angeles routes. How do they do it? Or are there other factors that causing losses for MAS?

 

While MAS makes losses, its ticketing agents are

making tons of money. MAS has appointed GSAs or General Sales Agents, who arethe sole agents for selling MAS tickets in many countries. The GSAs aremaking a killing, while MAS is getting killed. How so? The GSAs get ticketsfrom MAS at huge discounts, which they can mark up and sell to the

public.?So while MAS suffers deep discounts, the GSAs make huge money

again running innto millions of ringgit.

 

Who are the GSAs? Well, the GSA in Pakistan is owned

by the Sultanah of Pahang. The GSA in Italy, a company called Mal-Ital,

is owned by the Tengku Mahkota of Pahang (There are a few Datos from Pahangin MAS!) The GSA in Sweden is owned by a Malaysian who is presently a PRin Sweden.

 

The Botero paintings have kicked up a big fuss. The Senators have told

Idris Jala to sell them. Munir Majid has defended buying the

Botero paintings by saying they would enhance the image of MAS as a

billion ringgit company.

But how does this tally with MAS trying to selling off its headquarters

building in Jalan Sultan Ismail? If you have sold your building, where are you going to hand the RM1.5 million painting? Surely not in an aircraft hangar in Subang? Munir Majid has also bent the truth about the

paintings. He said the budget for the paintings was approved two years ago.

This is untrue. He has also said that the paintings are a capital

expenditure, and do not add to the company's losses. But what about cash flow? How doyou pay for the paintings if not by using cash? Where does a loss making company get the RM1.55 million cash to pay for the paintings?

 

The budget approved two years ago by its then chairman, Tan Sri Azizan, was for other things like office renovations. However,when MAS was beginning to show red ink, he killed unnecessary expenditure and never spent those budgeted funds. Munir Majid has also exposed his bungling when he showed Union members the Botero paintings. He told the Union members that he himself had a collection of Boteros in his house, and said he authorised the purchase of Boteros from the same art dealer who soldhim his personal collection. This is clearly a conflict of interest.

 

When Tajuddin Ramli was flying MAS into the ground, he

got MAS to buy two multi-million ringgit luxury apartments in Kensington

in London, in the same building and from the same developer from whom

Tajuddin Ramli and his crony had also bought the same luxury apartments. If theywere any volume discounts for these purchases, who would get it:Tajuddin Ramli or MAS?

Likewise, when Munir Majid authorised the purchase of

the Botero from his personal art supplier, who would have benefited from

any discounts? Munir Majid or MAS?

 

But how did Munir Majid circumvent the MAS Board of

Directors? How did he get the paintings approved? How did Mazidah get

Christopher Andrews employed at RM7,250 a day? How was the IT outsourcing contractgiven to IBM? How does MAS Director Azman Yahya's ailing Symphony Groupbenefit from MAS' outsourcing? Simple! Create subcommittees to the MAS Board, and which has its full powers. Then these subcommittees make the important decisions and then get the board to rubber stamp them. One such subcommittee is the Board Strategy Committee, chaired by Munir Majid with Azman Yahya and Tengku Azmir as the members. The outsourcing and the hiring ofcon-sultans was approved by this Board Strategy Committee.

 

Azman Yahya's Symphony Group has benefited from some

of the outsourcing awarded by this subcommittee of which he is a member.

Neat, isn't it? For example, the con-sultan contract with Christopher

Andrews has been expended in a memo to the MD dated 7 January 2005 from MarzidaMohamed Noor, the Senior General Manager of Support Services. She tells

the MD, Dato' Ahmad Fuad Dahlan, that the Board Strategy Committee has

approved the support services, that with Christopher Andrews'

participation, she was able to tell the BSC that it had made right?choice. And that Christopher Andrews' contract 'shall be on a daily rate based on a month tomonth basis', the total cost 'shall not exceed RM650,000 (inclusive of tax) for the designated phase 1 of the work'. And she signed it. She makes

references to the Board Strategy Committee several times in that memo. How canthe MD refuse when the Chairman says yes, and overrides him? But in thisway, the MAS Board is sidelined, and is frequently no more than a rubber stamp.

