Malaysia Airlines Back On Track

[Ken K. Kour 0]

MAS likely to beat 2007 profit target

 

 

KUALA LUMPUR: Malaysia Airlines Bhd may surpass its RM50mil profit forecast next year by boosting ticket sales, cutting jobs and selling assets.

 

“There’s cautious optimism,†the airline will exceed the 2007 profit target announced in February following a narrower- than-expected loss in the first quarter, the carrier’s managing director Idris Jala said in interview.

 

Malaysia Airlines, which last year posted its biggest loss since at least 1990, is cutting 8,000 jobs in five years, revamping routes, and selling assets to return the company to profit amid rising fuel prices.

 

“Trying to turn around an airline at this point is a very difficult task,†as every carrier suffers from higher fuel prices, said Kelvin Miranda, at Asian Asset Management in Kuala Lumpur. ... (pointing out the obvious...)

 

Record oil prices and competition from airlines including its closest rival AirAsia Bhd., contributed to Malaysia Airline’s RM1.26bil loss in 2005.

 

The airline, 80% owned by the government, has said it expects to meet its goal of narrowing losses this year to RM620mil.[/b] It aims to book a record RM500mil profit in 2008 by focusing on overseas flights.

 

“There are clearly seeds of recovery in our company,†Jala said at the June 27 interview, without giving a new profit target for 2007. “The monthly trend is improving.â€

 

The airline’s loss in the three months ended March 31 was a smaller-than-expected RM321mil.

 

In the four months after the recovery plan was unveiled, Jala got 4,200 employees to accept a voluntary separation scheme, cutting the airline’s workforce by about 18%. It had 22,835 workers on its payroll at the end of last year.

 

To help pay for the job cuts, the airline will receive RM850mil from the government, Jala said. It will also save about RM300mil next year from the route revamp.

 

“We’ve done quite a massive network review†and have reduced “quite a lot of the bleeding routes,†Jala said.

 

Jala said he is planning to boost the number of code- sharing arrangement the company has to help increase revenue. The airline, he said, was currently in talks for a code-sharing agreement with Alitalia SpA, aiming to add flights to Southern Europe, Jala said. Malaysia Airlines will work this year on “improving our cash position, next year we’re focused quite heavily on the profit,†Jala said. “The third year is when we will talk a lot more about growth.†– Bloomberg

 

Copyright © 1995-2006 Star Publications (Malaysia) Bhd (Co No 10894-D)

Managed by I.Star.

 

 

__________________________________________________________

 

 

Good news it seems

 

So the MD's schedule for the next 3 years has been made clear

 

2006 - Improve Cash Position

2007 - Improve Yields and Profit

2008 - Growth

 

 

so perhaps the entry of the Airbus A380 in 2008 is not such a bad thing, and it goes well with Idris Jala's statement for growth in 2008, so perhaps then we will see more flights, and the reopening of previous routes such as Manchester to parallel the growth of the airline.

 

Seems like the Turnaround plan has been going well, and all the best to Idris Jala, for all the flak he might be getting, hes doing a good job!

 

 

I'd like to hear your thoughts on this matter, from the Staffs view, etc etc

[Tony 1]

The plan has been successful, so far. Whether or not this momentum is going to move forward in the years to come remains unknown and nobody knows how it will end up being until it actually took place.

 

The difficult task now is to keep the effort going for the next few years. Hopefully not too much pressure from the Government in terms of regulating the industry.

 

What worries me is the increase in airfare as part of the airline's effort to increase yield. Well, it DOES increase yield, but I doubt the revenue will look healthy in the book! Personally, I usually go for the cheaper option if I need to fly.

 

The best thing MH has done so far, IMHO, is downsizing its workforce.

[kandiah k 0]

Sounds great especially the fact that they forecast good results.

Also, they want to code share with Alitalia ? Could be a good

thing for all we know!!!!!

 

 

 

[S V Choong 4]

Sounds great especially the fact that they forecast good results.

Also, they want to code share with Alitalia ? Could be a good

thing for all we know!!!!!

 

As long as ALITALIA is not Always Late In Take-off and Always Late in Arrival, all will be good.

[Seth K 3]

I thought Alitalia got $$$$$ problem too.

I hope their 2008 plan growth work cuz I expect them at DEN, PHX or DFW perhaps IAH

I think they should improve the unmagnificant Enrich program.

I-gallop ( May be introduce seat with I-gallop feature)

Edited July 4, 2006 by Seth K

[Ken K. Kour 0]

I thought Alitalia got $$$$$ problem too.

I hope their 2008 plan growth work cuz I expect them at DEN, PHX or DFW perhaps IAH

I think they should improve the unmagnificant Enrich program.

