MAS Privatisation

[flee 5]

Malaysia Airline's shares suspended pending announcement

 

http://uk.reuters.com/article/2014/08/08/malaysia-airline-stocks-idUKL4N0QA18620140808?feedType=RSS&feedName=rbssFinancialServicesAndRealEstateNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FUKBankingFinancial+(News+%2F+UK+%2F+Financial+Services+and+Real+Estate)

 

 

[KK Lee 5]

 

D7 forced itself into SYD and MEL.

 

 

I was trying to point out why the MAS-Air Asia JV was a bad idea (still is a bad idea). Tony was quick to transfer not only the landing slot at SYD and MEL but the highly prized HND traffic rights too! Some profitable engineering contracts were also taken away from MAS. How can that be good to MAS ? Besides, those Air Asia people appointed to the MAS board also failed to address the problems at MAS (catering contract and so many more). It's better to sell it to a foreign carrier than a competing Malaysian airline.

 

As a travelling public, any reduction in competition is bad for pricing.

 

Strictly speaking, MH and D7 are in different market segment. If pax migrated from MH to D7 means value provided by MH is inconsistent with its pricing. On KUL-MEL, MH direct competitor is EK, why few people blame EK for MH dismay performance?

 

Assumed D7 is non-existent, could MH sustain both daily KUL-HND and KUL-NRT? Majority of pax on these routes are Japanese, if demand is justified, JL would have offer both routes or serve KUL with a bigger aircraft.

 

MAS engineering is no longer 100% belongs to MH years ago like catering. What's left to be taken away?

[flee 5]

Khazanah to take Malaysia Airlines private

 

Minority shareholders would receive RM 0.27 ($0.08) a share, representing a 12.5 per cent premium to the closing price of Malaysia Airlines on Thursday, and a 29 per cent premium to the volume-weighted average of the shares over the past three months. Shares in Malaysia Airlines were suspended from trading on Friday.

 

Khazanah said the proposed restructuring would require “all parties” to work on a complete overhaul of the carrier. “Nothing less will be required in order to revive our national airline to be profitable as a commercial entity and to serve its function as a critical national development entity,” it said.

 

Full report: https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=6&cad=rja&uact=8&ved=0CD4QFjAF&url=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fef4ab4b6-1ea1-11e4-9513-00144feabdc0.html&ei=JjfkU-LWNYO68gWsr4KgDA&usg=AFQjCNFNbYu7SJ3kXs9_82OXhSqNg1ftmA&bvm=bv.72676100,d.dGc

Edited August 8, 2014 by flee

[Sharil Abdul Rahman 0]

For the restructuring to be successful, do you think the Unions needs either to be curtailed in power, or have them less powerful as they are right now?

 

Also what do you think will happen in this restructuring? MRO to be sold off? Firefly/Maswings to be spinned-off? LSG contract to be terminated? or just fluff?

[leon t 0]

looks like MAS will not be truly privitalised and its shares suspended today. Without a total restructuring and removal of any remnants from the previous by Khazanah and merely "requiring all parties to work together to overhaul the carrier" - will not be very effective. In fact, this is a good time to have MAS to be completely privitalised and if possible even sell some equity to a successful carrier - and at the same time remove the the very strong Unions. Otherwise its just another big bail out and MH will not be profitable in future.

[flee 5]

I was trying to point out why the MAS-Air Asia JV was a bad idea (still is a bad idea). Tony was quick to transfer not only the landing slot at SYD and MEL but the highly prized HND traffic rights too! Some profitable engineering contracts were also taken away from MAS. How can that be good to MAS ? Besides, those Air Asia people appointed to the MAS board also failed to address the problems at MAS (catering contract and so many more). It's better to sell it to a foreign carrier than a competing Malaysian airline.

To blame the Khazanah engineered share swap for MAS' woes is taking a short cut.

D7 has applied for the SYD slots a long time ago and MAS kept objecting to the granting of such rights. And why did MH not object to the govt. granting EK fifth freedom rights to EK on the KUL-MEL route?

