MAS Privatisation

[jahur 0]

2 hours ago, JuliusWong said:

If they are going for Super Diamond for widebody J, I don't see why they can go for Diamond for short-medium haul J. https://www.collinsaerospace.com/what-we-do/industries/commercial-aviation/cabin/seating/business-class/diamond-family

SQ has flat bed, we shall see what TG will put on their new A321neos. If TG also puts flat bed, MH is doomed to fail for the 1001945th time. 

Believe Collins Diamond was the seat selected for the MAX 10 based on the brochure forms ive sighted months ago. Unfortunately the max 10 is in limbo until certification is sorted. MH main idea is to have 10 units of max 10s to be flown as the 2nd daily flight into India and Perth sector after the 330neos.

Also it seems MH will retain the same economy class seats seen on the a350 for the 330neo. Difference will be a revised panasonic X ex2 IFE with bumped processor and resolution(Unlikely to be 4k though).

One thing the article got it wrong or more likely the CEO was not telling the actual est entry of service for the 330neo.

[flee 5]

Interview with MAS CEO:

https://www.headforpoints.com/2023/06/12/malaysia-airlines-captain-izham-ismail-interview/

https://www.headforpoints.com/2023/06/12/malaysia-airlines-ceo-reveals-new-business-class-seats/

[Chris Tan 0]

So, F (“Business Suite”) is going away, which is not entirely surprising. I presume the ground facilities will be maintained to cater to Plats/OWE.

Wonder if this means the Malaysian VVIP get an excuse to fly SQ F to LHR post-2026

Edited June 12, 2023 by Chris Tan

[JuliusWong 0]

15 hours ago, jahur said:

Believe Collins Diamond was the seat selected for the MAX 10 based on the brochure forms ive sighted months ago. Unfortunately the max 10 is in limbo until certification is sorted. MH main idea is to have 10 units of max 10s to be flown as the 2nd daily flight into India and Perth sector after the 330neos.

Also it seems MH will retain the same economy class seats seen on the a350 for the 330neo. Difference will be a revised panasonic X ex2 IFE with bumped processor and resolution(Unlikely to be 4k though).

One thing the article got it wrong or more likely the CEO was not telling the actual est entry of service for the 330neo.

Given that MAX10 certification is in limbo now [despite Boeing CEO assuring the market it is expected to enter service in 2024] and MH CEO has been hinting for few times the second part of the narrowbody renewal is not hinged on the first part of 25 B737MAX, I have a feeling the A321neo/LR/XLR has a high chance of winning the bid. Air Lease Corp. and Avolon have several hundreds A321neo on order, MH could cut a deal with either or both of them.

I wish they can upgrade the Y seats to RECARO CL3710 with 10.1 inch, 720p for both A350 and A330neo. Seen those on JX, man, they are really brilliant. Also allowing economy class passengers to book meal in advance. Little touch that MH can do to win back passengers. With the new A330neo coming, it is a great opportunity for MH to roll over new standardised product offerings.

A330neo should be coming only next year based on the current production data. Current latest MSN number in assembly plant run till 2057, MH's first is MSN 2080....and Airbus is only delivering two or three A330neo monthly. This year till May 2023, they only managed to deliver seven A330-900neo. The wait will be a  while.......

[Chris Tan 0]

2 minutes ago, JuliusWong said:

I wish they can upgrade the Y seats to RECARO CL3710 with 10.1 inch, 720p for both A350 and A330neo. Seen those on JX, man, they are really brilliant.

Terrible padding. Awful for long-haul. But I speak as someone who’s flown on those a few times. Not sure if they look better in pics though. 

[flee 5]

48 minutes ago, JuliusWong said:

Given that MAX10 certification is in limbo now [despite Boeing CEO assuring the market it is expected to enter service in 2024] and MH CEO has been hinting for few times the second part of the narrowbody renewal is not hinged on the first part of 25 B737MAX, I have a feeling the A321neo/LR/XLR has a high chance of winning the bid. Air Lease Corp. and Avolon have several hundreds A321neo on order, MH could cut a deal with either or both of them.

I wish they can upgrade the Y seats to RECARO CL3710 with 10.1 inch, 720p for both A350 and A330neo. Seen those on JX, man, they are really brilliant. Also allowing economy class passengers to book meal in advance. Little touch that MH can do to win back passengers. With the new A330neo coming, it is a great opportunity for MH to roll over new standardised product offerings.

