Saturday, May 26, 2012

Tony F's Virgin fascination [up-dated]


It is one of those low productivity week.

A good excuse could be the rainy afternoons. The humid weather is a convenient blame.

There is also that occasional radiating pain originating from the neck. Off course, there is the one month control on diet, long list of medicine intakes and new sleep regime taking it's toll and giving us a foul mood.

With only one posting on Monday, we'll just admit we lost the mood to write and we are plain lazy. And it is not because of lack of ideas to write, hardly.

The writing mood is not back yet.

So, we'll just continue where we left off and share some other information from the past on the never ending MAS issue. See where we go from there.

Recapping history


In Monday's posting here, we shared some old story on MAS from it's early days written during the turnaround attempt by Dato Idris Jala on the eve of it's 60th anniversary.

The important point we like to share is that the animosity between Malaysia and Singapore in aviation dates back to the days of the splitting of MSA, a Malaysia-Singapore joint effort in airline.

As soon as Singapore split or precisely was kicked out of Malaysia, the two countries wanted to have their own flag carrier. MSA asset was split up between the two country. Unfortunately, MAS did not get a good deal. It was our own fault for being inward looking then.

When we finally wanted to go international, it was Qantas that helped us. That relation with Qantas remained till today. Qantas is the sponsoring airline for MAS entry into One World Alliance in the middle of this year. Such alliances are preparation for open sky.

The Friday before here, we've touched on the open sky policy and how bilateral and multilateral agreements and alliances will determine the make-up of the aviation industry.

MAS had planned to face open sky since the 1990s, but many newbies managing MAS and those chairing the Board of new airlines are talking as though professional aviationist are not aware.

Before Virgin invested in Airasia-X and Singapore Airlines bought into Virgin Alirline, MAS had code sharing
relation with Virgin. It was MAS's silent way of open the closed sky of British Aerospace dominated Heathrow before open sky policy was in place.

It was a clue to our untold conspiracy theory of Airasia's early days.

This time we like to remind readers of an old information and mystery past of Airasia. Believe us, we are going somewhere forward with this many blasts from the past since we touched bits and pieces here and here.

Airasia emerge


On the Airliner.net here, we found a September 7th, 2001 forum posting:

-------------------

Air Asia, Malaysia's second national carrier told the Malaysian Press today that it was sold to Tune Air. Anybody knows what company that is?

It is also said that it might be related to Virgin of UK, but this is just a rumor! Is this true?

Since SIA owns 49% of Virgin, and if Virgin owns this airline (Air Asia), this could mean that SIA wants to get into the Malaysian aviation market. With MAS out of reach to other foreign parties, this little airline may well have potential to be foreign-owned.

Anyway, The Virgin office in UK denied this link with Air Asia. Is this some sort of news where they create to spice up the news in Malaysia?

Here's the press release:

Little-known Tune Air Sdn Bhd, which bought into Malaysia's second domestic carrier Air Asia yesterday, is believed to be making plans to take wing as a major regional player.

The company has bought loss-making Air Asia from DRB-HICOM Bhd via a partial debt-for-equity deal, which is said to be a prelude to a bigger exercise involving Britain's Virgin Atlantic.

Sources said the new owners have big plans for Air Asia, and its impact on the aviation industry is virtually assured should a tie-up with Virgin Atlantic materialize. When contacted by Business Times, an official from Virgin Atlantic's press office in London said: "We have no knowledge of any such development. "

The aggressive British carrier, founded by maverick and flamboyant entrepreneur Richard Branson, is currently ranked 39th in the world. And it is 49 per cent owned by Singapore Airlines, which the latter bought from Branson last year.

"We may well see Virgin Atlantic operating into Kuala Lumpur eventually. Right now, it is tied to a 10-year code-share arrangement with Malaysia Airlines. But this will end in 2005," a source said.

Under the code-share arrangement, Malaysia Airlines uses its own aircraft on the Kuala Lumpur-London route but allocates 35 seats per aircraft to Virgin Atlantic on the night flights and 37 seats on the day flights.

DRB-HICOM said in a statement yesterday that it has signed an agreement to sell its entire 99.25 per cent stake in Air Asia Sdn Bhd, the operator of Air Asia, to Tune Air for a nominal sum of RM1.00. The interest is currently held by DRB-HICOM's wholly owned subsidiary HICOM Holdings Bhd.

