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Mohd Suhaimi Fariz

MAS Privatisation

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Will MH be booted out fr OW if they perform a Ctrl+Alt+Del

 

Why should they? It's not going to affect any agreement between MAS & oneworld carriers. They kept Mexicana in their members list when that airline basically ceased operations.

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Yes, OW is just a platform for the airlines. Each airline has to put in the work if they want the benefits. So if you are like Mexicana, your benefits will be zero as you are no longer working.

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Glc is perceived to have gomen guarantee hence could borrow billion $ or issue bond at low interest rate.

 

If gomen is to shut down mh literally, other glc may need to bare higher interest rate and could cause some to belly up.

 

Unless they can find a solution to unwind contract without causing the market to rattle, mh is likely to continue as status quo.

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Will MH be booted out fr OW if they perform a Ctrl+Alt+Del

 

Unlikely. JL wasn't when they went into Bankruptcy protection, nor was AA. Circumstances are different I grant you - since we don't know what Ctrl-Alt-Del means in MH terms...

 

Well, Ctrl-Alt-Del isn't as bad as Format C:\ though...

Edited by Suzanne Goh

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Unlikely. JL wasn't when they went into Bankruptcy protection, nor was AA. Circumstances are different I grant you - since we don't know what Ctrl-Alt-Del means in MH terms...

 

Well, Ctrl-Alt-Del isn't as bad as Format C:\ though...

OK at least good to know I can still bank in my miles on my CX Marco Polo while flying MH if they do a reboot

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Ctrl-Alt-Del on mh will still left with old programs like old wine/vinegar in new bottle. Format C:\ is probably the only solution.

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Format C:\ is probably the only solution.

Just remove the hard disk keep it under lock and safe !! :D

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OK at least good to know I can still bank in my miles on my CX Marco Polo while flying MH if they do a reboot

 

Bankruptcy and bankruptcy protection are a two different things (at least in the US) - Bankrupt means completely bust, tutup kedai.

 

Being under creditor protection means that a court order temporarily saves you from the pack of wolves (usually secured creditors), whilst you sit down with the creditors and discuss HOW to pay them back, whilst still operating (remember it is not in the best interests of the creditors for you to go totally bust as they would only get back cents on the dollar), in exchange for a business plan agreeable to the creditors that involves cuts, and an enforceable commitment to carrying it out and emerging better on the other side.

 

So going back to your point: I think the question most pertinent to OW flyers is whether or not MH continues to operate after Ctrl-Alt-Del or whatever.

 

I think the answer is yes, but under a very heavy set of restrictions pertaining to hiring/asset purchases/contract negotiation and most likely further route rationalisation. That in theory is how it MIGHT pan out :) - i'm guessing, mind you.

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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.

MASEU now talking of wanting the top Management of MAS to resign and its replacement must be someone from the airline industry.

 

Only now they realise this? Probably after they realised that the government have abandoned them. The PM have in a Wall Street Journal interview said that MAS 's present condition is too grave for the government to assist and that bankruptcy is not ruled out for MAS...

 

I said get rid of government interference. Hire someone from the industry. Someone from outside the country so that they will not be influenced by the local "culture" and "favor"s that will hinder change-over.

 

Are they going to do it or let MAS whither and fade off?

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OK at least good to know I can still bank in my miles on my CX Marco Polo while flying MH if they do a reboot

Enrich miles is a liability to mh. As enrich miles creditors lack organization, it will be easy for mh to reverse split or merge existing enrich miles to new enrich miles e.g 10:1.

Edited by KK Lee

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Airline industry = Air Asia?

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Airline industry = Air Asia?

I would rather to say yes and ask TF to reboot and relaunch a new MH with profits

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What i have understood so far is,

 

1. To take over mas majority share, you have to be a Malaysian company.

Etihad and Petron are not.

2. The government will not help out MAS financially.

3. Any reboot with government inteference will fail.

4. AirAsia was booted out by the unions earlier, so, no chance here.

5. Sell off MRO is not liked by unions. And they have a say, see above.

6. The unions are there to stay. Whomever takes over has to work with them. You can not wind back that clock.

 

As we now know that the PM has said that MAS can not be saved in its present form, we will see a different form being introduced soon.

Ctrl.alt.del and reformat hard disk is easier said than done, therefore i would not be surpised if te government chooses to apply a strong anti virus and malware program. This to be brought in by an independant Malaysian investor company who is able and willing to put their money were their mouht is. Their own money that is and with the intention that they want to earn it back. They have to bring in qualified aviation management and have constructive talks with the unions.

 

The government can then wash their hands from it and step aside.

Far fetched, yes, you bet it is. Impossible, No. if i was a betting man i would start buying shares now.

You can not compare Malaysia and its culture with Japan. Bankruptcy will not happen. Privatisation will.

It's the only chance and the government knows it. They just have to choose the right anti virus software.

 

Off topic question, why is there an acting minister of transport and not a full time real one?

 

Regards

A.

Edited by Arthur Van Straten

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Airline industry = Air Asia?

