Friday, December 09, 2011

Hole on my Shoulder

Just came out from a minor surgery to address an irritating little acne just below my shoulder that grew over time into a large sebaceous cyst.

The cyst finally erupted on my last two days in Mekah but did not dry-up after two visits to a clinic. It had to undergo procedure at an equipped hospital. Since happen to be in hospital for some post-Mekah rehab, might as well do it.

So, please eh ... just cause there is a cyst off my shoulder, it does not mean there is a chip on my shoulder towards those people at Air Asia, MAS and Khazanah. Just saying it as I see.

Someone alerted me of The Sun's report today on an analysis on Danny Boy's turnaround plan. He said it is not as in-depth as what this blog wrote yesterday [read here] but it is right to the point.

The more appropriate title should have been, "Same b*lls*it from the same as*hol*" but they are more diplomatic. Cari makan ma ...advertisement.

Old wine in new bottle


PETALING JAYA (Dec 9, 2011): Malaysia Airlines (MAS) revealed its latest business turnaround plan on Wednesday but the issue of sustainability remains a concern, aviation analysts say, adding that the loss-making national carrier should look beyond the short-term economic boost, or there will be more turnaround plans to come.

Analysts like RHB Research Institute also noted that the measures proposed are nothing out of ordinary but just logical things to do in the normal course of business.

Some say they see similarities between the new plan and the previous turnaround exercises such as the Widespread Asset Unbundling (WAU) restructuring exercise in 2002 and the Business Turnaround Plan 1 (BTP1) in 2006, in that it also involves cutting unprofitable routes and spinning off assets.

"Under any turnaround plan, it's normal practice for businesses to sell their assets to repay debt, that is, pluck the low-lying fruits. In the case of airlines, they would also shed jobs and cut some unprofitable routes which would likely ensure profit in a short time," said an analyst who asked not to be named.

"But the big question is whether the carrier also has a business plan/model that is sustainable in the long term," he added.

Under WAU, in which MAS deputy CEO Mohammed Rashdan Mohd Yusof was also involved as his company at that time, BinaFikir, was the consultant to the carrier then, MAS' aircraft assets were transferred to and leased back from Penerbangan Malaysia Bhd. It also hived off 70% of its shares in MAS Catering Sdn Bhd.

For BTP1, MAS achieved a one-off gain from selling assets such as the MAS building and Four Seasons Langkawi.

This time around, MAS said it is looking to spin off its ancillary units such as MASkargo Sdn Bhd, aerospace engineering, pilot training and ground handling as part of its efforts to raise cash.

"Five years (after WAU,) MAS was in no better shape and in came oil executive Datuk Seri Idris Jala who came out with two business turnaround plans before he moved to work in the prime minister's office," said Standard & Poor's Equity Research aviation analyst Shukor Yusof.

"The truth of the matter is that MAS has been mismanaged for so long that even its main stakeholder, Khazanah Nasional Bhd, appears to be running out of ideas on how to shake the carrier up," he added.

Shukor also believes that MAS should do more to develop and nurture its own set of managers to run the carrier in the future.

Meanwhile, most analysts expressed skepticism on the viability of MAS' new plan as the airline faces tough challenges amid growing competition. There are also concerns of potential funding for its RM6 billion capital expenditure, which could burden the carrier with a gearing of four times by end-2012.

"We felt that MAS is attempting to effect a 'painless restructuring' (but) as the saying goes, 'no pain no gain' and as such we doubt if the painless restructuring could produce the results it desires," said RHB Research in a report yesterday.

Analysts are skeptical of the recovery plan due to its sketchy guidelines and timelines, the ability of MAS to increase ticket prices without sacrificing passenger demand, the relatively long timeline needed to change passenger perception and preference and the readiness of its staff to accept the new structures.

This is on the back of an anticipated slowdown in the economy, which will affect premium travel demand.

They also said execution is key to the carrier turning things around.

"We are optimistic on some of the initiatives in tackling the crisis faced by the carrier, but execution of the business plan remains a key risk. There are many issues highlighted in the business plan which need to be addressed and one year may not be enough. Right-sizing of staff was highlighted and it remains to be seen how this will be handled," said HwangDBS Vickers Research.
I think this blog's yesterday's report has more depth.

This and other newpapers' reports dare not report it as Air Asia vulturing over a MAS cannibalised by it's own shareholder and Government owner.

But, between MAS and Air Asia management, it is an open secret as we see the picture below of MAS CEO, Dato Ahmad Jauhari "slaughted" by party host Air Asia-X CEO, Azran Osman Rani:

Khazanah and MAS Public Relation machine was on over drive yesterday to address different messages to different audience.

To the Malay audience like in Utusan Malaysia, they were playing sympathy to play on the fear factor of critical sitution. Utusan report was entitled MAS kini kritikal.

