Tuesday, May 29, 2012
Danny Nanny departure not relief for MAS
Rocky's last posting here on MAS was actually a hint that Danny Nanny is leaving.
There is no way management will get cooperation from staff and union when a member of the management himself has no respect for the rules and procedure of the company.
However, before YB Wee Choo Keong released the voyage report here, there was attempt to cover it up. Why so?
The inquiry was done by Manager rank members. Who among the Managers dare say the Deputy CEO is wrong? And many of those participating in disciplinary inquiries are keling kaki ampu (no offense intended to good honest Malaysian Indians).
These days, Managers and even Senior VP ranks in MAS don't bother to initiate anything for the Company. Let alone pursue truth and be fair to their fellow colleague.
With Danny's departure, will it be helpful to MAS? Nope, it is still no relief.
Rashdan quits MAS
May 29, 2012
The Malaysian Insiders
KUALA LUMPUR, May 29 — MAS executive director and deputy chief executive Mohammed Rashdan Mohd Yusof has resigned from his posts, nine months after being appointed to the loss-making flag carrier when a share swap was announced with rival AirAsia.
The SunDaily reported it learnt Rashdan (picture) submitted his resignation letter to MAS chairman Tan Sri Md Nor Yusof yesterday afternoon. A MAS source confirmed the report.
“It was inevitable that he resigned,” the MAS source told The Malaysian Insider.
The Malaysian Insider learnt that Rashdan and his family have been under pressure since reports surfaced that they flouted the airline’s prohibition on bringing their toddler to the first-class cabin. The senior executive from Khazanah had denied the claim and an internal investigation had vindicated him.
“He has been under a lot of pressure because of that incident. To his credit, he stuck on to work out the sukuk financing for MAS,” a source said, referring to 10-year RM2.5 billion sukuk programme to shore up its capital base under a three-pronged funding pillar.
The funding plan is part of the ailing national carrier’s strategy to return to profitability after posting a narrower first-quarter net loss.
MAS had also said it had secured a bridging loan of RM1 billion from a local commercial bank on March 30 to ensure its working capital cash balances remained adequate until the expected drawdown of the first tranche of the sharia law-compliant sukuk.
During his short stint in MAS, Rashdan was in charge of short-haul operations, commercial, finance, corporate finance and strategic procurement units. This includes the purchase of aircraft.
But the short-haul operations section was aborted when MAS decided to shelve plans for a short-haul premium airline.
Rashdan’s latest stint in MAS was his second involvement in restructuring the national airline in the past decade.
In 2002, Rashdan’s BinaFikir Sdn Bhd was instrumental in the restructuring of MAS under the Widespread Asset Unbundling (WAU) scheme. The other BinaFikir co-founder was Khazanah’s managing director Tan Sri Azman Mokhtar.
So happen, Wee just received the written answer here to his questions in Parliament. They refused to divulge the fee to Bina Tak Fikir Sdn Bhd work in the WAU restructuring.
One source within MAS gave lead that it was 2.5% of the fund raised for the WAU which is about RM5 billion. It means the fee could be as high as RM125 million and it could have gone to someone with big pocket.
Despite some complimentary words for Danny Nanny from The Malaysian Insiders, it is not really an interesting and creative corporate finance work. Thus, he should not remain as a member of the Board of Directors too.
Sleepy Adviser, Clueless Board
In general, the members of the Board does not exude confidence. It is still infested with Adviser Tun Abdullah Badawi's cronies and non-aviationist.
What is the necessity of having Tun Abdullah around and gettting paid RM30,000 a month, as our source revealed? PAS Harakah speculated his salary as RM50,000, which means he is now a political issue and will blow open into a political liability for BN.
What good for MAS to retain him? Can he be of much help to MAS? Seriously what area of competency does he have to help MAS? Landing rights assistance? Technical or financial assistance?
Can he help Ahmad Jauhari (AJ) to renegotiate the lop-sided MAS catering deal in which he has personal interest via his brother? There is still a lot of crap in the MAS catering service which is now under Tamadam.
