The exact year and number could not be recalled but the event leading to Air Asia existence can still be remembered.
Air Asia was initially a Hicom company and was operating two airplanes out of Subang and later KLIA. Naturally, it is not expected to be profitable yet.
Then came these two blokes, Tony Fernandez and Kamaruddin Meranun from the music industry telling the world they can turnaround Air Asia. They submitted a paper and Government decide to sell the Airlines to them.
The company was sold to them at RM2 and the publicity machine was playing out the message Air Asia had accumulated loss of RM40 million. The part not said was Air Asia had a contract in hand of RM70 million a year.
Maybe they capitalised the losses and with a contract in hand, they could lay claim that they managed to turnaround in one or two year. Anyone not know better would have gasp in awe.
Come Pak Lah's premiumship, they allied themselves with the son in law and the official spinmeister. They were part of the conspiracy to take away the good routes as MAS was forced to slash routes from 130 to 30 routes.
They were good with gimmicks like those less than RM10 tickets but operationally, the cheap prices come with lots of inconvenience, abuse and trickery on the customers.
The public somehow or rather tolerated it. Some felt they were supporting an underdog, not knowing better that they were really dogs.
They managed to get away with their anti competition practices simply because tickets are el cheapo and Govevrnment closed one eye. Customers do not being made to wait for at least additional one and half hour.
The latest encounter with the Australian woke them up to the fact that the cheap numbers they have put on the willing victims of mostly Malaysians will not work in Australia.
The past practise to accumulate unpaid engineering bills and be difficult paymsters on Malayian Airlines Engineering Department do not work with other Engineering companies.
There are already airports that would only allow Air Asia for emergency landing but not for normal takeoff and landings. With those airports, they can't get away as though they are Malaysia Airports Berhad.
And there is more and more abuses of Air Asia on the customers that is surfacing that if there is any competitor on the domestic routes, even if it foreign airlines and at a it higher price, many are willing.
Customers are talking back to Air Asia's abuse and cheating.
Basically, Air Asia got to where they are through deceit and treachery on customers, competitor, authorities and service provider/s.
Sure they made money and achieve phenomenal growth. It is basically a hollow pyramid organisation. It has still that fly-by-night operator mindset.
If they are not able to cheat and condyct business professionally and ethically, can they make those claimed achievements? No sireee .... don't be too sure.
Read this past The Star report:
Thursday March 15, 2012AirAsia Thai is still a remarkable company but no it didn't manage to emulate parent company Air Asia to turnround in a year or two. They had to accumulate losses from the growing pains.
AirAsia Thai IPO expected to raise RM500mil
By TEE LIN SAY
linsay@thestar.com.my
PETALING JAYA: The listing of AirAsia Thai is expected to raise 5 billion baht (RM500mil) and will likely take place in Bangkok by early July this year, while the prospectus will be out in May, said sources close to the deal.
Tentatively, the shares will be priced at 5 baht (RM0.50) apiece.
It is learnt that investment bankers handling the deal are flying to Bangkok today to finalise details of the initial public offering (IPO) exercise. The listing was supposed to take place last year, but was delayed due to the flooding in Thailand in October.
AirAsia Thai is 51% owned by Asia Aviation Co and 49% owned by AirAsia Bhd.Two air-hostesses giving traditional Thai greeting. AirAsia Thai, which is 51% owned by Asia Aviation Co of Thailand, is expected to be listed by early July. — AFPAsia Aviation is a registered Thai company that bought into AirAsia Thai in 2006 from Shin Corp (associated with family interests of Thailand's then Prime Minister, Thaksin Shinawatra).
AirAsia Thai, which started operations in January 2004, was initially a joint venture between Shin Corp and AirAsia founder Tan Sri Tony Fernandes.
In 2006, when Singapore's Temasek bought into Shin Corp, AirAsia Thai's 51% national ownership requirement was diluted, thereby requiring an ownership change to ensure compliance. That was when Asia Aviation came in to buy the stake.
If the listing exercise takes place, it is likely that AirAsia's financial year ended Dec 31, 2012 (FY12), will start recognising revenue contributions from AirAsia Thai, something that analysts have generally yet to factor in.
Consensus estimates among analysts are for AirAsia to achieve net profit of RM977mil for FY12, and this has not factored in contributions from its associates.
AirAsia Thai has been operationally profitable since the second quarter of 2010, based on the notes to the accounts of AirAsia. However, AirAsia has not been able to recognise these profits due to accumulated losses of these units that have yet to be reversed to zero.
The share of profit will only be recognised in the income statement of AirAsia when a further RM30.4mil of unrecognised losses have been reversed.
AirAsia's share of AirAsia Thai's net profit in the fourth quarter to Dec 31, 2011 amounted to RM30.2mil, while for the full year, the net profit was RM99.3mil.
