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Mohd Suhaimi Fariz

MAS Privatisation

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Let me chip in here one more time.

 

I do not think we have to be afraid of a T.Ramli ghost hovering over future MAS prospects.

The situation is substantially more dramatic than it was during the infamous TR takeover. The takeover was for 32 percent and financed by loans. It took only a few years for the industry to realize what disaster was developing at MAS and when all was set and done and serious capital had changed hands it was too late. MAS never recovered after that.

 

That had a reason, and one of the reasons was that if you dumb down your workforce and bombard them with cronyism and nepotism for many years, your work force, your most valued asset, loses its esprit de corps.

People do not take leadership for granted anymore and whatever management is brought upon them, it will be looked at as, oh well, there we go again. And that has happened. And it will happen again if the government does not let go. Government involvement in Malaysian Airline business did not work in the past and will not work in future. This has nothing to do with the unions, big or small, but with the work force as a whole. Good and knowledgeable people have been neglected and set aside by nominees who were parachuted in. It is no wonder that now the workforce is feeling like a loaf of bread which has been in the oven for far too long.

 

So therefore, this time it should be different. And it can. A takeover candidate has to come with its own money, and with the intention to make a return on their investment. That means, reorganize, reboot, and call it whatever you want, but the bottom line should be that MAS is going to be a prosperous airline again. The difference is now that a takeover means 69.5 percent and for good measure the buyer can leave a minority percentage in the governments hands, as a token and acknowledgement that it is still called MAS. But, no interference, nor golden share or whatever. Step aside.

 

As I said before, a clean sweep across the ranks and re installment of responsibilities for the job you are hired for should be the norm. You do well, you get rewarded. You do badly, you walk. Unions will then have a contributing role to play to keep their members on the ball. Esprit de corps will come back. Everybody knows what and why to work for and the stale bread will become palatable.

 

But of course, could there be such a buyer, would the government indeed let go and step aside. Is it worthwhile to buy MAS and does it have a future? Many questions, but why rule out that there is such buyer who thinks out of the box and sees the hidden jewels. MAS is still an airline, has routes and aircraft. It sure has in house talent. It sure has intrinsic value. But, to have a controlling interest in MAS, the buyer should be a Malaysian company, with the qualifications as set out above. Do not ask me to name one.

 

And, as for a split up and send feelers to commercial banks, (as per flee post above), I would seriously doubt that any bank will put money into it without government guarantees. And them have been denied already. It looks like that at MAS HQ people are going to feel more uneasy by the minute. Like your losing the game and you know it.

 

Disclaimer, the undersigned does not work for MAS, never did, and is not a potential buyer. I just gave my twenty one cent worth of opinion.

 

Regards. A.

 

Mr 019 always complained he was asked to take over MH for national service.

 

In the last 10 years or so, MH as a company lack competitive advantages or track record for profitability, and the company is filled with political appointees/promotion, strong union, irrevocable profit guarantee to exclusive suppliers, gomen lack political will to cut staffs number, etc. Any sane entrepreneur with his own money will not touch MH with a pole length.

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"Yet, MAS staff were saddled with more work due to staff shortage, the source claimed" ....

 

Huh? Shortage of staff?

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"Yet, MAS staff were saddled with more work due to staff shortage, the source claimed" ....

 

Huh? Shortage of staff?

Since when mh, glc or gomen is not short handed, and rank and file do without ot? Edited by KK Lee

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If MAS Engineering is sold off, I think many would like to bid for it - it is profitable and it does high standard work. I would say that the Airasia Group might want to bid for it and turn it into a regional MRO powerhouse, competing against the higher cost rivals across the causeway.

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MAS can look to SIA on how to split it's non-core business.

 

While engineering isn't a core business, it is a highly lucrative one. It would make absolute sense to have a separate MRO company with an independent management. MAS can still be a majority shareholder in this unit. They could still reap the benefits from the share of profits. And by it's own association, they will still have some form of in-house engineering support. Having MAS as an 'anchor customer' means that this unit would already have a solid base to build on. By being independent, more focus can be spent on tapping the market for more third party MRO work. While MAS is already doing some of that, it's not living up to it's full potential. With the right team and with adequate government support, the potential benefit to Malaysia's aerospace industry is big. Just look what SIAEC and ST can do with their cramped facilities at busy Changi Airport. And then there's land-scarce Seletar with only a 1.8km runway but being a regional MRO and aerospace hub. So just imagine the potential of Subang Airport.