If the article Flying Buffet highlighted the double counting of mineral waters, such kind of practises seemed to continue. Orders are still being short changed and no one seemed brave enough to refuse delivery.
Another point that Tun Abdullah may have a hand in could be in the outsourcing of IT.
IT is a strategic tool and this oursourcing program is the most foolish thing done by MAS management under Khazanah. One Pak Lah related source claimed that one of the beneficiary of IT outsourcing is Tan Sri Azman Yahya, a member of the board of Director.
Azman Yahya had a significant role in the corporate scene during Pak Lah's tenure. He is close to Tan Sri Wan Azmi Wan Hamzah and typical of clannish Kelantanis, it could be beyond friendship.
Then there is a board member, Dato Rozana Rozhan, close to Tan Sri Ananda Krishnan, claimed in our previous posting to be close with Air Asia. Maybe true and maybe not.
Still .... no aviationist among the Members of the Board of Directors, except this possibility.
Tuesday May 29, 2012
Dr Don likely to join MAS board
By B.K. SIDHU
PETALING JAYA: Dr Mohamadon Abdullah, a former senior executive of Malaysia Airlines (MAS) with over three decades of expertise in the aviation sector, is making a comeback to the national airline as a board member.
Sources said his return to the airline was likely to take place after MAS AGM, which is slated for June 21. Another former MAS senior executive may also join the board but this could not be confirmed at press time.
Mohamadon, or Dr Don as he is known to his friends, joined MAS as a management trainee in 1972 and was senior general manager, corporate service, when he retired in 2004.
“Aviation, being a unique industry with its own challenges, the entry of someone from within at board level would certainly add value. He is someone who is known to be passionate about the industry and that helps," said a source.
MAS saw a board revamp in August last year when the share swap between the carrier and AirAsia major shareholders was forged. However, last month, the share swap was unwound and with that, the AirAsia representatives on MAS board left.
During the forthcoming AGM, several MAS board members are also seeking re-election and they include Tan Sri Md Nor Yusof (also MAS chairman), and directors Tan Sri Krishnan Tan, Tan Sri Wan Azmi bin Wan Hamzah, Datuk Rohana Rozhan, David Lau Nai Pek and Ahmad Jauhari bin Yahya (also MAS group CEO).
MAS' other board members include Datuk Mohamed Azman Yahya, Eshah Meor Suleiman and Mohamed Rashdan Yusof (also MAS deputy CEO).
That aside, the airline is said to be tweaking its business plan to chart its future growth direction and is expected to announce details of the plan before the AGM.
What changes would be made to the carrier's December 8 announced business plan is not known but certainly it will include the adding of A380 aircraft to its network system by July.
MAS reported RM2.5bil net loss for 2011 and RM171mil for first quarter 2012.
The former Corporate Service man from senior management team is respected by certain quarters within MAS. However, he has several issues.
The Malay staff are not comfortable with his rather liberal lifestyle. It is not so much him having a Chinese wife but his indifference or rather unnecessarily hard attitude towards his fellow Malay. However, that could be subjective.
In MAS, Dr Don is most reknown for his drinking habit. One of his close drinking buddy was the former MAS Chairman and the person who wasted millions of company money on Bortelli paintings, Tan Sri Dr Munir Majid.
That drinking relation may have linked him with Tun Abdullah's people like the villainous Dato Kalimullah, whose a close friend of Munir Majid in his days at NSTP and was former Chairman of Airasia-X?
Munir Majid was the man who when he joined MAS as Chairman said that there is room for MAS and Airasia to exist. It was during his tenure that MAS was reduced from a major player to a minnow and Airasia getting their way all the time.
Conspiracy against Tajuddin
Did Dr Don went along with Munir Majid to be part of the Tun Abdullah's conspiracy against Tan Sri Tajuddin Ramli?