With hindsight, it can be seen that the govt. intended to grant the rights to D7 as soon as the bilaterals were revised. So both MH and D7 can now operate to Australia as they wish.

As for HND, what has MH done with its 3 slot pairs? If it was so highly prized, why did it not operate KUL-HND flights on B744's? Why did it send a puny B738 from BKI-HND? If MH wanted to experiment with this route, it might have been better to run BKI-NRT so that it can cash in on the prized KUL-HND rights.

It would be unfair to say that the share swap failed because insufficient time was given for things to change and turnaround before it was abandoned. There was also a lot of union opposition, sabotage and interference to the measures taken by the new management.

Till this day, there are still many legacy issues that have not been addressed. No foreign carrier would touch MH (Etihad has already said no). Who in his right mind would want to buy a bankrupt airline that owes billions of RM and is saddled with so many structural issues?

This morning, Khazanah announced the privatisation of MAS. It issued a serious warning, and I hope that everyone involved with MAS will take heed:

 

Khazanah said the proposed restructuring would require “all parties” to work on a complete overhaul of the carrier. “Nothing less will be required in order to revive our national airline to be profitable as a commercial entity and to serve its function as a critical national development entity,” it said.

 

[flee 5]

MAS latest rescue plan to include drastic measures, bankruptcy -

 

See more at: http://www.themalaysianinsider.com/business/article/mas-latest-rescue-plan-to-include-drastic-measures-bankruptcy#sthash.zZaui2a9.dpuf

[JuliusWong 0]

Ok, where does the cronies line start? I would like to join in the queue for the new 'MAS' contracts....

[flee 5]

Take up Khazanah offer, Maybank IB tells shareholders

KUALA LUMPUR (Aug : Maybank IB Research has advised investors to accept Khazanah Nasional Bhd’s offer of 27 sen per Malaysian Airline system Bhd share it does not already own to take the airline private.

In a statement Friday, the state investment arm, which owns 69.37% of MAS, said it had submitted a formal request to MAS to undertake a selective capital reduction and repayment exercise.

Maybank IB analyst Mohshin Aziz in a note to clients said the long-awaited privatization by Khazanah Nasional would cost the state fund roughly RM1.4 billion to buyout shares that it doesn't already own.

He said the offer was unconditional, and will be pushed for completion as soon as possible.

“Go for it, take the offer and say thank you.. We have did an analysis on the sum-of-parts value of the Company a while ago and derive a value of RM4.1 billion or 25 sen.

“Therefore, Khazanah's offer of 27 sen is fair and in fact a nice 8% premium to our fair value,”he said.

Mohshin however added that any hope for a revised upward offer would not materialise, as its 2Q14 financial results to be released later this month would be awful and perhaps the worst in its history.

“When that happens, it will definitely spook everyone and evaporate any hope for a revised offer,” he said.

Source: http://www.theedgemalaysia.com/business-news/301899-highlight-khazanah-to-offer-rm14-billion-to-take-over-mas-de-list-carrier.html

 

[leon t 0]

With this so-called "rescue and turn around plan" - looks like MAS will remain pretty much the same old same old MAS - after the initial furore and just like the warnings to all "getting it serious and right" will just be like "full of sound and furry, signifying nothing".

[flee 5]

Wait and see what Khazanah does - if lenders are asked to take a haircut, it will seriously and adversely affect the whole Malaysian credit and lending scene...

[KK Lee 5]

Wait and see what Khazanah does - if lenders are asked to take a haircut, it will seriously and adversely affect the whole Malaysian credit and lending scene...

 

Most of MH bond holders are local institutions (i.e. GLC banks, EPF, etc), it is self destroying to take haircut.

 

Khazanah is not unknown for its creative and magic restructuring, so will be interesting to watch.

 

Ok, where does the cronies line start? I would like to join in the queue for the new 'MAS' contracts....

Unless you are well connected with the first family, waiting list is full.