Under the deal, Tune Air will assume 50 per cent of Air Asia's net liabilities, which sources said, are in the region of RM140 million.

Air Asia was incorporated on December 20 1993, but began flying only three years later. It currently operates two 737-300s and mounts scheduled flights to Kota Kinabalu, Kuching, Labuan and Langkawi. The airline also offers scheduled charter flights to several destinations.

The people behind Tune Air is said to include Tony Fernandez, chairman of Recording Industry Association of Malaysia (RIM). A source would not rule out a tie-up between Virgin Atlantic and Tune Air, noting that "Fernandez is known to aspire to be Richard Branson of the East.

"And people are not scoffing at the idea because Fernandez has what it takes," the source said.

Analysts contacted by Business Times meanwhile said the disposal of Air Asia is a positive development for DRB-HICOM, given that "the airline has long been a burden for the group".

DRB-HICOM registered a lower group pre-tax profit of RM29.21 million for the quarter ended June 30, down from RM85.92 million in the same period a year ago.

Regards.


-------------------

Tun Dr Mahathir assisted to sell Airasia because of HICOM's losses and not because he is a shareholder as many accuse him to be.

Although he is openly supportive of Airasia, there is no lead to show he is a shareholder. Why would he support an organisation with sleepy at the top of the food chain?

For one, he is supportive of Airasia because he may have been frustrated with MAS. Who would not if the company is made a flying buffet for every other staff, managers, senior managers, businessmen, politicians, etc.?

Secondly he has always support an industrious and serious entrepreneurs, irrespective of race. As a man driven for nation building, Tony F's entrepreneurs' empire building mindset are in sync and appeal to him.

Replicating Virgin


Despite the claimed denial by Virgin, the relationship between Tony Fernandez with Sir Richard Branson and Virgin Group have some truth. Among others, we found information from the following presentation (not necessarily by Airasia) below:


Tony was an auditor with Virgin Atlantic after LSE and became part of the travel, entertainment and lifestyle business empire. After Virgin, Tony joined Warner group and returned to Malaysia and the region.

At around 2000 or later, Tony went to see then Prime Minister Tun Dr Mahathir about getting a new airline license but was suggested to takeover Airasia. Many licences had been issued to flood the local aviation market and block off entry when the open sky start to be implemented.

Mahathir suggested he buy an existing one. Tony F was reported to have mortgaged his home and sank his savings to acquire the company, comprising two ageing Boeing 737-300 jets (9M-AAA and 9M-AAB) and RM40 million worth of debts, for one ringgit, and turned profitable in a year.

Market talk described him as mad. It was a risky venture to do so without a financial support. How would he know then that he can turn it around or repay the debt in a year despite existing contract? There could be unexpected problem beyond him to envisage as a non airliner.

It was said that it was Ananda Krishnan behind him, thus for the initial AK for Airasia. People in the industry explained that it was a coincident. AA was already taken up by American Airlines and AK was used when it was still under Hicom.

That claim of Ananda was in the background did not disappear. The possibility was that he played the role to help his fellow Indian and opened the door to the opportunity. Despite Tony F's fake British accent, he is the son of a Goan father and a Kristang mother.

Otherwise, how did Tony F cleared Airasia's RM40 million debt within a year? The contract in hand was believed to be only RM70 million a year. It only helped company's cashflow in it's early days.

Despite the talk of Ananda Krishnan backing him, Tony replicated Virgin in almost every aspect.

He replicated Virgin's businesses in hotel, financial service, telecommunication and maybe entertainment. He copied Virgin's red colour identity, plane colour scheme (livery), and corporate culture from Branson and Virgin. The idea of having subsidiries all over the region to secure landing rights also came from Virgin.

Did Virgin had shares in Airasia?

Many would think so but that shareholding could not be detected. But, when Airasia went for listing, one source said they had an initial hiccup. Airasia was viewed as a foreign company and had too high foreign shareholdings.

EPF then came in to takeover the shares of one of the foreign shareholders. That foreign shareholder remain a mystery. Industry players claim it to be Virgin or Richard Branson or related to them. The reason being Branson loves to invest in entrepreneurial company. The outlay is not much and risk of capital loss is small.

Virgin only reappeared in Airasia-X as a 20% shareholder. They may have spent something like 7 to 8 million pound for it. Like said earlier, Branson loves to invest in start-ups and early stage entrepreneur driven companies. The outlay is still small and hardly dent his pocket should it loses money.