The conspiracy some called Operation Homecoming was initiated by Tan Sri Nor Mohamed Yakcop to robbed him unfairly of his PLCs, Naluri and Celcom using Danaharta led by Azman Yahya and negotiated the block sales by Dato Nazir Tun Abdul Razak.
Nor Mohamad and Azman Yahya went to the extent of willing to bankrupted him.
Subsequently around in 2005-6, MAS's legal representative from Alan Gladhill, the devious Rosli Dahalan engineered to pin him with allegations of losses and conflict of interest. He had former CCID, the crooked cop Dato Ramli Yusof, former Bernama Chairman, insidious self serving Dato Annuar Zaini, Munir Majid, Idris Jala and few others to collaborate.
It was Dr Don that made a declaration dated January 4, 2002 against Tajuddin which include the allegation of conflict of interest on the Hahn Airport deal. That led to police investigation but nothing could be pinned against Tajuddin.
There is belief that it was partly triggered by a handful of vengeful or lazy senior management members that was under pressure or denied "certain opportunity" by Tajuddin. They include a group that could be dubbed as "Kelantanis mafia" in MAS, in which files on their gang members' wrongdoing can suddenly disappear.
When Ramli Yusof returned to Bukit Aman, Rosli orchestrated the conspiracy against Tajuddin. He had MAS Kargo's Dato Ong made declaration on May 5th 2005 and Managing Director MAS Kargo and son of former MAS Member of the Board, Dato Sulaiman Sujak, Shaari Sulaiman made reports on May 20, 2009 against Tajuddin for claimed conflicts in the Hahn cargo airport deal.
Ramli Yusof (a Kelantanis from Pasir Mas) made investigation and wrote a half baked letter dated March 2007 to Tun Abdullah to accuse Tajuddin as responsible for a loss of RM8 billion during his tenure at MAS but only provided details on alleged conflict of interest involving the Hahn Airport.
Only a stupid PM can believe such a stupid unsubstantiable allegation. Read part 2 of 7-part series "What the Untold MAS story did not tell?" here and the concluding part here.
In the Hahn Airport allegation, MAS lost at the Court of Arbitration in Geneva and had to pay Tajuddin. Recently, Shaari was recently removed and investigated by current management. MAS Kargo is planned to be disposed.
By having Dr Don, it means MAS is condoning and rewarding a person involved in a vindictive conspiracy that cost the company millions. That is the heartless nature of Dr Don.
Others may disagree, but that is our opinion of his probable appointment.
Having Dr Don will perpetuate the animosity with Tajuddin, which is about to reach a settlement. Tajuddin is only asking for forgiveness on the penalty interest and interest over penalty interest.
Unlike many other tycoons, Tajuddin paid billions for the principle and interest to Danaharta without asking for haircut. Among Danaharta's corporate debtors, he paid the most back. Yet Nor Mohamad Yakcop could victimise him.
Tajuddin could have pursued his lawsuit against Government and stand to win a potential RM23 billion. What is that compared to forgiving a debtor which he already paid his debt without asking a haircut?
Sometimes some Melayu can be more heartless in their revenge or victimising of their fellow Melayu than of other races. Rafizi and the anti-PTPTN demonstrators are stupid kids who knows nuts!
Returning back to Dr Don, perhaps in the land of the blind, the one eye jack can provide some insight. We may have no choice but to give that leeway.
Still destroyal mode
Danny was part of the failed WAU team and does not deserve to stay on the Board. During his nine months tenure, he was serving the interest of Tony F and Airasia.
To put MAS on serious footing, it takes more than just Danny's departure from management.
Unlike Wee Choo Keong who is taking no prisoners, others are sympathetic to AJ and giving him a chance. Can MAS afford experimenting now?
Another problem with AJ, as observed by sources amongst the press, is that he is too overwhelmed with Tony F.
AJ expressed his admiration of Airasia's engineering. How could he, when Airasia has no engineering department but only managing the mantainance outsourcing?