I would rather to say yes and ask TF to reboot and relaunch a new MH with profits

People like Aireen Omar at AK need not take slugs hailed by those neo-nazi, better spend their productive time elsewhere.

 

 

Divas in A.Net are pointing out MH as the perfect takeover object by Etihad Airways.

Given JL (the one who brought psy to pen) relationship with rm and arabs, it is plausible for mh to merge with m.e airline. However, the gomen need to package with load of sweetener e.g. write off all the debts, include engineering, lands ,etc.

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Can the new format be in the form excluding the union? MAS is brought down to its knee because of legacies problem and union is one (a very big one) of them. AK triumphs without any union.

 

There must be a prototype of a flag carrier under a new setup (formed in late 90s or early 2000s or has been reformed after a bankruptcy) without union that is doing well. I think the Middle East Big 3 are all ununionised.

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I would rather to say yes and ask TF to reboot and relaunch a new MH with profits

You don't put a cat and a tiger in a cage expecting them to coexist. One will devour the other.

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What i have understood so far is,

 

1. To take over mas majority share, you have to be a Malaysian company.

Etihad and Petron are not.

2. The government will not help out MAS financially.

3. Any reboot with government inteference will fail.

4. AirAsia was booted out by the unions earlier, so, no chance here.

5. Sell off MRO is not liked by unions. And they have a say, see above.

6. The unions are there to stay. Whomever takes over has to work with them. You can not wind back that clock.

 

As we now know that the PM has said that MAS can not be saved in its present form, we will see a different form being introduced soon.

Ctrl.alt.del and reformat hard disk is easier said than done, therefore i would not be surpised if te government chooses to apply a strong anti virus and malware program. This to be brought in by an independant Malaysian investor company who is able and willing to put their money were their mouht is. Their own money that is and with the intention that they want to earn it back. They have to bring in qualified aviation management and have constructive talks with the unions.

 

The government can then wash their hands from it and step aside.

Far fetched, yes, you bet it is. Impossible, No. if i was a betting man i would start buying shares now.

You can not compare Malaysia and its culture with Japan. Bankruptcy will not happen. Privatisation will.

It's the only chance and the government knows it. They just have to choose the right anti virus software.

 

Off topic question, why is there an acting minister of transport and not a full time real one?

 

Regards

A.

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To answer Arthur: Traditionally the Transport Minister is from the MCA party but since MCA lost badly in the last general elections, its leadership vowed not to be included in the cabinet. But recently Najib thought they should and MCA may reverse its decision. BTW who wants to be the transport minister at times like this with MH370 disappearance still unresolved. He / she will be the world's focus!

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I would rather to say yes and ask TF to reboot and relaunch a new MH with profits

TF has already ruled himself out of any MAS rescue. I believe that previously, the PM did twist his arm to do national service.

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I would rather to say yes and ask TF to reboot and relaunch a new MH with profits

That would be a big mistake as it will result in a monopoly... well, kind of. That's very bad to us the consumers.

 

 

What i have understood so far is,

 

1. To take over mas majority share, you have to be a Malaysian company.

Etihad and Petron are not.

He's talking about Mahathir's son.

 

 

You can not compare Malaysia and its culture with Japan.

So true!!

 

 

 

Off topic question, why is there an acting minister of transport and not a full time real one?

If i'm not mistaken, it is due to UMNO gentleman agreement with MCA.

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What now, MAS?

 