A330neo should be coming only next year based on the current production data. Current latest MSN number in assembly plant run till 2057, MH's first is MSN 2080....and Airbus is only delivering two or three A330neo monthly. This year till May 2023, they only managed to deliver seven A330-900neo. The wait will be a  while.......

I believe MH wants early delivery slots for the narrow body - so I guess it will be the OEM that has slots in 2025 who will get the orders. A321Neo can be ordered with CFM LEAP engines to help with commonality with the Max. A321 pilots can transition more easily to A330/350 too.

Yes, the new A339s and A359s will have standardised cabins - they are also planning to refurbish current A359s to the new standard from 2026.

Airbus production sequence does generally follow MSNs but not strictly. They can be out of sequence sometimes - all depends on whether the airline has paid up or are ready to take delivery.

[JuliusWong 0]

54 minutes ago, Chris Tan said:

Terrible padding. Awful for long-haul. But I speak as someone who’s flown on those a few times. Not sure if they look better in pics though. 

Not much choice out there, Stelia, Safran, Recaro, Jamco, Acro, Geven, Toyota, and Collins are the only few players in the market. Much of their product lineup for Y seats are ironing board to maximise the seat pitch. 

[jahur 0]

1 hour ago, Chris Tan said:

Terrible padding. Awful for long-haul. But I speak as someone who’s flown on those a few times. Not sure if they look better in pics though. 

9/10 of the economy offerings by many manufacturers are terrible now as the cushion padding has been stripped down with a select few niche model that barely any airlines are ordering and are considered as concept seats. A yesteryear 737-400 economy seat would easily beat up a widebody seat of today, except it would upset bean counters and accountants that it is too damn heavy and defeats their so called carbon emission and go green minimum compliance bullcrap.

 

1 hour ago, JuliusWong said:

I wish they can upgrade the Y seats to RECARO CL3710 with 10.1 inch, 720p for both A350 and A330neo. Seen those on JX, man, they are really brilliant. Also allowing economy class passengers to book meal in advance. Little touch that MH can do to win back passengers. With the new A330neo coming, it is a great opportunity for MH to roll over new standardised product offerings.

Most of the IFEs production post 2019 are already sporting 1080p as a standard with improved refresh rate that makes it feel fluid which is the case for the Panasonic EX2.If this was the ex2 variant in 2015 720p was the standard.  What we see MH taking up for the 738 and a333 were based on 2009 circa ifes which are very laggy like the a350 was something from the 2015 circa which only slightly improved the fluidness.

Some of the higher end segment models Thales Avant up or Panasonic NEXT series are already incorporating 4k with inbuilt gpu that is no longer dependent on the cpu to have that ipad like gui feel. Expect the 4k ipad like feel to be standard in late 2026 from what gather.

Edited June 13, 2023 by jahur

[JuliusWong 0]

23 minutes ago, flee said:

I believe MH wants early delivery slots for the narrow body - so I guess it will be the OEM that has slots in 2025 who will get the orders. A321Neo can be ordered with CFM LEAP engines to help with commonality with the Max. A321 pilots can transition more easily to A330/350 too.

Yes, the new A339s and A359s will have standardised cabins - they are also planning to refurbish current A359s to the new standard from 2026.

Airbus production sequence does generally follow MSNs but not strictly. They can be out of sequence sometimes - all depends on whether the airline has paid up or are ready to take delivery.

MH just need to cut the deal with lessors since they are not going to place a direct order with either Boeing or Airbus. I would be surprised if they do. Both OEMs are sold out till 2026/2027 at earliest. Unless MH is a blue chip customers like SQ or QR which Airbus/Boeing will bend over their back to accommodate to them, the issue now is whether MH wants to pay more for earlier delivery slots in lessor's order compared to lessors' other customers.

At this moment, parts for MSN2080 have not arrived at Airbus plant and there are at least another 20+ MSNs in between, judging from the 2023 A330neo delivery progress, again highly doubt MH will get their first A330-900neo any time soon, even by Q1, 2024.

Edited June 13, 2023 by JuliusWong

[flee 5]

18 minutes ago, JuliusWong said:

MH just need to cut the deal with lessors since they are not going to place a direct order with either Boeing or Airbus. I would be surprised if they do. Both OEMs are sold out till 2026/2027 at earliest. Unless MH is a blue chip customers like SQ or QR which Airbus/Boeing will bend over their back to accommodate to them, the issue now is whether MH wants to pay more for earlier delivery slots in lessor's order compared to lessors' other customers.

