New Business Transformation Plan

[Mohd Azizul Ramli 2]

MH is having a big party tonight (29 January 2008) at the Sime Darby Convention Center to promote 'MH is Malaysian Hospitality'. The theme for the event is 'Malam MH Warna Warni'.

 

Anyone here going to the event? What colour are you wearing? I'm thinking of a 'pinkish belang-belang hijau' baju melayu.

 

On a more important note, will this event be a BIG turnaround 'point' for MH as Malaysia's flag carrier?

[jani 0]

I hope they announce new fleet orders or something like that!

[Yusoff 1]

New "MWingers' best business plans" should do it...

[V Wong 0]

Read by NST today that the new BTP will be unveiled today. Anyone with lead in? Eagerly awaiting for good news!

[jani 0]

Sorry but what does BTP stand for? And why is it significant?

[Walter Sim 1]

Business Transformation Plan this time is it?

 

I think it will highlight how MH will become a 5 star airline at LCC cost..

 

[Izanee 0]

it will be unveiled tomorrow 31st of january! looking forward to see what IJ and co have in store for MAS>

[Kenneth T 0]

Business Transformation Plan this time is it?

 

I think it will highlight how MH will become a 5 star airline at LCC cost..

 

Haha, the biggest joke on the year...im sure it can provided it is at the expense of someone..haha

Edited January 30, 2008 by Kenneth T

[Keno Omar 0]

I shall give MH the benefit of the doubt that they would do the right thing this time. Some of their decisions for the past 2 years were not always in line with strategy of the first BTP in early 2006.

[jani 0]

So what actually usually happens when a BTP is announced? I mean, what does the plan actually contain?

[Walter Sim 1]

Thats what everyone is waiting for........

[BC Tam 2]

A "Business Turnaround Plan" by its inherent inference indicates the entity concerned is deeply entrenched in crap and hoping to crawl it's way out and up to some semblence of respectability. After two years (has it been that long ago already ?!) of trials (in more sense than one) and tribulations (given benefit of doubt) I sincerely hope the PR mongers within MH can come out with a more attractively coined catch phrase for the next few years. We hope

[Nik H. 3]

Much have been said here about how MH only made its turnaround on a bailout and sale of assets. In due time (sooner than you think) the actual story regarding this will be made known.

 

By the way, for what's its worth, MH managed to maintain its 5 star status by the skin of its teeth today. More will be revealed soon, together with the BTP, but I'll let the newspapers be the carrier of that piece. Then I'll wait for expert opinion to peel it layer by layer by the 'usual suspects' here.

 

Sorry, posted this here;

http://www.malaysianwings.com/forum/index....ic=7791&hl=

 

Edited January 30, 2008 by Nik H.

[Izanee 0]

Although people may see me as an MH critic here - I have always been a huge fan of MAS. I am hoping and praying that IJ can come up with the goods - if not a whole lot of hot air would be wasted for nothing.

[Naim 6]

By the way, for what's its worth, MH managed to maintain its 5 star status by the skin of its teeth today. More will be revealed soon, together with the BTP, but I'll let the newspapers be the carrier of that piece. Then I'll wait for expert opinion to peel it layer by layer by the 'usual suspects' here.[/i]

Trust Nik to be as diplomatic as ever. :)Btw now that the dust has somewhat settled, how's the take-up of your Kayu Nasi Kandar offer on 1/2? I'm off to Kelantan tomorrow noon, back Sunday, on some personal errands, so I won't turn up. Anyway wishing all attendees an interesting evening - can put the timely BTP on the agenda too.

Although people may see me as an MH critic here - I have always been a huge fan of MAS. I am hoping and praying that IJ can come up with the goods - if not a whole lot of hot air would be wasted for nothing.

Good one, my fren.

[Naim 6]

January 30, 2008 21:23 PM

 

MAS Aspiration 'On Target' If Profit Touches RM400-RM500 Mln

 

KUALA LUMPUR, Jan 30 (Bernama) -- Malaysia Airline System Bhd's (MAS) aspiration in the Business Transformation Plan (BTP 2) will be 'on target' if it achieves an annual profit of RM400-RM550 million this year.

 

In a filing with Bursa Malaysia here today, MAS said under its BTP2, it aspired to become the World's Five-Star Value Carrier (FSVC) to provide five-star products and services at affordable prices.

 

It said the achievement would be considered as 'exceeding' if it hit RM551-RM650 million profit and 'outstanding' if touched RM651-RM1 billion.

 

"We believe that if we aim for the best and stretch our limits, we can achieve an annual profit of RM1.5 billion by 2012 even after factoring in the challenges in the industry such as overcapacity, air traffic liberalisation and rising fuel cost," it said.