I-gallop ( May be introduce seat with I-gallop feature)

 

 

Seth, you seen that advertisement too issit? hahahahhaa

 

if they install that we can pretend to have turbulence too, while getting a work out

[Tamizi Hj Tamby 1]

So happy to hear that MH BTP is running well,and the decision to bring in Idris Jala as the new MD was a right step taken to bring back MH into profitability.

 

Keep it up,MH and do make the glorious 'Wau Bulan' flying high in the skies with other airlines!

[Ruiz Razy 1]

"MH and do make the glorious 'Wau Bulan' flying high in the skies with other airlines!"

 

CORRECTION

 

MH logo is a representation of Wau Kucing and not Wau Bulan. Please do not get confused.

[Edwin P K 0]

Wau kucing? Tak pernah dengar pon...somebody explain...

 

Edit

 

Some education on WAU...

 

Wau Bulan

 

Among the traditional kites, Wau Bulan is the most popular and most attractive in appearance. It is called Wau Bulan because of its crescent shape and tailpieces. According to legend, Wau Bulan originated from the Sri Wijaya Empire and symbolizes the reunification of the empire by Dewa Muda. Wau Bulan was used by Dewa Muda as a guide to determine the designated area to be conquered. The wau Bulan today has since undergone much modifications and changes. The Wau Bulan was more widely known in Kelantan.

 

Wau Kucing

The design of Wau Kucing (Cat Kite) resembles the cat and is most apparent when seen from the back, beginning with the head, body and tail. The specialty of Wau Kucing is the 'hummer' emitting a screeching, high-pitched sound, similar to the sound made by cats. The 'hummer' is also used to frighten away evil spirits and to forecast the following day's weather. The floral and plant motifs of the 'sobek' carvings on Wau Kucing are decorated in the same way as the Wau Bulan.

 

Source: http://www.filatelic.com/00-05/5kites.html

Edited July 5, 2006 by Edwin P K

[Tony 1]

That's informative, Edwin. Knew there are different types of wau, but never actually got to know them in detail.

 

And Wau Kucing hums? That's something new and interesting!

 

Thanks!

[Andrew K 0]

One random question. Has MH ever owned part of the 4 seasons langkawi? If so, have they sold their share yet? I cant seem to find any articles.

[Seth K 3]

MALAYSIA Airlines started operations to Bahrain yesterday, becoming the 38th international airline to operate to the kingdom.

 

The inaugural flight was received by airport director Mohammed Al Kabi, who cut a welcome cake at the airport with pilot Captain Aswardy Moktar.

 

 

[Ken K. Kour 0]

Idris: MAS on the right track

By Firdaus Abdullah

firdy@nstp.com.my

 

July 6 2006

 

MALAYSIA Airlines (MAS) has in fact turned around and made a profit, although a small one, just six months after Idris Jala was appointed managing director.

 

The national carrier, which was losing an average of RM 1 billion annually, is being successfully turned around with strong support and commitment from its staff.

 

"In January our loss was RM184 million, in February it was a RM143million loss but in March we made a profit of RM7 million.

 

"The future looks good, all the seeds of recovery have been planted into our business and we are beginning to see clear improvements. We are improving the profitability of the so-called unprofitable routes by boosting yield and productivity," Idris said in Kuching yesterday.

 

"I would say that there are very positive signs of recovery. It is still a long road; it is a marathon and not a sprint. We have to work a lot harder. Today we are on the right track and there are clear signs within the business that the staff are working hard," he told a news conference after a one-day working visit.

 

Idris said with good staff cooperation and a clear focus, the targets spelt out in the airline's Business Turnaround Plan could be achieved.

 

"I have no doubt that as long as we keep doing what we have started to do and increase the momentum we should be able to fulfil what we have put in our Business Turnaround Plan. Within the next three years we will turn this business to profitabily and emerge as a winner in the aviation sector in the region," he said.

 

Idris, a prominent corporate figure in Sarawak before he was roped in by MAS, was bombarded with a host of questions pertaining to the national carrier's recent decisions.

 

Top among the issues were the domestic route separation plan and why MAS would not be operating the rural air services after August 1.

 

Below are excerpts from the question-and-answer session.

 

 

Q:How is the route separation plan at the moment?

 

A: The Government decided to restructure the domestic aviation sector into the concept called trunk and non-trunk. Under the Government's definition MAS would fly only to the trunk routes. There are 19 trunk routes identified, the other non-trunk routes will be flown by Air Asia and Fly Asia Xpress (FAX) and the handing over will be on August 1.

 

Q: The 99 non-trunk routes, was it part of your Business Turnaround Plan?

 

A: The Business Turnaround Plan is the one we announced on February 28 and it did not have the concept of trunk and non-trunk, but this was the decision of the Government to restructure the aviation sector using the concept of trunk and non-trunk.