At this moment, parts for MSN2080 have not arrived at Airbus plant and there are at least another 20+ MSNs in between, judging from the 2023 A330neo delivery progress, again highly doubt MH will get their first A330-900neo any time soon, even by Q1, 2024.

Yes, even if MAG orders directly from OEM, they will do a sale and leaseback deal with lessors like they did with Avolon for the A339s. For the narrowbodies, I think OEMs can only offer 2027 and later slots. But these will also be sold out as some airlines are already negotiating mega orders that may be signed at the Paris Air Show next week.

The OEMs were sort of criticised by EK CEO for being inefficient when trying to sort out their supply chains post Covid. He said it is taking far too long to return to pre-pandemic production levels. Airbus deliveries are normally sluggish in the first half of the year. It would be interesting to see if they can ramp up deliveries in the second half - deliveries are normally done at a frantic pace in Q4. 

 

[JuliusWong 0]

MAG: Poor performers will be replaced

https://www.nst.com.my/business/2023/06/919500/mag-poor-performers-will-be-replaced

KUALA LUMPUR: Malaysia Aviation Group (MAG) will not think twice about replacing poorly performing third-party service providers of  subsidiary Malaysia Airlines Bhd.

MAG group managing director Datuk Captain Izham Ismail said two service providers have not been able to keep up with Malaysia Airlines' standards.

"Those are the people which are pulling our reputation down…While Malaysia Airlines remain steadfast on driving customer experience, our service providers are not helping us," Izham said in an interview.

The New Straits Times is reaching out to the service providers identified by Izham. It will identify them after getting their response.

Izham said MAG is looking to invest a portion of its RM4.7 billion cash balance to migrate some of Malaysia Airlines' services in-house while at the same time work with new service providers for certain services.

"We're looking at all options ....," he said, reiterating that the poor service provided by the vendors is at the consumers' expense.

Insider news: MAG to end Brahim's catering contract by phase, AeroDarat to take over catering. MAS Awana will handle the food supply chain. Malaysia Airlines's catering will now be in-house again! Another is rumored to be their overseas call centre.

To re-cap: Brahim's Holdings Bhd via its 70 per cent-owned Brahim's Airline Catering Sdn Bhd (BAC), has a 25-year contract that expires in 2028 to provide catering and related services at the Kuala Lumpur International Airport (KLIA).

It was forced to renegotiate the deal in 2014/2015 when the new MAB was set up. Due to cash flow problem pertaining to the renegotiation, it was forced to agree to a shorter agreement term and price was 25% lower than its initial contract. 

Brahim’s was classified as PN17 status listed issuer on Feb 28, 2019 after its shareholder equity fell below the 25% threshold. Its shareholders fund stood at negative RM5.812 mil for the year ended 2018 as from a positive RM98.81 mil for 2017. This decline was attributable to impairment on goodwill of RM88.6 mil.

Malaysia Airlines's inflight catering has been lightning rod for critics for decades, glad to see this has come to an end. Good riddance, Brahim! Stay buried!

 

[KK Lee 5]

9 minutes ago, JuliusWong said:

MAG: Poor performers will be replaced

https://www.nst.com.my/business/2023/06/919500/mag-poor-performers-will-be-replaced

KUALA LUMPUR: Malaysia Aviation Group (MAG) will not think twice about replacing poorly performing third-party service providers of  subsidiary Malaysia Airlines Bhd.

MAG group managing director Datuk Captain Izham Ismail said two service providers have not been able to keep up with Malaysia Airlines' standards.

"Those are the people which are pulling our reputation down…While Malaysia Airlines remain steadfast on driving customer experience, our service providers are not helping us," Izham said in an interview.

The New Straits Times is reaching out to the service providers identified by Izham. It will identify them after getting their response.

Izham said MAG is looking to invest a portion of its RM4.7 billion cash balance to migrate some of Malaysia Airlines' services in-house while at the same time work with new service providers for certain services.

"We're looking at all options ....," he said, reiterating that the poor service provided by the vendors is at the consumers' expense.

Insider news: MAG to end Brahim's catering contract by phase, AeroDarat to take over catering. MAS Awana will handle the food supply chain. Malaysia Airlines's catering will now be in-house again! Another is rumored to be their overseas call centre.

To re-cap: Brahim's Holdings Bhd via its 70 per cent-owned Brahim's Airline Catering Sdn Bhd (BAC), has a 25-year contract that expires in 2028 to provide catering and related services at the Kuala Lumpur International Airport (KLIA).