 

MAS said the benefit of achieving the FSVC status was that it was building a ship that could weather the worst storm.

 

"Should the magnitude of overcapacity and liberalisation be less than anticipated, it is possible for us to achieve an even higher profit, between RM2 and RM3 billion per annum.

 

"FSVC is MAS' path to long-term survival and success. MAS' ability to deliver this FSVC strategy is the cornerstone to grow the airline into a global champion. MAS can do this, and it will," it said.

 

MAS said the company has every intention to continue to meet and exceed the targets set forth in its Key Performance Index Scorecard.

 

The company said its single largest concern was overcapacity.

 

"Based on industry estimates, about 400 plus new aircraft have hit the skies of Asia-Pacific, India and Middle East in 2007, and another 400 plus are expected in 2008.

 

"This phenomenon of unbridled growth will intensify competition in the market, and erode MAS' yield and profit margins," it said.

 

It said in the price-driven market segment the company was also strongly pushed by low-cost carriers (LCCs) with low fares.

 

"In a nutshell, MAS will reinvent itself to fend off competition from FSCs and LCCs," it said.

 

-- BERNAMA

[Nik H. 3]

Trust Nik to be as diplomatic as ever. :)Btw now that the dust has somewhat settled, how's the take-up of your Kayu Nasi Kandar offer on 1/2? I'm off to Kelantan tomorrow noon, back Sunday, on some personal errands, so I won't turn up. Anyway wishing all attendees an interesting evening - can put the timely BTP on the agenda too. Good one, my fren.

 

So far no one, not one gave any indication if they will be there.

 

I will be there irregardless. Its my Smartcar hangout anyway.

 

And usually Friday nite at Aman Suria is a meeting point for many Car groupies... the Supra Gang, the Fairlady Group, the Italian Car Fans, the Bimmer Boys, RX8 Owners, Skyliners, Scoobies and Evos, and many more motorheads.

[jani 0]

"The plan also calls for opening up more routes and acquiring new planes to expand its capacity and network to achieve sustainable growth, it said"

 

http://sg.news.yahoo.com/ap/20080130/tbs-a...ne-88383ae.html

 

 

Ahh.. Come on MH! Bring home some 747-8I's, 777-300ER's and/or A350-1000's!

 

What do you think MH will order, aviation pros?

Edited January 30, 2008 by jani

[Mushrif A 3]

It was actually released after 5pm yesterday to bursa.

 

This time, BTP2 which is for public consumption is just a 3 page summary, unlike the detailed BTP1. So no juicy details - just broad statements.

 

Nothing really new - MH attempts to provide 5 star service whilst operating at LCC-like costs and hoping to transfer some of the cost savings into value-for-money ticket prices. (Now that last bit is something that has not been acknowledged until now, as it has been "5-star-ticket prices" thus far, but not necessarily real "5-star service")

 

MH recognised the first class product offerings by its full service competitors which are better that its own current offerings. At the same time, it has to manage the LCC competition at the other end of the spectrum. Hence, the need to strike an equilibrium.

 

Again, MH also took into consideration the potential overcapacity down the road and will operate & strategise accordingly. By having LCC-like cost structures, MH hopes to be able to withstand the competitive pressures overcapacity will bring and continue to be the carrier-of-choice by offering 5-star services. It expects a RM1.2bn profit by 2012 to be probable, and if the competition and overcapacity concerns were not too severe, the profit can even be as high as RM2-3bn.

 

But that's it folks - no details of new plane orders, snackboxes, e-ticketing, web chk-in yadda yadda...these are probably in the full BTP2, but not released to the public. So nothing to nitpick.

 

Here it is , in full, what was released to the public.

 

"Bursa Announcement - Business Transformation Plan (BTP 2)

 