Edited August 8, 2014 by KK Lee

[flee 5]

KUALA LUMPUR, Aug 8 (Bernama) -- The government and Khazanah Nasional Bhd are in the final stages of completing a holistic restructuring plan for Malaysian Airline System Bhd (MAS) and a detailed plan will be announced by end-August, said Prime Minister Datuk Seri Najib Tun Razak.

The government, through its strategic investment fund, Khazanah Nasional Bhd, today announced a formal process to take full ownership and de-list the airline from Bursa Malaysia.

"This is the first step needed to return our national carrier to profitability. It is a step I wholeheartedly support.

"MAS is part of Malaysia's history. It is a symbol of national pride, of our ambitions and our place in the world. So today we are making changes to ensure it is also part of Malaysia's future story," he said in a statement here Friday, in response to the proposed de-listing of MAS.

He believed that the national carrier must be renewed to create a genuinely strong and sustainable national carrier.

"This process of renewal will involve painful steps and sacrifices from all parties.

"My instruction and my commitment to all concerned is that the process will be carried out professionally, with proper principles of fairness, transparency and compassion," he said.

Najib also touched on the recent losses of MH370 and MH17, saying that seldom before has a company been subjected to two profound and extraordinary tragedies in such a short space of time.

He hoped that these twin tragedies would change the way the aviation industry operates, making global travel safer for all.

[Arthur Van Straten 0]

@ flee

 

Thanks for the update.

 

Quote

 

"The government and Khazanah Nasional Bhd are in the final stages of completing a holistic restructuring plan for Malaysian Airline System Bhd (MAS) and a detailed plan will be announced by end-August, said Prime Minister Datuk Seri Najib Tun Razak." End quote

 

Can anybody enlighten me what a holistic approach would entail? The mind boggles.

 

Cheers

A.

[flee 5]

As Malaysia Airlines faces overhaul, are there lessons from Japan?

 

Aug 8 (Reuters) - Fast forward a year, and Malaysia Airlines may have a new CEO, new logo, new livery, maybe even a new name, and fewer employees, airline insiders and brand experts said as the government signalled a "complete overhaul" of the loss-making carrier that has suffered two recent jetliner disasters.

MAS management has been working on a plan that could cut the national airline's over 19,000, largely unionised workforce, freeze pay, speed up retiring older planes and retrofit some of its current fleet to add seats, people close to the airline said.

JAPANESE LESSON

As Khazanah begins the restructuring process, it may look to nearby Japan for a precedent, airline analysts said.

Oneworld partner Japan Airlines (JAL) once ran the world's biggest fleet of Boeing 747 jumbo jets, but became bloated and unprofitable and had to be bailed out by the government three times between 2001 and 2009. In early 2010, JAL went into bankruptcy protection with $25 billion of debt.

The government insisted on new management and a tough restructuring. Employees were told to focus on productivity and profitability, and the airline went about tackling its costs; cutting its workforce by a third, slashing pension payouts, retiring older planes and shrinking its route network.

By late 2012, JAL had exited bankruptcy protection and made a successful $8.5 billion stock market re-listing. Its shares have since risen around 44 percent, lagging the main index's 60 percent gain over that period.

Analysts say similar changes at MAS could see it make a successful comeback.

Full report here: http://www.reuters.com/article/2014/08/08/malaysia-airline-restructuring-idUSL4N0QE47220140808

 

[Arthur Van Straten 0]

@ flee. Yes, read it. And?? The holistic thing? Anybody?

 

No matter what, you still need buckloads of money. From where?

 

Not so long ago cabinet members were spouting, no more money for MAS.

 

I am still waiting with bated breath that somebody comes up with, open sky policy 2015 and barbarians at the gate.

 

A.