The Star's was cooperative to not be critical and supportive of their turnaround plan with a cautiously optimistic tone.

Read positively titled, "CEO sets in motion business plan to bring airline to profitability by 2013". However, there was a mysterious and interesting end:
There is also apprehension towards the comprehensive collaboration framework from with AirAsia.

Asked if the CCF was really necessary, he said “it makes it easier with the CCF."
Easier? What does he mean?

The Star dare not offend Air Asia as an important advertisement client. The MCA-controlled paper was willing to advertise Air Asia's protest against the Government as raised here by Rocky Bru. Right?

The Edgedaily dare not push forward an optimistic opinion to their well read and independent minded readers with HwangDBS Vickers Research sceptical report looming. They posed a question as title, "Back to black in 2013 for MAS?"

Their reservation is justified. Can MAS contain losses for 2012 to RM165 million and turn to profitability in 2013 with that kind of business plan? Where is the income coming from? Danny's ass?

The New Straits Times's Business Times was more brutal and not holding back on HwangDBS Vickers report. They titled theirs as "MAS turnaround plan fails to excite analysts." Hurrah to the new GEIC. Baru ada telor.

So no chips, eh.

But all are holding back to report the rush-rush cut Danny made for Tony F and Din before the CCF which should conclude that it is cannibalisation of MAS by owner and Government for Air Asia's favour.

But that's quite alright. Who reads the newspapers anyway these days? They probably on this blog yesterday.


Freddie Kevin said...

Salam Tuan,

Hope you're fine after the op.

I think I may be having the same problem on my right arm pit.

That aside, your posts on Mas/Air Asia issues especially your previous post, if not taken heed spells trouble for the Govt.

It's the same with KTM Komuter woes which I am going to address. They can forget about taking back Selangor or even some of the lost FT seats.

Meaning the Govt takes it ever so lightly or so it seems.

The Govt is not seeing the woods for the trees.

If the Govt continues to allow matters to persist, I fear for the worst.

Best regards

Anonymous said...

Dear BlogMaster,

I do wish u a speedy recovery eventhough I consider myself to be the complete opposite of virtually everything you stand for.

I notice in your articles that you have failed to offer objective advice on what MAS can or should do. Let it be clear - MAS prior year revenues are north of RM 12 billion, which is not a small number. The issue is its inability to control costs which translates to a complete lack of worker productivity. If MAS is not productive on the premium end of the flight spectrum, how can it even dream of being competitive on the discount airlines, a point you beat to no end when you comment on the discontinuation of Firefly?

To cut the long story short, as long as MAS is viewed as a Malay institution it can kiss goodbye to any hopes of being profitable. When u constantly badmouth Air Asia, you make the mistake of not recognizing why Air Asia is profitable. Have you wondered who are the folk behind Air Asia's hedging policy? Or behind its creative advertising? Or behind its operational management capability? Or behind its IT systems?

All these are in house Air Asia employees of different races. Perhaps Tony Fernandes greatest achievement was not making the mistake MAS makes when it sees itself in race coloured views. Inside AirAsia it is definitely much more on meritocracy and the folk they hire just do a much better job than the folk at MAS.

Until then, MAS will continue to bleed until of course the day it ceases to exist. And of course, all the Air Asia haters will blame Tony Fernandes, Khazanah and whoever. However, it will amount to nothing

Anonymous said...

Salam Tuan Haji,

Nampaknya semua yang tak betul dalam dunia ini kerana Melayu. Kalau bagi kat depa semua betul. Tak guna betul Melayu nu?

Anonymous said...
This comment has been removed by a blog administrator.
George Choo said...

Voicey, hope that you have a speedy recovery and take care.

A Voice said...

Anon 5:46 PM

First thing first

I have no tolerence for insulting commentary using words like "dumno' and being racist agst malays.

Comments like yours I appreciate very much.

If you fil to realise, I am very consistent about corporate morality.

The new markedly improve Air Asia was conceived and grew through deceit and plunder.

If you think I have o idea was is needed to turnaround MAS, YOU ARE ABSOLUTELY WRONG.

Absolutely, you read my blog with a pre-conceived mind.

The areas I criticised, identified and ridiculed as weakness should have been areas solution need to be looked into.

When I said Government had no political will to address cost fctor, there is two area that need to address government and cost per unit issues.

An important issue on outsourcing is cost.

Can't we find a solution or option to renegotiate or threaten these plunderers out of the MAS catering contracts?

I still have lots of big and small items and ideas in the bag. Even part of the RM12 billion issue.

Why should I tell and make Danny, Tony F and Din richer to steal more from MAS?

Danny should stopbeing an arrogant young prick and learn to lsiten and communicate with the staff to get these ideas.