It was forced to renegotiate the deal in 2014/2015 when the new MAB was set up. Due to cash flow problem pertaining to the renegotiation, it was forced to agree to a shorter agreement term and price was 25% lower than its initial contract. 

Brahim’s was classified as PN17 status listed issuer on Feb 28, 2019 after its shareholder equity fell below the 25% threshold. Its shareholders fund stood at negative RM5.812 mil for the year ended 2018 as from a positive RM98.81 mil for 2017. This decline was attributable to impairment on goodwill of RM88.6 mil.

Malaysia Airlines's inflight catering has been lightning rod for critics for decades, glad to see this has come to an end. Good riddance, Brahim! Stay buried!

 

Brahim catering contract was profit guaranteed. Unless aerodarat and mas awana could bring in professional and new team else is old vinegar in new bottle.

 

[jahur 0]

On 6/13/2023 at 11:34 PM, JuliusWong said:

Insider news: MAG to end Brahim's catering contract by phase, AeroDarat to take over catering. MAS Awana will handle the food supply chain. Malaysia Airlines's catering will now be in-house again! Another is rumored to be their overseas call centre.

 

To re-cap: Brahim's Holdings Bhd via its 70 per cent-owned Brahim's Airline Catering Sdn Bhd (BAC), has a 25-year contract that expires in 2028 to provide catering and related services at the Kuala Lumpur International Airport (KLIA).

It was forced to renegotiate the deal in 2014/2015 when the new MAB was set up. Due to cash flow problem pertaining to the renegotiation, it was forced to agree to a shorter agreement term and price was 25% lower than its initial contract. 

Brahim’s was classified as PN17 status listed issuer on Feb 28, 2019 after its shareholder equity fell below the 25% threshold. Its shareholders fund stood at negative RM5.812 mil for the year ended 2018 as from a positive RM98.81 mil for 2017. This decline was attributable to impairment on goodwill of RM88.6 mil.

Malaysia Airlines's inflight catering has been lightning rod for critics for decades, glad to see this has come to an end. Good riddance, Brahim! Stay buried!

 

This new catering move is unlikely to improve much for MH's lackluster meals unfortunately but it will finally fully detach MAG completely from the unnecessary high catering cost with the Brahim contract.

When Brahim took over catering from LSG skychef. They need to recoup the cost of procuring it. They pass most of it to mh and mh stupidly sign it cuz the crony board told them too. Other foreign carriers were charged quite high also but those carriers are willing to pay unnecessary steep contract but the meals served still lack behind the  meal quality of ex SIN/BKK. Different story for mh, as it keeps nego for lowest available option. Brahim gave them the low frills option for domestic and the cutback ingredients for long haul and hence we got very poor food onboard. Another renego deal was made in during the MAS to MAB change that lower the cost but that barely improved the quality of the meals and its still pricey for the quality of meals served.

If not mistake BRAHIM catering overall cost structure is near up cost to SATS Changi but their procurement for ingredients is 3-4x cheaper than Changi yet are charging clients on KUL on near SATS level.

Edited June 15, 2023 by jahur

[nrazmoor 0]

 

On 6/13/2023 at 9:40 AM, JuliusWong said:

I wish they can upgrade the Y seats to RECARO CL3710 with 10.1 inch, 720p for both A350 and A330neo. Seen those on JX, man, they are really brilliant. Also allowing economy class passengers to book meal in advance. Little touch that MH can do to win back passengers.

 

MH already offered Y class to book meal in advance, i did that for BKK. Not sure for the rest of MH destination

[Lim Kar Yong 0]

45 minutes ago, nrazmoor said:

 

MH already offered Y class to book meal in advance, i did that for BKK. Not sure for the rest of MH destination

Yes, and I think this is not widely promoted by MH. However, lately, I notice this option is communicated to J class pax to choose from the menu from Chef on Call.

[nrazmoor 0]

1 hour ago, Lim Kar Yong said:

Yes, and I think this is not widely promoted by MH. However, lately, I notice this option is communicated to J class pax to choose from the menu from Chef on Call.

J class already have the option even before the covid.. during covid it stop temporarily. Now they just resume the service again

[KK Lee 5]

11 hours ago, jahur said:

This new catering move is unlikely to improve much for MH's lackluster meals unfortunately but it will finally fully detach MAG completely from the unnecessary high catering cost with the Brahim contract.