 

Whatever path MAS takes for this so-called reboot, it mustn't go back to the dark days of Tajudin Ramli.

 

Declaring it bankrupt and starting on a clean sheet of paper (if there's such a thing as a clean sheet of paper) is probably the best and most obvious solution, even if it's politically unpalatable.

 

Any other stop-gap measures will only prolong this dire situation, which can't go on indefinitely.

 

Even well-run airlines like SIA are barely in the black, and this situation will stay for the foreseeable future. The days of double-digit operating profit margins for well-run airlines such as SIA and Cathay won't come back anytime soon, if ever. Running on 2-3% margin has become the new norm for these airlines. What more for a troubled airline like MAS.

 

To people who bark about the so-called glory years, the cold hard truth is there was never one for MAS. Back in the days when the airline industry was highly nationalized and controlled, it was easy for airlines to make money. Underlying problems, huge inefficiencies, incompetent management and cronyism were easily masked.

 

The post of CEO in MAS is the most thankless job of any major company in Malaysia at this point in time.

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"Yet, MAS staff were saddled with more work due to staff shortage, the source claimed" ....

 

Huh? Shortage of staff?

 

Recruitment across the board is still ongoing. My former boss, proudly announced on FB about his eldest son joining MH on 9 June 2014.

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We have to agree here that restructuring MAS involved not having government interference as well. The chosen person to helm MAS should not be from another GLCs to avoid going back to square one. It should be someone from the industry and with a ready team to move in and shake things up a little at MAS.

Getting rid of non-core business would be a good way to shed off some baggage, and to make the airline lean again. Out-sourcing is much cheaper at this stage.

 

However, MAS at this moment would somehow still need the government's assistance to turn it around but the latter's involvement should not be so liberal as it is anymore.

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RESTRUCTURING PLAN: MAS to cancel some old contracts and trim workforce by 10pc, say officials


MALAYSIA Airlines (MAS) will close several departments for a day under its restructuring plan, which will see it terminating some old contracts and reducing the workforce by more than 10 per cent.


Business Times understands that all departments will be affected except for in-flight services, which comprise the technical and cabin crew and the engineering division.


Company officials said MAS is targeting May 28 for the major restructuring.


MAS has also decided to cancel some contracts that are squeezing its profits and sign new agrements at competitive rates, they said.


"By cancelling some of the contracts, MAS will be able to save more than RM200 million a year," said an official.


He said MAS will also let go of excess workers and re-look the salaries of staff, including those in key management positions.


"This is the first step in returning to the black. The next step is to streamline operations, look at more profitable routes and change the top management."


MAS has about 20,000 workers.


The airline embarked on a massive restructuring plan at the end of 2011 with the aim of reducing costs and returning to full profitability last year. Despite the restructuring, MAS lost RM4 billion in three years.


Analysts said MAS should spend less on mass-market advertising and start rebuilding its brand through other means that do not increase expenditure.


"MAS should also explore new opportunities in the airline industry to diversify its income stream," said an analyst.




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Quite a fast pace restructuring (28 May), I wonder if there is a timeline to get these things sorted out. Hopefully nothing is rushed out (if it does, for what and for whose benefit?)

 

I am putting my money that the Brahim contract will be terminated. This is the most highly publicised unfair contract that MH signed in the past and if it passes through due to Badawi or whatever reason, then this so called restructuring is a BS. Hoping the management/media to expose other contracts with the same nature that were somehow well kept from the knowledge of the curious public.

 

It is refreshing to read MH admits that it has excess staff, something that they never acknowledge in the past.

 

But the staff cutting target is rather low, only 10% from 20,000 = 2,000 staff. IJ's past VSS in 2006 recorded a better number, 6,500 were offloaded from the payroll.

 

Looking forward for the development comes 28 May. This whole reboot is quite drastic so we will witness a lot of drama unfolding.

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Quite a fast pace restructuring (28 May), I wonder if there is a timeline to get these things sorted out. Hopefully nothing is rushed out (if it does, for what and for whose benefit?)