He seemed adamant to keep the Airasia planted people; Rozaman, Azhari and Nor Zalida. It is ridiculous for these management team of Airasia to leave Airasia for a sick Airline. Furthermore, like Danny, they were sent to serve Airasia's interest.
During Idris Jala tenure as CEO, MAS made the mistake of securing the work of the incompetent expatriates like Martin Barrow. Now they are making the same mistake by hiring the unrelated experiance of expatriate Shane Nollan and Plane Consult.
Come June 21st, MAS will be holding it's AGM. Most of the members of the Board are up for reelection. Some may quit and heard some Mat Salleh names was suggested by Tony F to join the Board.
Why are some Malaysian still stuck with colonised minds?
The Mat Sallehs hired are usually hopeless, rather than useful. If they are good, they are expensive. Only the oft chance that they have local spouse can they be useful.
In addition, there are also lots of idiots and incompetents getting promoted in MAS.
Over dinner last week, one old timer and quite well connected chap in the Airline industry told us plainly that the big plan is to destroy MAS. That is the reason Khazanah kept appointing newbies, incompetents and crooks in key positions since the appointments of Munir Majid.
It means Tan Sri Azman Mokhtar can't make claim to MAS staff that he has no malice against MAS.
And it is just not convincing to allow Tony F's proxies everywhere in MAS - Engineering, Network, Marketing, Finance, Human Resource, and Management/Board of Directors, if it is not to allow them pick up the succulent pieces.
There is the likelihood that the Prime Minister may not know of this, just like he was not told the truth on the earlier CCF. Who has been keeping PM in the dark?
That person should be shot!
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.
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.
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.
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.
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...
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."
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
Monday, May 21, 2012
A blast from the past
Much has been said of MAS losses and Airasia's potential operational problem. But really, Airasia is in a bigger trouble than that.
To understand it, one need to look back at history and start from MAS early years. There is a piece by The Star published on December 9th, 2007 for MAS 60th Anniversary that serve our purpose.
Since it was written during Tun Abdullah Badawi era, it is spinned to make Dato Idris Jala bigger than what he is really capable and continued villification of Tan Sri Tajuddin Ramli.
It was Tun Abdullah way of justifying his brother taking MAS Catering (today with Tamaddam) and enable "them" to steal away MAS IT. He was too sleepy and stupid to realise that there was a gameplan at work to kill MAS and MAB.
The mentioned The Star article below:
Flying high once more
Dec 09, 2007
From the “winged tiger” of Malayan Airways Limited (MAL) in 1947 through to the soaring Kelantanese wau kite emblem of today, it has been a momentous 60-year journey for Malaysia Airlines (MAS).
And it has endured, for better or worse, as a national symbol through its triumphs and tragedies.
After the break-up with Singapore in 1972, MAS had to rebuild virtually from scratch. By 1994, it had established itself as a respected and profitable international airline. And then it was privatised to tycoon Tan Sri Tajudin Ramli.
The airline incurred massive losses and six years later, the Government had to renationalise it. Even then, tales of mismanagement continued until MAS was on the brink of collapse in 2005 with losses of RM1.3 bil.
[Note: ABITW have proven that Tajuddin's losses pales in comparison with the losses of the post WAU era. Tajuddin's loses were attributed to foreign exchange revaluation but was profitable operationally. See past postings.]
It was then that Datuk Seri Idris Jala was appointed as the CEO. And what a difference two years have made – the airline posted its highest ever profits of RM610mil this year.
[Note: Idris Jala pulled rabbit out of the hat by selling assets and chopping 3,000 staff but later add back 3,000 sstaff. What an idiot? Although claimed to be an oilman, he was arbitraging jet fuel like an amateur spot trader and bled MAS badly.]
How was the rabbit pulled out of the hat? But it was no sleight of hand, just a solid demonstration of what Malaysians can achieve with proper leadership, hard work and thrift.
What a ride, or rather flight, MAS has been.
The early years
Malayan Airways began modestly in 1947 with propeller planes such as 21-seater DC3's with flights from Singapore to Kuala Lumpur, Jakarta, Medan and Saigon. By the early 1960s, jets such as the Comets were added.