[flee 5]

Taking the knife to MAS

BY B.K. SIDHU

http://www.thestar.com.my/Business/Business-News/2014/08/09/Taking-the-knife-to-MAS-Khazanah-embarks-on-turnaround-plan/

Firms whose fates are linked to MAS

BY JAGDEV SINGH SIDHU

http://www.thestar.com.my/Business/Business-News/2014/08/09/Firms-whose-fates-are-linked-to-MAS/

Big cut in human resources likely at MAS

BY YVONNE TAN

http://www.thestar.com.my/Business/Business-News/2014/08/09/Big-cut-in-human-resources-likely-at-MAS/

 

Khazanah, MAS can learn from the JAL experience

 

http://www.nst.com.my/node/21431

[leon t 0]

sigh...looks like MAS will never get back to real profitability and get rid of all the things that have been saddled with. Imagine under Khazanah for the last many years and even in the last 3 years, MAS have lost rm4.1 BILLION in 3 years - even before the 2 incidents! and it its Khazanah that have been "trying" for the past 12 years to turn MAS around and did it happen? What makes it sp special that this time they can do it "holistically" or any other ways. MAS is over saturated with too many staff, and very powerful Unions with political ties. This so called turnaround by Khazanah by paying out another rm1.4 billion to buy out the remaining shares and another do know how many millions or billion more to bail MAS out - will never work.

The only real way is to shut the airline down and start afresh with new private owners and new management.

and looks like more EPF funds were need to be used for this exercise to resue MAS again.....and again

[leon t 0]

Just look at this facts from the Star papers :

 

 

In the past 10 financial years, MAS have lost money 5 times with the biggest loss of rm2.5 Billion in 31 dec 2011.

 

Over the past 5 years Khazanah have pumped in rm5.7 Billion in 3 rights issue, and rm19 Billion in rights issue and government-backed debts to keep MAS running.

 

MAS is burning rm5 million daily, and have debts or rm11.5 Billion.

[flee 5]

These "facts" only partially tell the story. What about the off balance sheet stuff? The special purpose vehicles set up to support MAS. We may never know the real amounts of taxpayer money that was pumped into MAS.

 

The first step we need to take for MAS is to install a professional Board of Directors and top management. These must be people who are proven financial, aviation and management professionals. Without this, any restructuring will end like all the previous hair-brained schemes.

Also do note that the JAL experience may not translate well into Malaysia. Japanese culture is quite different from Malaysian culture - e.g. personal integrity, being accountable for your actions, etc.

[leon t 0]

Yes - and believed the toal MAS and govt-backed debts for Khazanah and MAS exceeds even rm20 BILLION ! It would be cheaper and even cost effective to shut MH down and even start a brand new airline with much much less costs. And now even in the unlikely event that Knazanah can even turn MAS around, and if MAS does make rm300 million profit yearly - it would take MAS/Khazanah more than 50 years to clear its debt! However looking at this attempt to turnaround around for the upteen times,, its is more so now that MAS will continue to make losses even after this 2 years.

[CH Teo 0]

http://www.malaysia-chronicle.com/index.php?option=com_k2&view=item&id=337471:in-revamp-mas-may-be-broken-up-with-project-sapphire-making-comeback&Itemid=3#axzz3A52ZYk9b

 

"Project Sapphire" making a return? Wait and see...

From my two cents, best option is still consolidate turboprops in ONE single brand, ONE single business model (Fireflyz mode of operation); then another ONE for narrow-body operation, more leaning towards LCC; leaving the "mother" for wide-body services...

 

Neverthless, just see wait "recipes" they will be cooking up for Malaysia Airlines after delisting...

[Arthur Van Straten 0]

Yes, read about Saphire, and MRO and Airod, and present CEO stays on for a few more years and yes,

also read this maybe not true as headhunters already sourcing new CEO. But all only after agreement with shareholders.

 

I tried to find sayings of Confucius on confusion. Could not find any. Maybe more learned friends on this board can.

The Masterplan will be out end of this month, as i have read.

 

But if the Masterplan is as confuse as what i have read today, then we need a Confusius translater asap.

 

Cheers

Confused Art.

[Johan Z 0]

I'm glad this could happen:

 

"It is believed that Firefly will be in charge of MAS’ domestic and regional (Asean) network by reviving its jet operations while maintaining its turboprop operations."

Firefly is already a well-known brand. I just don't see a point having another name, unless it's MAS regional or something similar.

[Mike P 0]

I thought AA has had its rebranding by changing its logo and retaining its name as American Airlines after the declaration of bankruptcy?