Two situation parent company did not undergo miraculously.
Let's talk of it's low cost model.
Yes, low cost model comes with low priced ticket which means they have to live on low margin. It only means that Air Asia is a risky company.
How did they managed to get the attention of investors and enable their share price to rise?
Most analyst are interested with Earning per share (EPS) or more important EPS growth. EPS will derive the Price Earning ration or PE as they would normally call.
Current PE ration of stocks are usually already high. Stock market is efficient to build in all the known information. Stockbroker and analyst cannot cari makan.
So they sell investment ideas of buying future PE. With certain growth, next year or the year after next, share price can be bought because future PE is low and it will eventually rise to current level.
So can make money they tell you and I. You buy, they earn commission and brokerage.
Air Asia cannot sell the idea of low PE because it is in a low margin business and relies on volume. To get investors interest, they have to claim growth.
So far they have been able to deliver growth. Although we concede to acknowledge their growth, we say they are not growing through the natural means but unnatural ways of "deceit and treachery."
Stock market punters don't care to all this moral issues. They buy low and sell high on their mother to make profit. Cut loss when adverse condition happen.
Air Asia is built on the same model or year in year out script from Ryan Air. However, when it stop growing, the trouble will begin. Read here and here.
What if growth stopped on Air Asia?
The same problem can occur.
Be mindful of the fact Air Asia rose not really out of low cost, efficiency, operational growth etc. but by taking over MAS routes through deceit and treachery, low cost and cashfow management by refusing payment, delay suppliers, engineering bill, airport tax, even sacrificing safety, bad treatment of customer, etc.
How is Air Asia going to pay for their 200 ordered Airbuses?
Dump on MAS?
That will effect MAS's product, business plan, and the whole array of issues. Had some numbnuts not refuse to upgrade fleet and that affected sales, dumping Airbuses on MAS will have worse impact on revenue.
Tony F does not care really, if Air Asia mampuih. He is only interested in the 2-5% commission to be derived for purchase of every planes.
This is on one commentators view of Air Asia:
The truth from insiders in Airasia is that it is collapsing. Another 275 aircraft to go in 14 yrs with total bill RM110Billion. Most of the bank have stop giving AA loans knowing their attitude of lack of discipline in payment. You can ask Singapore Engineering Company who service their aircraft before, too much backlog.Air Asia haves subsidiaries and associates in many countries in Asia. Maybe it is to get routes and raise financing. If each one goes listing, become independent operator and help flood the airline market, what can happen?
CIMB, Kuwait Fiance and European bank will be in trouble in case AA loan turns to NPL. At anytime Moody's, Standard & Poors and Morgan Stanley can bring down their rating which Nazir do not want it to be happen. Much of what is happening is about saving Air Asia.
For sure, Air Asia will be in for a tighter operational margin, squeezed also on sales, and eventually one or two will go under.
Parent Air Asia may have no control over these subsdiaries or associates. But they carry the name Air Asia. The bankers will realised and some of the bankers will get jittery and pull the plug on any of these Air Asias.
Fill your own imagination.
Some of the fact may not be right, especially on the arrangement between Air Asia and their little ones, but the big picture is the same.
Try imagine what Khazanah was thinking to claim something can be learned for MAS from Air Asia. Yeah right actually, MAS has never learned to do business the conniving way. They are too professional.
MAS need to learn to cheat?
10 comments:
"The public somehow or rather tolerated it. Some felt they were supporting an underdog, not knowing better that they were really dogs."
Many anti-BN people I know and don't know tend to see AirAsia as "opposition" against MAS which they regard as a "big bad BN GLC," and rejoice in AirAsia's supposed feats of profitability versus "inefficient" MAS.
However, while I too am anti-BN, I didn't buy into that crap but was actually sickened by the journo-prostitutes' especially business journo-prostitutes' glorification of Air Asia as some kind of "shining example" of free enterprise versus state-ownership.
It was pretty obvious that Air Asia would not have got where it did without political patronage from some influential quarters within the ruling elite of Malaysia but its starry-eyed fans are blind to that.
Good and informative article. Thanks
Voicey,apa macam ?
The real owners of Air ASIA are very powerful people.
Tony and kamaruddin or initially Pahamin JPJ Rejab are frontman only.
The real owners of Air ASIA is DR M and ANANDA KRISHNAN.
That is why the flight number start with AK.
Ananda krishnan and
Dr mahathir are the real owners of AA?
Seems believable.....what say you A Voice?
Would be a terrible tragedy if the success is not real.
"The real owners of Air ASIA is DR M and ANANDA KRISHNAN."