When Brahim took over catering from LSG skychef. They need to recoup the cost of procuring it. They pass most of it to mh and mh stupidly sign it cuz the crony board told them too. Other foreign carriers were charged quite high also but those carriers are willing to pay unnecessary steep contract but the meals served still lack behind the  meal quality of ex SIN/BKK. Different story for mh, as it keeps nego for lowest available option. Brahim gave them the low frills option for domestic and the cutback ingredients for long haul and hence we got very poor food onboard. Another renego deal was made in during the MAS to MAB change that lower the cost but that barely improved the quality of the meals and its still pricey for the quality of meals served.

If not mistake BRAHIM catering overall cost structure is near up cost to SATS Changi but their procurement for ingredients is 3-4x cheaper than Changi yet are charging clients on KUL on near SATS level.

LSG skychef was engaged by brahim. brahim contract with mh was profit guaranteed. it was idris jala requested for cheapest meals.

brahim like most glc, is inefficient, unproductive and have enormous leakage. hence, is losing $.

while sgd was about rm2, mh top management justified to have double number of headcount of sq. mys salary may be about 1/3 of sg but inefficiency, low productivity and leakage could end higher cost than sg. 

Edited June 15, 2023 by KK Lee

[Robert 0]

Sitting waiting at KLIA for my flight to Singapore and noticed that 9M-MXY has just arrived having flown KUL-CRK-SIN-KUL.in the last 12 hours.

Curiosity getting the better of me so any idea why this is? 

 

[Robert 0]

https://www.channelnewsasia.com/asia/garuda-indonesia-malaysia-airlines-mas-pandemic-covid-19-recovery-travel-3582491

IN FOCUS: Garuda Indonesia and Malaysia Airlines chart contrasting paths in post-pandemic headwinds

JAKARTA/SINGAPORE: An air of confidence and optimism exuded from Irfan Setiaputra as he took centre stage in Indonesia’s parliament earlier in June this year.

As the Garuda Indonesia boss outlined the flag carrier’s recovery from the unprecedented turbulence of recent years, politicians took turns to sing praises of the airline – a stark contrast to the mood at a similar hearing in 2021. 

At the time, talk of dissolving and even establishing a replacement for Garuda was on the table. The company was struggling, with the COVID-19 pandemic bringing passenger numbers down by 90 per cent and inducing a net loss of nearly US$4 billion along with a US$10 billion debt to vendors.

But along with other neighbouring flag carriers, Garuda is faring much better today, having recorded in 2022 a profit of US$3.9 billion - the biggest in its 74-year history - as the pandemic eased off and travel restrictions loosened.

Across the strait, Malaysia Airlines (MAB) also turned profitable last year after back-to-back losses, in a turnaround that tripled its revenue due to strong demand internationally.

And regional standout Singapore Airlines (SIA) marked a milestone profit of US$1.6 billion for the 2022-2023 financial year ending in March, the largest in its 76 years of operating.

While the SIA announcement propelled its shares to a three-year high and led to eight-month bonuses for employees, bumpier skies may lie ahead for both Garuda and MAB.

he prospect of a ticket price war in a post-pandemic world looms large, with airlines competing for their slice of the surging demand for air travel. Meanwhile, costs to lease, operate and maintain aircrafts will likely balloon as once-dormant fleets are brought back to life.

Where the Indonesian and Malaysian flag carriers could bifurcate is in their trajectories through the storm, with experts calling for Garuda to adopt a more cautious approach - but for MAB to go on the attack.

“CRAZY" COMPETITION

Going into the pandemic, neither Garuda nor MAB was in the best shape.

The latter, long beset by high costs and a bloated workforce, struggled following the disappearance of its MH370 flight and the downing of MH17 over Ukraine, both in 2014. 

That year, Malaysian state fund Khazanah Nasional took the airline’s parent company - Malaysia Aviation Group (MAG) - private in a rescue bid.

In 2019, MAG was ranked 10th out of the top 10 Southeast Asian aviation groups based on passenger traffic, according to an Asian Development Bank (ADB) study on the pandemic’s impact on the aviation sector.

Domestically, MAB’s two main competitors in pre-COVID-19 days were AirAsia Group and Malindo Air - recently rebranded as Batik Air Malaysia - according to independent analyst Brendan Sobie.

“It’s not just the number of competitors in the market but the way they were expanding,” said Sobie, who co-authored the ADB study.

“Some of them were quite aggressive ... by pricing crazy low. And this led to losses for all the airlines in 2019.”

When the pandemic hit in 2020, MAB began to restructure its RM16 billion (US$3.4 billion) debt, a process which involved renegotiating with leasing companies, creditors and state entities that was completed in early March the next year.