MAS has certainly come a long way. For the financial period 2005 (9 months), MASreported a loss of over RM1.3 billion – the biggest in the company’s history – and it wasexpecting to hit an even deeper loss of RM1.7 billion for the full year 2006. The financialposition was so precarious that MAS had only a few months until April 2006 before it ranout of liquidity. In the wake of the profit and cash crisis, MAS announced its BusinessTurnaround Plan (BTP 1) in February 2006. The BTP 1 was developed using theGovernment-Linked Companies Transformation (GLCT) manual as a guide, andtargeted to cut its losses from RM1.7 billion to RM620 million in 2006, achieve a profit ofRM50 million in 2007 and a profit of RM500 million in 2008.With hard work, radical changes and tough decisions, MAS was able to overcome thecash crisis to ensure its financial survival in 2006, achieved a record profit of RM610million for the 9 month year-to-date period to September 2007, and is now on track togenerate profits in 2008. MAS has demonstrated to its stakeholders, nation and world atlarge that it is a winning team.However, new challenges loom ahead of MAS. The single largest concern that MAS willface in the industry is overcapacity. Based on industry estimates, about 400 plus newaircraft have hit the skies of Asia-Pacific, India and Middle East in 2007, and another 400plus is expected in 2008. This phenomenon of unbridled growth will intensify competitionin the market, and erode MAS’ yield and profit margins. Coupled with the liberalisation ofASEAN skies and rising oil prices, MAS will, with everything else remaining equal,inevitably hit a wall and fail badly if it does not transform itself.Thus, as MAS goes into 2008 and beyond, its focus will clearly need to shift to securingits future success. This phase represents the most challenging yet for MAS – this is thereal mountain that it needs to scale. To chart its path onwards and upwards, thecompany has developed a Business Transformation Plan (BTP 2). The plan will build onthe 5 key thrusts of The MAS Way (see Exhibit 1) which served as the guiding principlesfor the BTP 1.Exhibit 1: Transforming the company “The MASWay”In the premium market segment, MAS is under tremendous pressure from full servicecarriers (FSCs) who are striding ahead with first class products, new and modernaircraft, and fast-expanding routes. On the other hand, in the price driven marketsegment, MAS is also strongly pushed by low cost carriers (LCCs) with low fares. In anutshell, MAS must reinvent itself to fend off competition from FSCs and LCCs. It isprecisely for this reason that it is adopting a strategy which deals with this dual challengei.e. it will continue to improve the quality of its products and services (hence, Five StarAirline) and at the same time, reduce its costs so that it can offer low fares (the notion ofValue Carrier). It is mobilising the entire airline to become a Five Star Value Carrier: onewith products, fleet and network that are in the league of the world’s premium airlines,with a cost structure and operational discipline to match the best fares the LCCs can andwill throw at MAS.MAS aspires to become the World’s Five Star Value Carrier. It believes it has to reinventitself to achieve this vision. Its transformation journey towards achieving this vision willbe tough but exciting. This vision will be supported by its mission to be a consistentlyprofitable airline. Tthe strategy is to transform MAS into a Five Star Value Carrier(FSVC) i.e. providing 5-Star products and services at affordable prices.There are 5 bold steps which make up the FSVC VirtuousCycle of Profitable Growth:Step 1 - 5 Star: MAS must maintain the high quality products and services offered (5-Star) and these have to be constantly matched to the specific needs of its customers;Step 2 - Lower Costs: MAS must reduce its structural and operational costs (withoutcompromising on safety and security);Step 3 - Competitive Fares: With a lower cost base, MAS will be able to offer low andcompetitive fares to its customers, and still be able to make a profit;Step 4 – Get more customers, more revenue: With high quality products and servicesat low/competitive fares, more passengers will choose to fly on MAS. This translates intomore revenue;Step 5 - Grow network, build capacity: With more revenue and profit, MAS can investin growing its network and building its capacity. MAS will open up more routes andacquire more planes, and this leads the company to sustainable, profitable growth.The process repeats in an upward spiral (see Exhibit 2).Exhibit 2: The Virtuous Cycle of Profitable GrowthThe philosophy behind the BTP 2 is “aiming and planning for the best, assuming theworst”. On “aiming and planning for the best”, MAS will go for the seemingly impossibletarget i.e. record profit. On “assuming the worst”, MAS must transform to become aFSVC. MAS has to build a ship that can weather the storm, in its case, the imminentliberalisation and overcapacity in Asia.Based on a series of focused key business activities, the company’s aspiration in theplan is to achieve RM400-550 million (on target), RM551-650 million (exceeding) andRM651-1000+ million (outstanding) in 2008. MAS believes that if it aims for the bestand stretch its limits, it can achieve an annual profit of RM1.5 billion by 2012 even afterfactoring in the challenges in the industry such as overcapacity, air traffic liberalisationand rising fuel cost. The benefit of going for FSVC is that MAS is building a ship that canweather the worst storm. Should the magnitude of overcapacity and liberalisation be lessthan anticipated, it is possible for MAS to achieve an even higher profit - between RM2and RM3 billion per annum. On an annual basis MAS will review its financial targetsand update these targets as it achieves them. Over the past 2 years, MAS has managedto outperform its announced targets and MAS has every intention to continue to meetand exceed the targets set forth in its KPI Scorecard.FSVC is MAS’ path to long term survival and success. MAS’ ability to deliver this FSVCstrategy is the cornerstone to grow MAS into a global champion. MAS can do this, and itwill."