Two name changes followed, first to Malaysian Airways Ltd in 1963, and then to Malaysia-Singapore Airlines (MSA) in 1967. The latter was equally owned by both countries and was highly profitable, with destinations including London, Rome, Bombay, Taipei and Perth.
Yet, the two countries had different priorities.
“Singapore was an island and wanted to promote itself through international flights while Malaysia was more interested in domestic services,” Bernard Thomazios, 65, explains in an interview. He was seconded from the Transport Ministry to MAS in 1971 and retired 21 years later as its deputy managing director.
The differences became so bad that the directors were quarrelling like “cats and dogs”, recounts one-time MSA chairman, Robert Kuok in Airborne, the MAS 45th anniversary book published in 1992.
Finally, Malaysia and Singapore agreed to split the airline. According to Airborne, Malaysian Airline System (MAS) inherited 12 smaller aircraft while the five larger Boeing 707s went to Singapore Airlines (SIA). More crucially, Singapore inherited the rights from MSA to fly international routes. In later years, this division was criticised, by former Prime Minister Datuk Seri Dr Mahathir Mohamad and others, as a raw deal from Singapore.
“We only took the 50-seater Fokkers,” says Thomazios. “As for the larger planes, we told Singapore we didn’t want them. We did not have the traffic and were not sure we could translate the planes into profits.”
Captain Hassan Ahmad remembers how, just before the split, the Government sent people to persuade Malaysian staff of MSA (based in Singapore) to return to KL.
“In their briefings, it was clear they (the government officials) were more interested in domestic flights. They didn’t even talk of regional routes. It was a mindset. I realised it was no way to plan a national airline but we were just employees,” says Hassan, 71, the first Malay civil aviation captain who retired as director of flight operations in 1992.
“We even lost the KL to Bangkok route,” recalls Thomazios. “The Thais stopped us from flying because they said it was a Singapore to KL to Bangkok route (belonging to SIA).”
So were we simply outmanoeuvred due to inexperience and lack of know-how?
“The head office as well as the management, engineering and financial people were all in Singapore,” reflects Lee Shu Poh, 77. He joined MAL in 1949 as clerical staff and worked all the way up to become MAS operations manager (1982-88).
“In 1972, I was the most senior Malaysian at MSA in Singapore. I was also at the Mandarin Hotel briefings to persuade other Malaysians to return. But most chose to remain in Singapore (as they felt they had better prospects).”
Despite the handicaps, MAS soldiered on, investing in engineering facilities and six new Boeing 737s. The board of directors was made up mostly of civil servants and, as Airborne recalls, “few believed that this motley team ... could actually create and run a viable commercial airline.”
“We had to buy tables and chairs for our first office,” recounts Thomazios, which comprised two rented floors of the Police Co-op building with two telephone lines.
Airborne quotes Tan Sri Saw Huat Lye, the first chief operating officer (1972–1982):“We were the underdogs.... We had to do everything ourselves, design our logo, decide on toothpicks, learn to create a flight kitchen ... our families did not see us for almost two years. Our home was our office. Every Sunday, every holiday, we worked.”
The slogging paid off. With help from Qantas experts, MAS took off three months ahead of schedule. On Oct 1, 1972, the pre-dawn darkness of Subang Airport’s rubber tree-lined road was lit up by many, many cars and buses carrying VIPs and ordinary citizens eager to watch history unfold.
The airfield became a spectacular stage featuring the new aircraft. At 5.30am, to the beat of rebana drums and rapturous applause, Deputy Prime Minister, Tun Dr Ismail, launched the first MAS flight to Singapore.
Tan Sri Abdul Aziz Abdul Rahman, the then company secretary, says in Airborne, “There were teething problems, delays, etc. It was to be expected.... But it was not long before Malaysians were able to acquire the necessary skills to operate the airline smoothly.”