Airasia took advantage of Tony's relationship with Richard Branson and Virgin. Many presentation on Airasia (not necessary by Airasia) mention the link with Airasia as an advantage. See the example presentation below:



There is another source that told us that the idea and business plan to turn Airasia into a Low Cost Carrier (not Low Caste Carrier please) was not Tony's. He was just being a boastful salesman that is good in selling himself.

But that will be for other future posting...


Virgin-SIA sabotage?


In business sometimes, today's friend could be tomorrow's enemy. Yesterday's enemy could be today's partner. Someone rivals remain rivals to eternity.

Behind the excitement of a new aggressive and exciting Airline everyone was cheering as underdog, there was danger lurking unnoticed to all.

SIA, MAS old arch rival had a 49% interest in Virgin Airline. Sometime in mid-2000, 2005 likely, Virgin had a financial problem but could weather the storm. The partnership helped them tremendously.

Singapore has always been an arch rival of Malaysia. Despite leading ahead in the competition in aviation including airline and airport management, MAS and Sepang remained as competitor and could be a nuisance to them if there is leadership and seriousness in the organisations.

Thus, could it possibly be that Airasia was designed to wreck MAS from inside for SIA? Who says eccentric British gentleman like Sir Richard Branson can't screw his partner for someone else more rewarding to keep as partner?


Branson may have viewed his code sharing partner MAS as having the innovation to compete with Virgin and SIA. MAS had more than 30 code sharing agreements to penetrate market.

Mind you, at the time Airasia emerged, MAS was a major airline in the world with more than 100 destinations. Putting aside certain American and Russian airlines with wide domestic network, MAS could be considered in the top 5 or definitely in the top 10.

Another interesting coincidence was that Airasia send their Airbuses to Singapore for servicing. Off course, SIA's Engineering entertain any customers but they tolerated the crap from Airasia. Or they gave them some easy payment scheme.

Some will argue that Singapore had not been that friendly to Airasia. Their plan to use Senai as the lower cost competitor to the KL-Singapore route by creating shuttle between Changi and Senai was sabotaged by Singapore. Our source in the industry dismissed it as "wayang."

Outlived usefulness?

Another argument is Singapore is no more friendly to Airasia servicing its plane there. It means they had enough with Airasia's undisciplined financial practices.

It could mean that this is the reason Airasia badly needs MAS Engineering, especially for a cheaper and lay way plan on the expensive D and E checks. And it could be interpreted that Airasia has outlived its usefulness.


Kiasu Singapore cannot tahan and wants its many LCCs to compete with Airasia. Come Asean open sky, there are about 20 competitors to emerge and challenge Asiasia's first mover advantage. And 2015 is not too far away.

Don't bullshit about Airasia is not afraid of competing. Why does it fear competing and pulled out Airasia'x routes? Why ask MAS to stop the big bonus giving Firefly? Off course, no profit yet for first few years.

There is another part of the equation. SIA-Virgin are aggressive players along the kangaroo route.

Qantas is definitely a competitor. So does British Airways (BA). British Airways and Qantas are members of the Oneworld Alliance. MAS is joining them soon. This is one reason for both of them to be wary of MAS.

Airasia failed to have a tripartite agreement going with MAS and Qantas for the kangaroo route. Was Qantas weary of Airasia or Airasia-X's's relationship with Virgin? Maybe, for Qantas made remark that they look forward to working with MAS through Oneworld Alliance.

Khazanah: Incompetent or Insidious?


As far as MAS is concerned, it is too far behind SIA. The current management of MAS appointed by Khazanah (or perhaps CIMB) is hardly worrying for SIA.

Ahmad Jauhari is not an airliner, but a "one business" CEO type and not suited for an industry that requires compulsory competency in high technology and also the soft side of services. Overzealous and heartless Danny Nanny is an armchair financial man with no grasp of operations.

Khazanah kept making the same mistake over and over again of refusing to get a true airliner, particularly premium airline or legacy airliner person lead MAS. Why?

Instead the CCF brought into MAS, low cost carrier Plane Consult, Shane Nolan and the Airasia planted people. Yes they are really planted people. They are doing well in Airasia, so why join a sick airline?

See Airasia structure below:


Come to think of it, is it a mistake or the design by the conniving heartless Dato Nazir Razak of CIMB? "We" think we know. That will be in a future posting.