If I can, why cant he? Cambridge cocksure!

On your comment of giving racial distinction between Air Asia and MAS, dont be deluded by such racist notion.

Looks like you are a victim of Tony F's psycho marketing hype!

Freddie Kevin said...

Salam Tuan,

I would have taken sometime to respond to anon 5.46 with his racist remark but was confident that you would reply.

Anon 5.46 thinks that you one those dime a dozen blogger.

Little does he know!

You addressed anon 5.46 most aptly and in the professional manner that only you can, no matter what, as always.

Talk about cyber troopers, it would seem that there are now Tony Fler troopers.

Surely Tony Fler would not have a racist vein.

Or would he?

Captain Morgan said...

Dear BlogMaster,

Its me again.

Do appreciate your lengthy comment. Its good to know that you do have some ideas to turn around MAS and I wholeheartedly that u should not be compelled to reveal such a masterplan on a public blog. Perhaps given your proximity with the PM, you would have a chance to share it with him. But alas! its Najib we are talking about. I guess thats the difference between Najib and Dr Mahathir cos from my recollection, Dr Mahathir values well thought of ideas. As for Najib, he just outsources his problems to big brands aka Pemandu, Cambridge, McKinsey and other purveyors of corporate dark arts.

You make a point about corporate morality, or perhaps you mean corporate governance. Won't deny it at all.

However, what I really questioned was on the corporate identity of Malaysia Airlines. Whether you choose to accept it or not, there is no evidence of a company who bases their corporate identity on racial affiliations being successful over the long term. It just does not exist, and so if there is an insistence on MAS internally viewing itself as a Malay managed and run airlines (aka "national" project), then it can either create history by being the first in the world to prove me wrong, or it could end up as yet another statistic.

Perhaps you missed the point of why I mentioned those specific areas and functions within Air Asia. The reason was that it was handled by folk of different races, I know, cos I have been inside the Air Asia office to see for myself. Secondly, those areas are sources of competitive advantage.

I also find it remarkable that you claim Air Asia grew thru deceit and plunder. Seems that you are unable to objectively look at Air Asia as a business, and hence, unable to critically appraise why they have a market cap double than that of MAS.

But maybe its not only me, but also the massive overseas institutional funds, which have billions of assets under management and who are have large positions in Air Asia that are similarly taken in and captivated by that ex-music execs spin doctoring! If only someone could help us see the light...

As to renegotiating those contracts, well, I believe the contract with Ibrahim Badawi was signed when Tajuddin Ramli was still CEO of MAS. You have frequently defended him on this blog, so from my untrained eyes, it looks slightly inconsistent.

Hope to meet you at your Saturday afternoon lunch spot one of these days

Anonymous said...

Captain Morgan

Sky Chef proposal was not done by Tajuddin Ramli but during Mohd Nor's time.

Refer to Wee Choo keong's debate in Parliament here

Apa ini Captain, you keep debating with wrong facts????

A Voice said...

Captain Morgan

LSG Sky CHef purchsed 70% of MAS Catering in July 2002. That was after Tajuddin Ramli left.

Secondly, the deceit and plunder is a long story. You have to read back past revelations volcing KJ, Zaki Zahid and Tony.

Look up past writings on how customers are being duped by poor service at airport. Only now they realised after charges after charges are being levied at customers.

But I am not totally unaware of his passenger volume jump that could reach 30 million.

My caution: Have you looked at what is happening to Budget Airlines abroad???

MAS is an 80% Malay staffed outfit. But isnt Petronas also a Malay majority outfit? Let's not drag race into the picture. There is advantage to diversity as I come from same working environment.

It is an advantage but not the essential. SOmetimes it can become a problems. There are airlines successful abraod in countries that are of singular race.

MAS is being designed to be cannibalised by the slick hands of Badawi and Nor Yakcop & gang.

Anonymous said...

DEar Sir,
LSG was inked during Tan Sri Mohd Nor's time but it was mooted by Taj Ramli and when Tan sri came, he had no choice but to proceed cause it was more or less finalised. Make no mistake about it, it was during Tajuddin Ramli's time. He started the rot.....

Captain Morgan said...

Dear AoB,
Your right. I stand corrected. Did not do my research before opening my trap

A Voice said...

Anon 2:13

If you had a son and the son turned out to be a liability to the society after you have given him education, needs, imbued moral values, etc and more till he become a young man that started on the right foot, do you blame it on yourself or your son?

Tajuddin established profit and cost centres by subsidiarisation. Nothing rocket scientiost but common sense and standard treatment.

But Dolah Badawi wanted to hijack it (Danny acknowledged Binafikir responsible for suggesting sale of MAS catering), yet you still blame Tajuddin?

At least, be clear what you want to blame him for.

My Say