However, MAS had to negotiate all its international routes afresh and Singapore’s head start as an international aviation hub was a hampering factor.
For instance, on the lucrative “kangaroo route” from Australia to London via South-East Asia, both SIA and MAS were fighting for market share. Thomazios, who spent “half his life” negotiating flight rights, explains:
“Qantas was only operating two KL-Sydney flights a week, so the rules said we were limited to two as well. Why should Qantas fly more when they were already making money from their seven Sydney-Singapore flights (and on to London)?”
“To get two extra flights to Sydney for MAS, I even had to offer Qantas half of the flight revenues. But it was okay because we could take (extra) passengers from Sydney and fly them on the more lucrative KL to London route.”
MAS managed to be profitable in all its first 20 years, except for 1981. It could even overcome the oil “price shock” (when it quadrupled!) of 1973.
“We watched every cost. Growth had to be planned and steady,” explains Thomazios. “You can’t say, 'Oh SIA is so profitable because they have 747s'. Doesn’t mean we go and order 10 747s also. Planes have to fit passenger demand. Otherwise, you leave them on the ground and you lose money every day.”
Lee adds, “It’s no point running a Rolls Royce when passengers will only pay Proton taxi fares.
“We developed a culture of thriftiness. Buy what you need, not what you want.”
He continues to live by that culture. He shows me his RM45 Casio digital watch and 20-year-old leather shoes.
“They work fine. Why should we show off? Does the watch say who I am?”
Thomazios recalls that MAS kept costs down by doing everything in-house.
“We could make nasi lemak for only 10 or 20 sen per pax. And we sold it to other airlines for RM1 each!”
But other considerations also came into play that overturned good business practice: “The Los Angeles route was glamorous but we were losing our pants. We tried to anticipate growth but sometimes, because of diplomatic relations, we had to do 'national service’ and set up new flights.”
What about long standing complaints (especially from Sabah and Sarawak) that MAS should have had cheaper air fares to fulfil its objectives of “promoting national integration” and boosting tourism?
“Well, we did offer cheaper flights at night and for groups,” he says.
However, one much appreciated part of MAS was the (government-subsidised) Rural Air Service using small Twin Otter 12-seater aircraft that provided a critical link to isolated villages such as Bario, Long Semado and Ba Kelalan deep in the interior of Sabah and Sarawak.
“Everybody will be waiting for the plane next to the airstrip, as if the ice cream man was coming,” recalls Lee.
In fact, one of those who waited for the plane at Bario was a boy named Idris Jala.
Growth and decay
MAS continued to grow in strength from year to year in terms of routes, aircraft and staff. There were hiccups such as the 1977 crash (all 100 on board were killed) at Tanjung Kupang, Johor, (the hijacker shot the pilots) and the big strike of 1979 (which ended after 18 people were arrested under the ISA).
Nevertheless, by 1985 MAS was so self-assured that it could go for a stock exchange listing. Aziz, who was CEO from 1982–1991, proudly pointed out that 90% of flights departed on time (the rest were 15 minutes late) while profits had soared to RM132mil.
The shares, offered at RM1.80 each, shot up way past RM5 upon listing, a resounding public vote of confidence in the company. The additional funds were invested in expansion plans and by 1990, profits rose to RM224mil.
The company had grown from 900 people in 1972 to 19,000 in 1992, serving over 9 million passengers.
The then chairman, Tan Sri Zain Azraai, said, “We can take pride that no major allegation of financial wrong-doing has ever been made. (Besides that) I also mean intellectual honesty. Officers in MAS, in submitting their views, should not tailor them to what they think their seniors want.”
[Note: He was the one insistence on the expensive and irrelevent George Lucas directed Star War styled advertisement.]
Zain’s words unwittingly forewarned of what was to come. In 1994, the Government privatised its controlling stake in MAS to tycoon Tajudin Ramli. By 2000, the airline was tottering under the weight of RM9.5bil in debt after a fourth straight year of losses.