Sovereign wealth fund and MAG owner Khazanah also committed new capital of RM3.6 billion to fund the airline's business throughout the restructuring period and until 2025.

Subsequently, the return of robust travel demand and effective cost control measures helped MAG reverse a RM767 million loss in 2021 to report an operating profit of RM556 million for the next year, according to the group.

Analysts said by restructuring its debts and financial obligations quickly, MAB managed to reduce costs significantly while holding on to all of its employees.

“During the pandemic we took a difficult stand to not ground any aircraft nor let go of any of our staff,” MAG managing director Captain Izham Ismail told CNA.

“And because of this stand, we were able to quickly relaunch services when our borders reopened in April 2022.”

MAB has reached 90 per cent of pre-COVID capacity and expects to bridge the gap once demand from China starts to bounce back by the end of 2023, he added.

The airline will also introduce more capacity to destinations that have experienced a surge in demand, such as Australia and South Asia.

“Amongst Southeast Asian carriers Malaysia Airlines has surprisingly been one of the few national airlines to exploit the market post-COVID, compared to laggards such as Garuda and Thai Airways,” said Endau Analytics founder Shukor Yusof.

“ALL SORTS OF PROBLEMS”

Garuda had entered the pandemic riddled with inefficiencies and scandals involving former CEO Ari Askhara, who was removed from office in December 2019 after getting caught trying to smuggle Harley Davidson motorcycle parts inside a newly delivered plane.

Under Askhara, the airline was also convicted and fined over allegations of price fixing and fraud related to financial statements.

When current chief Setiaputra took over, he told Indonesia’s parliament: “The pandemic has unveiled all sorts of problems happening inside Garuda: Inflexible cost structure, high aircraft rent and mismanagement.”

To get its cash flow going, the flag carrier moved to downsize considerably, including by spinning off and closing down some of its subsidiaries. 

The number of employees was cut from 7,878 in 2019 to 4,459 in 2022; while aircraft fleet strength dropped from 142 to 66 in the same period.

In the face of competition from main domestic rival Lion Group, Garuda also closed more than 100 domestic and international routes to shift attention to what it saw as more profitable ones.

The airline also kicked off a debt restructuring exercise in 2021 and was able to convert some liabilities into shares and bonds.

But it remains saddled with negative equity - more liabilities than assets - of US$563 million today, Jakarta-based aviation expert Gerry Soejatman pointed out.

On Jun 13, Setiaputra told Indonesian lawmakers that this was his company’s “biggest homework”. But he also said he was confident in continuing to turn things around.

“If we keep a tight leash on the way we manage these costs, (the issues) of the past can be addressed,” he said.

“Garuda has not fully recovered just yet,” Soejatman noted. “If Garuda can continue with its current cost discipline, Garuda will survive. But by the time they emerge out of their financial woes would they still be able to expand? This we don’t know yet.”

COMPLAINTS OF “DEAD WOOD”

This year, there have been some bright spots for the Indonesian flag carrier - chiefly in areas of customer satisfaction.

Garuda was voted as having the best air crew globally at this week’s 2023 Skytrax World Airline Awards, while in January it was named the most punctual airline in the world by travel data provider OAG Aviation.

MAG, on the other hand, admitted earlier this year that despite its positive finances, “many areas for improvement” remain in customer experience and on-time performance.

Shukor, the analyst, said these problems could be traced to MAB’s external vendors and that the airline needed a “complete change” of its outsourced services.

In-flight entertainment on domestic routes, for instance, has been a “biggest disappointment” for oil and gas executive Fashran Fauzi, who flies MAB from Kuala Lumpur to Kuala Terengganu for work about thrice a month.

“There is no difference from low-cost airlines. Food-wise for economy (class), it does not make the experience any better,” the 38-year-old told CNA.

MAG’s Izham, who is also MAB chief, said the airline has prioritised improving 10 key aspects of its customer experience ranging from check-in processes to in-flight food and beverage services.

MAB has also gone after underperforming staff, said the analyst Sobie, with Shukor adding that the airline could afford to be even “leaner”.

“Malaysia Airlines is still overstaffed despite having reduced its fleet size due to COVID-19. That means its ratio of workers per aircraft has risen, which will impact the bottomline,” Shukor said.

But weeding out “dead wood” would be a “politically sensitive” move, he added. “In the past the government of the day was reluctant to shed people at government-linked companies, such as Malaysia Airlines, on concern it may hurt the vote bank during elections.”