 

But then it does not really matter because the MASBoard, stuffed with

Khazanah nominees and other no brainers, do not do anything about the

Engineering Mafia, Pilots Collective Agreements,accumulated man days

leave, C checks, Botero paintings, light bulb changes or anything at all.

 

In Engineering, there is something called the'Engineering Mafia'. These

are the engineers, mechanics and ground crews that are costing the company

millions of ringgit in overtime claims and shoddywork. They bum around

when they should be working, and start work only aftertheir day is over. So

they begin work only after they finish for the day, andclaim overtime pay.

Anyone who tries to genuinely work hard gets reprimanded by the Engineering Mafia. The situation is so bad that expatriate engineers become

indoctrinated into this cheating culture. MAS ends up paying millions in

overtime.

 

C checks are done sloppily on MAS aircraft. C checks

are the checks on simple and basic equipment and fittings on board

aircraft like light bulb or toilet flushes. MAS aircraft are even failing C checks

because MAS' Engineering Mafia does not even do the C checks properly. Delayed flights cost money.

 

MAS also had ground servicing agreements with British

Airways in London.

When MAS planes fly into London, the BA mechanics run

quick checks and replace faulty light bulbs. How many light bulbs does

BA change for MAS, and what do they cost? In London, MAS pays in sterling

pounds, and one sterling pound costs MAS RM7.00. But in Malaysia, the

Engineering Mafia allows work to be done overtime, and the work is not properlydone. So MAS pays BA to change light bulbs, and pays for it in sterling pounds!

 

When Munir Majid met the Unions to explain his actions, he tried to pull

the wool over their eyes. Until this news was exposed about two weeks ago, he flew free of charge by MAS first class from KUL to London almost every weekend. Munir Majid explained to the Unions that this was within his entitlement for free tickets.?But he did not tell the Unions that as Chairman he is only entitled to four free flights a year and not four free

first class flights a month!

 

Besides, first class flight attendants know that Munir Majid is a freeloader. He drinks in the MAS Golden Lounge. But he drinks most on board

the plane, where his favourite is Dom Perignonchampagne, which costs about

RM450 a bottle. They say they have to open a newbottle just for the

Chairman when he flies free at the weekend from Kuala Lumpur to London.

When he gets off the flight in London, he asks the flightattendants to 'ta pau'

for him any half finished bottles of Dom Perignon campaigme. Not only is

MAS a Flying Buffet; it also a Flying Bar, at least for

Munir Majid!

 

 

<_ src="%7B___base_url___%7D/uploads/emoticons/default_sad.png" alt=":("> :angry:

 

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I think it's more appropriate to say "most airlines" and not "all airlines". Look at QF, they are operating profitably along with their fully-owned LCC subsidiary (JQ).

 

I think he meant that it worked for some airlines but not others.

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Definitely needs some changes in terms of its overhead costs ..

 

But once again , its all about politics ..

 

Politics and aviation definitely don't mix well

 

Basically...

 

Reduce expenses, get rid of loss making routes, and make drastic improvements in staff motivation levels. Without a motivated workforce, a company is nothing.

 

The influx of ex-MAS pilots and engineers into Emirates, Etihad and Qatar Airways is testimony to the low motivation levels... <_>

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I agree with Pieter, creating an LCC will not necessarily work. Swiss tried it unsuccessfully for their European operations in the aftermath of the Swissair bankruptcy. I guess you can call it the NZ model as Keith calls it.

 

One problem, as Keith mentioned, is that customers will fly in first or business class on an intercontinental flight to ZRH. Then when they catch their connecting flight to Vienna, for example, they have to sit in economy and don't even get a glass of water. So they started to lose a lot of premium customers that were really needed for their long haul ops.

 

That to me was not the biggest problem - when I am at the airport, I often see the Swiss baby busses taking more than an hour to turn around. Not only do they sit on the ground too long, they always have to wait for "connecting passengers", i.e., passengers coming in from delayed intercontinental flights. One of the main principles of a succesful LCC is quick turn around times. Swiss wanted to be a LCC, but simply stopping food&beverage service on board is not enough. They need to change the whole operations, like improving their turn around times, getting the crew to multitask, etc.

 

 

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