 

We respect the Government's decision and abide by the Government's decision and we have to work with the Government to arrive at a workable solution on the basis of the trunk and non-trunk routes, so in the discussion with the Government they identified the 19 routes as trunk whereas AirAsia can fly to all the routes, by the way. It was not in our plan.

 

Q:MAS cannot do what AirAsia is intending to do?

 

A: Our plan was put exactly in the document (Business Turnaround Plan) The documents spells out what we wanted to do. In that document we told the Government "we take over all the routes, we take full responsibility over the profits and loss of all the routes".

 

We needed the opportunity to have a free hand at restructuring the business and to determine where we fly and the schedules. Essentially the Government had made its decision and it wanted to create two national champions.

 

The way that the Government envisaged is to split the routes into trunk and non-trunk. The Government allowed us to fly the trunk routes and AirAsia will fly the trunk and the non-trunk ... that is the Government's decision and we respect the Government's decision.

 

Q:Status of the Mutual Separation Scheme (MSS)?

 

A: We have about 12,800 staff now. More than 4,200 applied for the MSS and we are finalising the outcome. By this Friday we should be able to inform the staff that we have mutually agreed to let go under the scheme.

 

Under the WAU agreement between MAS and PNB, there is a clause that when the asset unbundling agreement is terminated we will get a compensation for that and we will use that money to fund the MSS costs. The compensation that we shoud received

from the termination of the agreement is RM650 million, we also have up to about RM200 million from asset write-off which we could claim from the Government through PNB and Khazanah Nasional.

 

The RM650 million is not an amount directly paid by the Goverment for the MSS but rather to compensate for terminating the WAU agreement.

 

Q:Could a tourist flying from London to, say, Alor Star do it directly in a single ticket?

 

A: If you look at our current operations, we have the interlining capabilities. To interline we have to be a member of IATA and you need to have multilateral interlining traffic agreement with all the major carriers. We have more than 20 airlines that are doing bilateral with MAS.

 

So, a passenger could book a single ticket all the way from London to all the destinations in the country. It is a seamless transfer between the routes in our current arrangement, but with regard to interlining capability of AirAsia and FAX ... I think it is only fair to ask them the question.

 

Q:When you were appointed MAS managing director, the rural folks in Sarawak were happy but they are very upset with MAS because they have been abandoned, and their privileges taken away.

 

A: Let me make it quite clear, quite explicit. It is not the intention of Malaysia Airlines to abandon those "non-trunk" routes. It is not our stated policy, not our stand to not fly the rural air service. We always maintain our view, if you look in our plan, we offered to continue to fly all those routes but the Government wanted to create two national champions.

 

Q:Is it a workable plan?

 

A: I think there is a way to find how this can work, and in my view if AirAsia was to ensure that proper interlining, proper connectivity, it should be able to work. I think there is scope for both airlines to become indeed national champions as the Government has put forward in its objectives.

 

Q:How would you describe the morale of MAS staff now?

 

A: Right now we are going through very difficult times, obviously when we restructure, but the way we are going through this ... we are not making anybody redundant through force. Staff are really working hard to get results. I'm convinced that as results flow in things will really get better for MAS.

 

Q: How has your six months on the job been?

 

A: It is a very exciting period. I have worked very hard for the last six months. I'm privileged to work with really good people in Malaysia Airlines, many committed staff and we are all working together to make a difference in this company

 

[HSLim 0]

The plan has been successful, so far. Whether or not this momentum is going to move forward in the years to come remains unknown and nobody knows how it will end up being until it actually took place.

 

The difficult task now is to keep the effort going for the next few years. Hopefully not too much pressure from the Government in terms of regulating the industry.

 

What worries me is the increase in airfare as part of the airline's effort to increase yield. Well, it DOES increase yield, but I doubt the revenue will look healthy in the book! Personally, I usually go for the cheaper option if I need to fly.

 

The best thing MH has done so far, IMHO, is downsizing its workforce.

 

I agree that it is too early to tell.

 

I had quick glance at MH's Q1 2006 (quarter ending on March 31) presentation which included comparisons with the corresponding quarter of 2005. Yield (calculated as revenue divided by flown revenue pax km (RPK)) has gone up. However, most of the yield increase came from fuel surcharges; the chart that compared MH's Q1 2006 yield (inclusive of fuel surcharges etc.) against that of SQ and TG without specifying if their figures included fuel surcharges. Capacity (in available seat km (ASK)) was trimmed 5% compared to Q1 2005 but RPK fell 10%, resulting in a reduction in load factor by a few percentage points. The impact of the attempt to raise revenue cannot be assessed over a single quarter; we don't know if the demand will continue to weaken in the face of higher prices. It is also unclear if large-volume advance sales stimulated by the likes of the MATTA fair were included in Q1 revenue. If so, perhaps the revenue of Q2, acknowledged as traditionally the weakest quarter, might have taken an extra hit. MH released the Q1 results at the end of May; does it mean we get to see the Q2 figures at the end of August? I wonder if MH can offset the fall in pax revenue with more cost reductions? I doubt we will see the effect of the mutual separation scheme until Q3 or Q4. Starting from Q3, it would be interesting to see the profit-and-loss of MH's downsized domestic network, what with the stipulated minimum fares etc.