 

I am putting my money that the Brahim contract will be terminated. This is the most highly publicised unfair contract that MH signed in the past and if it passes through due to Badawi or whatever reason, then this so called restructuring is a BS. Hoping the management/media to expose other contracts with the same nature that were somehow well kept from the knowledge of the curious public.

 

It is refreshing to read MH admits that it has excess staff, something that they never acknowledge in the past.

 

But the staff cutting target is rather low, only 10% from 20,000 = 2,000 staff. IJ's past VSS in 2006 recorded a better number, 6,500 were offloaded from the payroll.

 

Looking forward for the development comes 28 May. This whole reboot is quite drastic so we will witness a lot of drama unfolding.

 

On staffing, they probably don't want to rock the boat too much. Just hope the 10% are selected based on "past performance" and not merely (old) age !

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MAS Unions are very strong and entrenched. Unless the govt can talk sense and sensibility into these unions, it will be very hard to have a reboot for any effective change.

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Khazanah should probably sell their stake to Petronas. Let them sort MAS out as they have huge resources. Then, when MAS has turned around and is profitable, Petronas can sell of MAS for a tidy profit.

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Khazanah should probably sell their stake to Petronas. Let them sort MAS out as they have huge resources. Then, when MAS has turned around and is profitable, Petronas can sell of MAS for a tidy profit.

Don't think the rm will allow mh messing with her coffer.

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I am putting my money that the Brahim contract will be terminated. This is the most highly publicised unfair contract that MH signed in the past and if it passes through due to Badawi or whatever reason, then this so called restructuring is a BS. Hoping the management/media to expose other contracts with the same nature that were somehow well kept from the knowledge of the curious public.

 

 

A business contract is still a business contract and if MAS opted out, how much would they need to compensate Brahim's for premature termination?

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Just bring back Datuk Idris Jala. He did a good job at MAS when he was their CEO.

He is only an asset stripper and creative accountant. He did nothing of substance for MAS.

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He is only an asset stripper and creative accountant. He did nothing of substance for MAS.

Well said!

Well I am not IJ ardent fan, I would say what choice did he had when the organisation was so bloated that no matter how high the load factor was, it wasn't able to cover your operating cost. Bear in mind at that time he sold most, if not all assets like the MAS HQ in KL, the millions dollars paintings, all aircraft and leased back. At least at that point of time, he managed to generate cash for the company to save for bad days. I supposed some of the RM3.4billion MH has now came from IJ's time. And he told Badawi he wanted no political interference. When he chopped of NY, the parliament went ballistic just to 'save our face and prestige'. He insisted and never back down.

 

True that many staff lost their jobs, true that MAS was cut into bare bones, true that those lunch box was fugly, but looking back, had he and his management didn't take the bitter pill, MH would have been long gone. SQ also divested all their non-core business assets to concentrate on flying only, they are not doing any well too today but they know it was essential for survival. Their profit keeps shrinking quarter to quarter due to massive pressures from ME3. TR Group is recording continuous loss Y-o-Y, Scoot is still bleeding money. All airlines in SEA are recording falling profits or total loss. No surprise at all, the aviation had experienced paradigm shift to Middle East. A shift that is very difficult for many to digest.

Edited by JuliusWong

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I think the MAS cash balance was a result of the issue of more shares, bonds and sukuk in the past 2 or 3 years. All the cash raised by IJ was frittered away and the airline is still in a bad shape. So they raised another RM 9-12b (correct me if I am wrong) from those capital raising exercises.

 

Yes, SQ Group is not doing too well right now. However they made profits for the past few years when MAS were making billion RM losses. So they are in a stronger position to withstand the downturn. They also do not have all the legacy problems that MH are facing.

 

There is one final advantage SQ has over MH - their govt. will not hesitate to let them go bankrupt and close down. They have the biggest incentive not to fail...

Edited by flee

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Just bring back Datuk Idris Jala. He did a good job at MAS when he was their CEO.

All said and done, what realistic chance is there to convince the chap to make a return to MAS ? :)

If you were in his shoes and in consideration of what MH faces nowadays, would you ?! :D

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SQ also divested all their non-core business assets to concentrate on flying only, they are not doing any well too today but they know it was essential for survival.

And that seems to be one of the biggest mistakes that was done during Chew Choon Seng era.

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