I thought that the real owner was Adam King (AK). You know that daring photo journalist who went to hazardous places, later started an airline, opened char koay teow franchises, and drank Guiness stout. ;)
Dear Brick,
Interesting reading and good analysis. AA has indeed seems arrogant at times with their anouncements and pubic brawls. In a way, i am no fan of theirs and would not even fly with AA unless really neccessary due to their frequencies.
However, I always felt that they did allow many people an alternative, a chance to fly, create excitement in the aviation and even banking industry. Not to mentioned the suppliers, engineering contracts and even jobs for our sons/daughters. Basic example is that we gets cheaper flights for our maids.
How AA manage their business partners ie. vendors, borrowers, debts and the regulators is very much in the present competitive commercial world. Of course, their numbers are important as they always negotiate in bulk / volume and cheaper solutions. This maybe the case with MAHB as they refuse to reduce airport rates (or sufficently) eventhough AA provide them with volume and yet uses the former hanger (with makeshift facilities)as LCCT. Of course, MAHB can be stubborn as they (again) holds the monopoly.
There are still some good that came out (from emergency of AA) for MAS ie. emergence of Firefly(my fave), sportier & improved image, better online reservation system, create excitments with the lower fare packages & etc....It has been my choice of "full service" airline.
However, all these efforts still failed to bring MAS "Back to Black" (brick, no fan of ACDC?). Instead, MAS has been hogging the headlines with CBT case of their former Chairman (politically linked), inneundos of person running the org must be of certain nationalities & race, Union threatening to vote for the opposition and etc.........
Thus, how MAS can unchain themself from these politically linked shackles and national mandates? Especially when it is being contolled by Khazanah (with the invincible hands)?
With due respect, Khazanah boys also tries to view the problem with their current commercial sense to swap shares to build on economies of scales, level the risks and reduced unneccessary "head on' competition for both airlines. Again the marriage is marred by the above reasons or another.
We all know that dealing with TF one must at the highest state of alertness but we too must let there be room for trust? Or we dont have confidence with our own kind in Khazanah especially in our own turf? Then how are we going to go 'global'? It is a wild business world out there.
In a nut shell, MAS is definately politically linked to the veins of power in BN. The nation must accept the fact that MAS cannot move further and bleeding have to stop. The only way is to 'close shop" and start another airline with most professional managers & independent bodies. As the saying goes "the truth can be painful".
Bro,
Let correct the facts.Air Asia is not owned by Ananda or Mahathir.The owner is Tune Air.They have 26.4%.Tune Air shareholder are Tony,Kamaruddin and Aziz Bakar.
The man behind AA success is not Tony or Kamaruddin.He is the Irish Guy who was formely work as COO Ryan Air.So they build the AA module base on Ryan Air success story,
I think AA will contine to survive cos the Asian market for cheap airline huge.Their failure will come from A Asia X.Tony had been told from day one that AAsiaX module will not work.He told this guy let give a try.The failure of Air lacker is a good lesson.Tony say thay was 30 year ago.
Now A Asia started closing down all the unprofitable route,London,New Zealand,New delhi,Paris.With the oil price at $110 per barrel soon they will close all the route.
You try to click the air fair of all the airline esp to Melboune,Sydney,Pearth,Dubai or London.The cheapest airline are from Middle East.Emirate,Kuwait,Gulf Air,Qatar.To them Oil are almost free.
E.G.You Fly AAsia X to melboune return fair around $7,500.You can frly with Emirate at around $6,900 will all the inflight entaitament and food.
Why Tony want the merger with MAS badly because they scare of competition.Why they want MAS to close down Fire Fly?
I flew to Hanoi last week.suprisingly MAS fare for economy class to Hanoi is cheaper than A Asia by $100 ringgit.MAS flight time at 9 am and 1.45 pm more convinence.A Asia fly at 6 am.That mean you have to be at airport at 4.30 am.
MAS use Boeing 737-800.The seat and leg room more spacioue.MAS serve good food,Rotai Chanai and mee goreng,prepare by Sky Chef.
A Asia you have to buy food.Pak Nassir nasi lemak was prepare at a factory in kepong.If you visit the factory you wont eat AA nasi lemak.
AK cud also br Anwar - Kalimullah to add to the popular believe it is Anantha Krishnan.
How about MH?
Mahathir-Hasmah? Or rosMaH to add intrigue?
Malaysia handal prrhaps?
Adam King...The worst bloody ad campaign ever..
I actually stopped drinking guiness for a while due to that ad..
airasia is misleading and cheating passengers. the prices they showfor their flights are not full prices! Be aware! The price only includes the ticket, not the luggage!!! you will have to pay extra for your luggage and this can amount to huge sums. Also if you check in at the airport, it will increase your costs. Besides, you can be locked into a non-reclining seat even in international flights! If you want to change the seat, guess what, it will cost more again....
so the company is run by mob who is simply doing extortion! I cant believe this is legal....
never use it!
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