 

Meanwhile, for an accurate gauge of the viability of MH's operations, any concessions it might receive from its parent company - PMB, should be laid out. How much of MH's actual cost burden does PMB shoulder? Have PMB's accounts ever been disclosed?

 

 

 

 

[Mohd Idham 0]

Other Airlines start to raising the number of staffs and routes and planes, but MH is definitely moving backwards..

[M N Fairizuan 0]

Staff downsizing, they are planning for:-

- Eliminating one non primary crew for "juice/non meal" sectors onboard B737.

- Eliminating Inflight Supervisor position onboard Airbus 332/333. Hence Chief Steward/Stewardess become Cabin Crew In Charge onboard A332/333.

- "D-Fleet or Narrow Body crew" currently rated only for B737/A330 due for B777 class conversion. In the end, WB crew will be operating A380, B747 (exclusively) and B777. NB crew B737, A330 (exclusively, excluding CS/CSS position) and B777. What ever happen to B738 crew, I dunno.

- About 70+ MAS crew went to Qatar (1st installment).

 

Service/Product/Etc:-

- Planning to introduce pre-pack meal/juice for "juice/non-meal" sectors replacing juice/milo service in EY.

- MAS may introduce another special color scheme aircraft honoring Vist Malaysia Year 2007 next year/and a small VMY sticker on all its a/c.

- Blu Inc Media Sdn Bhd (Malaysia's Men's Health, Seventeen, Torque etc) may replace Berita Publishing Sdn Bhd for Going Places.

Edited July 21, 2006 by M N Fairizuan

[Walter Sim 1]

WHAT?

 

Going PLaces is going??

 

 

[Ken K. Kour 0]

I think what he means is a change of Publisher for the Going Places Magazine. So we might see some changes within the magazine, i highly highly doubt they would actually phase out the magazine.....

 

 

Fairizuan, when you talk about the staff being trained from NB aircraft to WB aircraft you're talking exclusively about Cabin Crew correct?

 

 

And also, this special colour scheme, any idea what AC it will/could be painted on? 777? 747? 737? A330? i suppose the A380 would have been a nice choice, but seeing we wontbe seeing on in MH colours for another year with all the delays....

 

good to hear MH is advertising Visit Malaysia 2007 on its Aircraft..

 

 

anyone think TF will do the same across AK aircraft>?

[Pieter C. 5]

- About 70+ MAS crew went to Qatar (1st installment).

 

In the Netherlands we have a saying: "De een z'n dood is de ander z'n brood"....literally translated:

 

"One's death is another's bread"...

 

At least they still got a job, all be it for another airline

[Tony 1]

Other Airlines start to raising the number of staffs and routes and planes, but MH is definitely moving backwards..

Look on the bright side, sometimes you have to move backwards in order to move forward in the longer term. Just sit back, relax, and watch what they do.

[Ken K. Kour 0]

To Quote Dennis Bergkamp, a true legend of football (whos testimonial is being played today coincidentally...) Its okay to Move Backwards one step, as long as you take 2 or 3 steps forward next time, but when you take too many steps backwards, then you're in trouble... lets just hope MAS isnt compromising its future for its present.

[M N Fairizuan 0]

Ken,

Yup, NB/WB thingy = for cabin crew only. But from what I heard, many promotion also going active at the moment for our pilot i.e B737 to B777 etc.

 

MAS "loan" their cabin crew for a certain period to QR. Once done/things get better at MAS, they will come back and work for MAS once again. The next carrier to "adopt" MAS cabin crew ... EK and SQ. But no news at the moment.

 

MAS F50/Twin Otter crew... many of them go for the MSS and then will work for FAX. One wishes not to go to FAX, will begin their B737 classes soon. MAS however will still support FAX operations (ground, handling, etc) until a certain period.

 

 

[Guest Michael]

As an Aussie I have full faith and confidence in MH getting back on track. They have already won some awards this year so it is good. Also any word on if they have brought cheese back on board and pralines?

[KK Lee 5]

 

With many routes (e.g. PEN/LGK) decided by the cabinet, doubt MH will ever truly independent and operate like a business entity.

 

Old wine, new bottle.