MAS Chairman is also not an airliner but a banker and a low profile CIMB man from it's early days of Bank of Commerce. What hope can Tan Sri Mohd Nor Yusof, though was CEO briefly for financial restructuring purpose, steer MAS out of the woods back to the fairway?

As it is, sources within MAS are saying MAS management is clueless on where to take MAS. At least the conniving Tony F provided some direction for further asset stripping.

The latest announcement to seek for RM9 billion Sukuk bond financing not only shows they are clueless but thinking with tempurong (coconut shell) on their head. There is completely no innovation. Aisay ... Cambridge trained Amokh and Danny Nanny, apa ini?

Be it the board or management or staff, they are in no hurry to rebuild MAS.

Although the union helped pressure Tony F and Kamaruddin out, after much coercion, there are union heads and managers bleeding the company. MASEU head, Alias is in cahoot with the former corrupted Abdullah Md Zaid in a cleaning contract.



"We" see a possible big picture forward but even a hint could be expensive. We know cases of written paper, spoken idea and documented proposal hijacked by Khazanah or by people associated with Khazanah or by Amokh himself for Khazanah use or their private use.

It is better off to give it to a Mat Salleh Consultant firm and get pittance. At least, one's idea gets heard and paid.

Since we are talk fees, hmmm ... how much did Binafikir got for creating Penerbangan Malaysia Berhad to finance and lease back some RM5 billion of MAS asset? One source from within MAS say it is 2.5%. That will be close to RM125 million.

Only problem is that it is not believable because YB Wee Choo Keong claimed Binafikir was sold to Maybank for RM8 million only. Amokh only lives in a modest linked house in Uptown Damansara Utama. Danny Nanny can't afford first class seat for his nanny and had to "force" the captain to upgrade.

Another way to look at it is that there could be someone with a big pocket capable of filling it up with RM117 million cash to avoid trace by MACC or Tax Department.

Why don't Tan Sri Nor Mohamad Yakcop answer YB Wee's repeated questions in Parliament with regard to Binafikir's fees to end all these suspicions? It's only the rakyat's money and they are answerable!


* Updated: 26/5/2012 3:00 PM

13 comments:

Jasper Bloodstone said...
This comment has been removed by a blog administrator.
Anonymous said...

A Voice

It is not easy to verify what you wrote but it is something worth pondering.

Chinky Singapore memang tak senang duduk dan tak boleh tak sabotaj Malaysia dalam apa segi sekali pun.

A Voice said...

Jasper

Maybe you should ask yourself, from whose shit did the drinking water you had came from? That explain for Singky's smelly attitude.

How is that for insult to reply an insult?

You wanna comment here. Watch to whom you are directing insults. Otherwise, don't go complaining and challenging us later like a cry baby the last time we censor you.

So behave, ok? There will be no second time.

This is our blog. Giving comment is a previlage and not a right. There is no such thing as democrasy or freedom of speech here. Comprende?

To answer, we acknowledge SIA was bigger but MAS was a player and competitor too. We are not dumb to ignore that reality.

You must be dumb not to deny that Singapore is a kiasu and kiasi state that is acquisitive in nature and initiate rivalry/animosity in all areas against its neighbours. Bet a childish remark will come.

Come to think of it, maybe we should deny you that right to answer because it will only divert away from the message of this post.

BTW I don't smoke, you mother *ucking dumb ass singky!

Ahmad Fuad said...

Bro.

Tune Air shareholders are Tony,Kamaruddin and Aziz Bakar.

AA success ,credit must be given to MD of Plane cunsult,Mc Gomek.Initially he want to charge a fees for his work but when he look at the market in Asia i.e number of population in China,India,Indinesia,Thailand,Vietnam,Philipine ,Malaysia,he change his mind.Instead he ask to be a shareholder of A Asia.He was given 5% free shares.

Actually Tony was vary lucky,when they took over A Asia there was the existing contract with T Haji to carry pilgrmages to Mecca.When the complete the contract they make 35m profit.That was their see capitatal.

Singapore technelogy also play a part by providing A.Asia with the maintance agreement on credit term
and aslo helping them with airline fuel.

Tony only mistake was refuse to listen to Planeconsalt advice that budger airline cant work on long haul.He launch A Asia X.Now he iin in trouble but they are vary flexcible.They change the business model quickly.Now A Asia X only fly to less than 6 hours flight.