Edited January 30, 2008 by Mushrif A

[V Wong 0]

Dropped the term FSLCC and now favouring FSVC - five star value carrier. Reinventing itself or spinning another yarn?

Yawn yawn.... talk is free

Edited January 30, 2008 by V Wong

[Izanee 0]

i thought i would give them the benefit of the doubt as Capt Nik kept raising our hopes that the management were sharp and had some great ideas. He kept mentioning about how the 'friends of MAS' were just naive and had no clue on how to run an airline.

reading todays business times article - some analysts have mentioned about how crucial it is to join an alliance sooner to stimulate growth and increase profits.

 

As expected, the report gave lots of hot air, left a nasty smell lingering in the air and provided no real substance. For that, I would recommend a phosphate enema and plenty of laxatives.

Edited January 30, 2008 by Izanee

[V Wong 0]

Maybe also throw in a gastric lavage, activated charcoal, Fuller's earth, ipecacuanha, anything to induce more vomiting....

 

On a serious note, Izanee, hang on to the bashing - all hope is not lost yet, as the full plan will be unveiled today in detail (according to NST)

Edited January 30, 2008 by V Wong

[Izanee 0]

oh yeah...i will hang fire...for now.

[BC Tam 2]

..... I would recommend a phosphate enema and plenty of laxatives

Would that be a good indication of the surgical discipline you're specializing in ?!

 

V.Wong,

Do not discount good old fashioned "tickle back of throat" approach !

[V Wong 0]

The Star (Thursday January 31, 2008)

 

 

MAS can meet 5-star value carrier goal

 

PETALING JAYA: Malaysia Airlines (MAS) believes it can achieve its ambition of becoming a “five-star value carrier” (FSVC) under its new business transformation plan (BTP) by making key changes to how it services its customers.

 

The national carrier will draw from the experiences of three international airlines, change the type of food it serves passengers and place more emphasis on Internet booking to become an FSVC.

 

MAS also believes the low labour cost in Malaysia, its reputation as a five-star airline and its ability to venture into maintenance, repair and overhaul business would give it a better starting advantage in becoming an FSVC.

 

“We will offer products and services that provide our customers with more value compared with those of our competitors,'' MAS said in its BTP. “Our target customers are those who want service excellence and quality, and do not make decisions solely on price.''

 

To become an FSVC, MAS intends to offer the products and services of a five-star airline but reduce costs so it can offer low fares as a value carrier.

 

MAS has forecast losing RM650mil to RM1bil in 2012 if it does not transform itself into an FSVC. It sees the operating conditions being hit by overcapacity and liberalisation if no changes are made to its business model.

 

While delivering such kind of value to travellers, MAS said that had to be matched by choices on how money was spent to ensure a decent return on every ringgit spent.

 

For example, MAS said modifications to hot meals on long-haul sectors had shown a preference for hot meals that cost less to prepare.

 

MAS said the light meal boxes served on short-haul sectors had also found a huge degree of acceptance among passengers and such boxed meals enable the airline to increase in-flight service efficiency, improve aircraft turnaround time and reduce overall in-flight costs.

 

“Sale of air tickets via the Internet plays a critical role in realising FSVC,'' MAS said, adding that together with the MAS Passenger Services System, operating costs would be substantially reduced.

 

MAS also said the concepts exposed in turning the airline into an FSVC had been successfully implemented in other international airlines.

 

MAS said Ireland's Aer Lingus had managed to dramatically cut costs by focusing on Internet sales, eliminating the business class and free food on short-haul flights and focusing on productivity to compete with low-cost carriers.

 

“Air Canada has been very vocal about how its model, focused on low costs and significant sources of protected revenue, delivers superior profit,'' MAS said.

 

The third example used by MAS was Chile's LAN, a regional airline that increased short-haul aircraft utilisation and the percentage of direct flights to nearly double its operating margin.

 

“MAS has the advantage of being in a better starting position than any of these carriers,'' the carrier said in its plan.

If MAS successfully transforms itself, it is projecting a net profit of between RM1.5bil to RM3bil by 2012

 

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My heart just sank after reading this (although I still hope I am jumping the gun).

 

Looks like sandwic is here to stay and long haul hot meal will receive makeover. For worse or better, is your guess.

 

To be benchmarked against and emulating " three international airlines" : Aer Lingus! LAN Chile! Air Canada!!!

 

Izanee, your prediction about MH transforming itself into Aer Lingus is spot on. You can get your brickbats ready, I'll just whimper away in resignation to the cold fact that MH will never relive its glory days.

My resolution NOT to fly any MH international route this year has been successful so far, and stronger than ever!

Edited January 31, 2008 by V Wong