DARK CLOUDS ON THE HORIZON

Beyond such internal decisions, a litany of other challenges await airlines in the region in the coming year, analysts warned.

For one, costs are expected to return in the form of higher aircraft lease payments after MAB deferred some of these payments as part of its restructuring, said Sobie. “You have overall issues like inflation, and a strong US dollar which is putting pressure on cost increases.”

The Malaysian flag carrier also faces intensifying competition - including from two new entrants SKS Airways and MYAirline - and their ambitious expansion plans.

Malaysia's plan to redevelop and reopen Subang Airport in suburban Kuala Lumpur to handle narrow-body jets will also create more competition for MAB and force it to split operations from its traditional hub at KL International Airport, said Sobie.

“You'll see pressure on airfares to come back down and you’ll see low fares again in Malaysia,” he noted.

But Izham and his Garuda counterpart Setiaputra said they were unfazed by competition from low-cost carriers, with both adding that their focus was on capturing the premium market.

Enter dominant, full-service neighbour Singapore Airlines as a rival - but not quite, said Sobie.

Every airline is positioned differently in the market, and Garuda and MAB should recognise that they are not competing with SIA, according to the aviation consultant.

He pointed out that while SIA is “all international”, the Indonesian and Malaysian flag carriers are “smaller regional players” that have dropped almost all of their long-haul operations - and have domestic markets to cater to.

In 2019, SIA proposed partnering with MAB to share revenue on flights between Singapore and Malaysia, and to expand regional and long-haul codeshare routes.

Garuda also recently signed a pact with SIA to coordinate fares and flight schedules.

Both plans are subject to approvals.

Sobie said the tie-ups were win-win: MAB and Garuda can benefit from SIA’s extensive network, while the latter can count nearby Malaysia and Indonesia as “extended home markets”.

POLITICAL BATTLES

If anything, reopening more routes should be the least of Garuda’s concerns, said the aviation expert Soejatman, as he urged the flag carrier’s executives to be conservative in spending.

“They need to focus on having a positive cash flow, because that is their engine towards profitability. Cash flow-positive means at least the business is still sound,” he said.

“I hope they will continue to be more nimble, more reactive to changes, (more able to) anticipate what happens next - than they were at the beginning of the pandemic.”

Garuda CEO Setiaputra said the airline was hoping to increase flights by 40 per cent every year, and to focus on raising the frequency of profitable routes.

“We still need to set aside 60 to 70 per cent of our profits to repay our obligations to creditors,” he added.

Chappy Hakim, an advisor at the Indonesia National Air Carrier Association (INACA), said there was plenty of room for future growth.

“Indonesia is strategically located between two continents (Australia and Asia), it has a big population, big in size, it has thousands of islands,” he told CNA. 

But Hakim also cautioned that with Indonesia set to stage presidential and regional elections simultaneously next year, Garuda, as a state-owned enterprise, might have to contend with politics and government interventions - some of which have affected its bottomline in the past.

“Having a flag carrier, a premium airline, flying into one’s province or city is a great source of pride for some regional leaders,” he said. “Garuda has to choose their battles wisely because they will be inundated with requests or even instructions from certain people with short-term political agendas.”

WEATHERING THE STORM AND BEYOND

So a more measured, defensive strategy for the Indonesian airline - in contrast to analysts calling for its Malaysian peer to take the offensive moving forward.

Sobie pointed out that MAB has yet to use most of the government funding received during its restructuring, as it became profitable sooner than initially expected.

This means it has the capital to make the necessary investments to improve customer service and renew and expand its fleet, he said.

The airline expects to get the first four of 25 Boeing MAX 8s by the third quarter of 2023, as part of its narrow-body fleet renewal.

“If they do become unprofitable again in 2024 and beyond because of the market conditions and everything that's outside of their control, they're able to withstand some of that,” Sobie added. “Ultimately, I think their position financially is strong enough to weather the storm.”

But a prolonged return to the red could upset MAG’s sole shareholder, he warned, and again trigger existential questions for MAB.

“The government … has to kind of be prepared to basically support them through this period,” said Sobie. “But over and over again, the government always decides that Malaysia does need a flag carrier. When it’s necessary, they always kind of step up and recapitalise the airline.”

While MAG exec Izham acknowledged the “stiff competition and challenging macroeconomic environment” ahead, he said the group was in a “good position” to make key investments it could not necessarily make in the past.

Some of its key strategies going forth would include sustaining financial discipline and improving customer experience to meet changing demand, he said.