They also make big mistake by entering into fuel hedging.When they realise the mistake,they stop immediately and cut loses.Mas contineu with the hedging and they loss almost 1 billion ringgit.

Bro let give credit to what is due.jangan hentem sahaja.t

A Voice said...

Ahmad Fuad

Other than Haj charter, Airasia had another contract.

Coming soon

A Voice said...

One commentator commented:

How to answer without resorting to abuse?

Commentators like this are not welcome. If you will never agree and engage in proper manner, why bother coming to this blog?

Surprise that Spore parents don't teach their children manners. My family members down south do.

Get loss, dude. You are not welcome!

Anonymous said...

Must give tony fernandez due credit but for a record company executive to be able to clear rm40 million debt in a year, it is something to ask.

He claim air asia is a malaysian company but for malays asking for job, they could ask them to go to mas.

I believe your theory have some truth. Otherwise, singapore wouldnt be sending cybertroopers to defend airasia.

How much is the truth? That is another question.

Kamal said...

Bro.
Tony downfall is not because of AA sia but his other investment.He like Richard Branson and want to follow his food step but Richard networth vary solid compare to Tony.His QPR and Fomula one will bleed him.

His desire is unlimited but he is streching his resources to the max.His head Xtra big.

Pretty ponder said...

Anon 10:11

Spot on!

It amazes me to see Spore cybertroopers; olek skilgannon and jasper blackstone or likely same people, defending tony fernandez gallantly.

The manner they defended Tony usually by justifying what tony did as fair since it is done in spore.

Ahha . . . As fuad disclose spore engibeering gave support to tony.

Anyway I agree w blog owner to stop insults and bad language in the commentaries like kadir jasin did. It improves the quality of discussion in his commentaries.

All bloggers should start editting out bad language and insults. Bloggers should stop using bad lang and insults.

Anonymous said...

Apalah tony asyik berangankan anak dara?

Airasia yg dia beli tu janda yg terpaksa dihias balik untuk jadi cantik :-)

sting garten said...

Kamal

tony's airasia is better described as a low margin airline than a low cost carrier.

thus its survival depends on growth, high growth.

without growth, profitability is not attractive. no higher future earning to drive share price up.

w a bullish share price, comes confidence and stupid bankers n sovereign fund mgr to give loan n buy shares.

Maybe lcc still has potential growth n airasia can still exploit, but can airasia survive economic downturn? Airasia x failed model? Oil hike? Competition?

Business based on high growth model will fail in the first instance of a downturn.

Anonymous said...

When you couple the absence of meritocracy and competition in the appointment of MAS Directors with Khazanah Soverign Funding even entrepreneurs who are losers will end up as winners. The root is the availability of 'funding grants' at no cost to the so-called entrepreneurs and that is the issue that must be trashed out. Until and unless we do that MAS will drain even PETRONAS.

Anonymous said...

Cool down Brother.

I understand your anger against Jasper Bloodstone or its alter ego Olek Skilgannon. They are one and the same troll or paid cybertrooper, the quintessential feature of their character being mouthing inanities, running down others' comments and throwing red herrings when confronted and cornered. Surf Rocky's Bru for some gems from the troll.

Both have an aversion for facts and inhabit a delusional world where only their pathetically distorted realities hold sway, no matter how inane and silly it may seem to sane people out there. Why even the US State Department, Treasury and IRS were deemed morons by JB/SG for having the temerity to red-flag Singapore as a "jurisdiction of primary concern" with regard to money laundering.

http://www.state.gov/j/inl/rls/nrcrpt/2012/vol2/184112.htm

Of course, when challenged to debunk that, JB/SG came up with a litany of hokum that would qualify as classic examples of childlike stupidity. Bet an undeveloped infantile ego rules the roost in that deluded adult body.

Responding would be akin to dignifying his stupidity so I praise you for deleting JB's puerile garbage.

Anyway, your piece was a brilliant expose on how AA colluded with SIA via Virgin to destroy MAS, a rival to their dreams of hegemony over the ASEAN skies. Readers who have doubts about that should just look at one instance:

We foresee yield improvement in FY12F driven primarily by the exit of Firefly's jet operations from Nov 2011."
http://biz.thestar.com.my/news/story.asp?file=/2012/5/16/business/11297141&sec=business

Now isn't that using one's influence to kill off a rival to save your skin?

Warrior 231

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