Although the authorities are not sure what should be done with Malaysia Airlines (MAS) whatever plan that is finally decided must be thoroughly studied first because past restructurings have not been very successful.
What the national carrier needs to do to restructure itself in the face of massive losses is a talking point but one seasoned analyst feels the first step the airline needs is a detachment from its current major shareholders.
Suggestions of using Section 176 of the Companies Act to handle its mountain of debts could also be prohibitive, according to a specialist in corporate law.
Bankruptcy should not be an option because the ramifications of such an action are severe, not just for the airline which is the national carrier but also for its employees and the country.
What the Government and Khazanah Nasional Bhd, the major shareholder of MAS, plan to do with MAS is unknown but whatever will be done should be a well thought of plan because past restructurings have left the airline in the red for five out of the past 10 years.
“Deconstruct MAS, detach it from majority shareholder Khazanah, and rebuild the carrier from the bottom up,” says an independent aviation analyst, Shukor Yusof.
For that to happen, Shukor says “it needs political and financial will and the structure of a resconstructed MAS needs to be absolutely transparent. It has to be market driven, operated based on merit and exploit technical skills of the many outstanding and loyal MAS staff,” Shukor, a former analyst with Standard & Poor’s says. He has been covering the industry since 1996.
Any action needs to be done, and fast too. The disappearance of MH370 has wounded the airline immensely as MAS, which has lost money in four of the last five quarters, reported a whopping RM443mil net loss for first quarter of 2014.
Analysts do not see the airline recovering until 2016 should the status quo remain. But a restructuring is unavoidable given the size of its network is smaller now given the cancellation of nearly 900 flights over the past two months and demand for its services are at rock bottom. Compounding MAS’ problem is its cost, which is a major issue the airline has been trying to combat unsuccessfully for a long time.
Critical priorities
Given the cancellations and lack of demand especially from China, MAS needs to relook at its business model. That is being done but starting afresh is what it needs more than a rejig of its business model.
That has led to chatter that MAS is considering bankruptcy, opting for Section 176 or even a privatisation.
Shaharudin Datuk Hj Ali, a lawyer who specialises on corporate law, says the cost of a business restructuring for MAS, including a restructuring made pursuant to section 176 of the Companies Act or simply by renegotiating all agreements (outside section 176), will be extremely prohibitive and massive by any comparison.
“Since this will definitely be the case, logic dictates that MAS would have to look at critical priorities first in order to stay afloat and make money again, whilst carrying the Malaysian flag.”
With hints of bankruptcy a possible option, that route could be challenging given that MAS has not been deemed a company unable to service its debt obligations.
Shaharudin adds that there is no evidence or facts to support the view that MAS is incapable of paying its debts when called upon to do so by its creditors. “In other words, there is no evidence, for now, that MAS is insolvent. Besides, strictly MAS cannot be declared a bankrupt because MAS is not an individual.”
In his view, he says MAS is quite capable of handling the current financial turbulence facing the national carrier.
“I wish to add that MAS has a strong asset base and it is unlikely to be find itself in deep financial trouble,’’ Shaharudin says.
Shukor adds that the ramifications of bankruptcy are quite obvious, but it is also an opportunity to relook and renegotiate contracts, debts and accords signed by the airline previously with banks, unions, catering companies etc.
But there are job implications, clearly for employees, and this must be dealt with humanely, he says.
At the same time such a move will put all MAS companies, not just the parent company, under scrutiny. That means, each unit, such as Firefly and MAS Engineering, will be under the microscope, Shukor says.
He says that if MAS still goes ahead to file for bankruptcy, it would allow for the airline to renegotiate long-term contracts and restructure debts/loans with secured and unsecured creditors.
Filing for bankruptcy allows for a stay of proceedings, meaning the banks or unions cannot sue or take legal recourse against the airline.
He says typically an airline emerges from Chapter 11 financially stronger than before, e.g. Japan Airlines, but such an undertaking is very complicated and requires, in MAS’ case, astute manoeuvring by the Government and shareholders as it has political implications.
Capital reduction
But Shukor also adds that there must be political will and courage to overcome such a monumental challenge.
Heading to the courts for protection under Section 176 of the Companies Act is an option as it will offer MAS protection from its creditors to meet its financial obligations as it restructures.
Shaharudin believes that Section 176 is a little technical and there are two parts to it.
The “first leg”, he says, deals with a mechanism to save insolvent companies through the order of the court by allowing a company to pay a smaller sum to its creditors, provided the strict provisions stipulated in the section are complied with.
The “second leg” deals with restraining orders (stop orders from court) that behaves like a rider to the first leg, to help maintain the status quo of the company if you like, until the court makes a proper decision relating to the first leg. But restructuring a company may or may not involve reducing its shareholders fund or capital.
He goes on to say that, whether it involves capital reduction or not, it is a sign that a company is accepting that time has come to re-open its debt payment with creditors or even preference shareholders.
“The point that I wish to stress is this: The moment a company invokes the Companies Act to protect itself against creditors, or to adjust or restructure its corporate liabilities, or to reduce its capital, or to seek an injunction to stop creditors from potentially harassing its business (not to mention initiating a voluntary liquidation) these are generally taken by the market as red flags, or warning signs. The financial market will get the jitters if the company is a large, significant market player,’’ Shaharudin says.
He adds that a multiple-structure share option scheme should be introduced to all; excellent and deserving employees will have a clear career paths. “MAS ought to create excitement again. I’m not a branding expert but I think a good fresh theme for MAS could be like ‘Malaysia Airlines– travelling excitement starts here’ or something like that.”
Shaharudin says that there are many ways a company can restructure its capital, its finances and, most importantly, the amount due to its creditors.
Because creditors can be a major hurdle to future corporate plans and strategies of a large company, then sometimes, the consent, understanding and even cooperation of creditors becomes necessary for the company to move forward. This involves rescheduling periodic payment of debts, asking for a discount or downward revision of interest or principal sum of the debt.
In other words, if MAS decides to renegotiate its financial commitment to key stakeholders or creditors (note, employees are also stakeholders in corporate restructuring), it is in essence, renegotiating the original loan agreements, financing deals or supply agreements so that it gets more breathing space to move forward and compete.
Shukor says that “at the end of the day, whether a rejuvenated flag carrier is minority-owned or majority-owned by the Government or even 100% privately-owned by Malaysians, matters little unless it is profitable and can serve the economic needs of the country and its people.’’
Shaharudin says that MAS should also ensure leakages are addressed totally and completely. Tender procedures must be tightened and made more transparent. Pre-qualification should be a no nonsense exercise. Pricing quoted by suppliers must match the quality of services or products – for example in flight snacks/meals.
Whatever route it takes, MAS has to evaluate all models before taking the plunge because this is seen as its last chance for salvation.

 

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