Endau Analytics’ Shukor also believes that MAB needs to be more aggressive - especially in fending off domestic competitors.

In tourist hotspots Sarawak and Sabah - East Malaysian states located on Borneo island - “more can and should be done”, he said. For instance, MAB could expand its network there beyond its subsidiary MASwings, to exploit “opportunities in that still raw frontier”.

Critically, MAB can become a much better airline by being “exceptionally disciplined, hard-nosed and more importantly, smarter in its business dealings”, said Shukor. “Of course, these are easier said than done.”

 

[KK Lee 5]

Neither Khazanah nor mag has plan or vision beyond 5 years horizon.

 

[jahur 0]

MoF steps in to reconcile Malaysia Airlines and Brahim's

KUALA LUMPUR: The rift between Malaysia Airlines Bhd and Brahim's Holdings Bhd will likely be patched up by August as a mediator has stepped in to help the two companies reconcile.

The New Straits Times learnt that the Finance Ministry (MoF) acted as the mediator to mend the broken relationship between the national carrier and its main in-flight meals provider.

Sources told the NST that on Thursday, the MoF held a discussion with representatives of Malaysia Airlines' parent Malaysia Aviation Group (MAG) as well as MAG's sole shareholder Khazanah Nasional Bhd.

Representatives of Brahim's were also present at the meeting.The ministry asked Malaysia Airlines and Brahim's to extend their contract for another two months after June 30, 2023 to negotiate on a new agreement, particularly on the termination of convenience clause. "They're looking into finalising the contract within two months with a revision of the terminational (of convenience) clause," one of the sources said, adding that the discussions between the two companies would be regularly updated to the MoF

MoF steps in to reconcile Malaysia Airlines and Brahim's

 

What a joke. LOL

[BC Tam 2]

Likely it will be old food repackaged but invoiced 'differently' ?! 😒

[JuliusWong 0]

Hahaha! Lol! This is Malaysia, this is kind of experienced, right? Madani sangat~~ it is not as if Brahims will die tomorrow if they lost MH contract. They are providing catering services for other 35 airlines.

[Zamir 0]

MALAYSIA AIRLINES NW23 TOKYO HANEDA SCHEDULE UPDATE – 23JUN23
source: aeroroutes

Malaysia Airlines’ Kuala Lumpur – Tokyo Haneda service during Northern winter 2023/24 season remains pending, as reservation for service on/after 01NOV23 remains unavailable, as of 23JUN23. Previously reported, the oneWorld member’s service for Tokyo Haneda in Northern summer 2023 season is listed until 16SEP23, Kuala Lumpur departure.
 
Further changes can be expected in the next few weeks.
 
MH036 KUL1500 – 2235HND 359 x12
MH037 HND0030 – 0710KUL 359 x23

[KK Lee 5]

 

16 hours ago, jahur said:

MoF steps in to reconcile Malaysia Airlines and Brahim's

KUALA LUMPUR: The rift between Malaysia Airlines Bhd and Brahim's Holdings Bhd will likely be patched up by August as a mediator has stepped in to help the two companies reconcile.

The New Straits Times learnt that the Finance Ministry (MoF) acted as the mediator to mend the broken relationship between the national carrier and its main in-flight meals provider.

Sources told the NST that on Thursday, the MoF held a discussion with representatives of Malaysia Airlines' parent Malaysia Aviation Group (MAG) as well as MAG's sole shareholder Khazanah Nasional Bhd.

Representatives of Brahim's were also present at the meeting.The ministry asked Malaysia Airlines and Brahim's to extend their contract for another two months after June 30, 2023 to negotiate on a new agreement, particularly on the termination of convenience clause. "They're looking into finalising the contract within two months with a revision of the terminational (of convenience) clause," one of the sources said, adding that the discussions between the two companies would be regularly updated to the MoF

MoF steps in to reconcile Malaysia Airlines and Brahim's

 

What a joke. LOL

 

12 hours ago, JuliusWong said:

Hahaha! Lol! This is Malaysia, this is kind of experienced, right? Madani sangat~~ it is not as if Brahims will die tomorrow if they lost MH contract. They are providing catering services for other 35 airlines.

brahim may has mentioned and is at risk to cease operation, and  the gomen couldn't take the risk to have 30+ foreign airlines without meals uplift. In the name of national interest, gomen may buy off brahim shareholders at what they paid mas back in 1990's.

 

Edited June 26, 2023 by KK Lee
wrong format