The culture of thrift of the early years had been replaced by a spending spree. The MAS Executive Staff Association (Mesa) told the press in 2002, that third parties with “personal links” to certain corporate people were given lucrative contracts to handle services like air cargo, catering, insurance underwriting, a yacht business, off-shore aircraft leasing and IT.
Mesa claimed that the MASKargo scandal was just the “tip of the iceberg”.
The Government renationalised the airline in a highly controversial purchase of Tajudin’s MAS shares at RM8 each, though the market price was just RM3.62.
Tan Sri Azizan Zainul Abidin, the new chairman, frankly disclosed then that MAS’ culture had “fostered abuse, the plunder of the company for personal gains, high cost and inefficiency.” He promised new procedures to plug the “rampant leakages and stop the haemorrhage to protect it from predators.”
In 2002, the burdens of aircraft depreciation, various debts and unprofitable domestic routes were transferred to Penerbangan Malaysia Bhd, the Government’s airline holding company. MAS even lodged a police report against Tajudin for improprieties in MASKargo which had caused the airline to lose some RM1bil.
[Note: Till today, none of these allegations targeted towards Tajuddin have been properly exposed, substantiated and brought to court except for the Hahn Airport that went for arbitration in Geneva. MAS lost and have paid for it.
Government could lose billions if Tajuddin pursue his lawsuits for being unfairly stripped off control in Naluri, Celcom, etc. However, the public fail to realise that Tajuddin only asked for all demands to be dropped and he is willing to forgo what should be due to him.
He had paid and was the highest amount paid to Danaharta unlike other Chinese tycoons who refused to pay any, like Tan Sri William Cheng.]
Even then the haemorrhage continued, and Dewan Negara senators queried the purchase of Botero paintings and asked why a foreign “consultant” was being paid RM7,525 a day.In the first nine months of 2005 alone, the losses were RM1.3bil. So what was to be done?
[Note: That was the work of Kalimullah buddy that later became MAS Chairman to replace Azizan, Tan Sri Munir Majid.]
Enter Idris Jala, then a senior executive with Shell Malaysia, as CEO in December 2005. Relatively unknown, his appointment was somewhat of a surprise and he faced a monumental task: an overstaffed and demoralised MAS that was close to running on empty with the majority of its routes making losses.
Undaunted, he got to work. (See The Idris Jala way on SM6). When a local business magazine asked him last year how “MAS culture” had changed, he answered, “You change culture by doing.”
But some things may not be perfect yet. In mid-2007, there were rumours of employee sabotage apparently over alleged favouritism in giving out incentives, resulting in many missed and delayed flights (even Transport Minister Datuk Seri Chan Kong Choy was affected).
Idris' solution to tackling such residual problems was to have an open door policy and be transparent.
“There is no accountability without transparency,” explains Idris.
And it has gone down well. Says MAS staff trainer Faridah Abdul Rahman; “It’s fantastic. The CEO is online. He gives out his email address and staff can write to him directly. And he replies!”
“It’s the first time it has happened in the company,” testifies Alice Nazareth, a marketing executive, who joined MAS as a stewardess back in 1973.
Another factor is the CEO’s humility.
Mazlan Mokty, a senior steward, says, “When we see him, he doesn’t like us to call him Datuk. He prefers just plain Idris.”
Idris's upbringing must surely play a part. He grew up in the Bario Highlands of Sarawak’s interior, the home of the staunchly Christian Kelabit people.
There were (and still are) no roads and it took more than a week to reach Miri by jungle trail and riverboat.
“My father was a teacher and I followed him on jungle treks for days sometimes. Because of these hardships, we did not take things lightly. As a student I knew that if I wanted to see the world beyond our hills, I had to study hard.
“When the MAS Rural Air Service started flying to Bario, it was like a gift from heaven. If people were not working or at church, they would go to the little airstrip to wait for the plane. I grew up totally loyal to MAS.”
That steadfast belief in the organisation and its people has been rewarded. When Idris announced the turnaround plan in 2005, the business community was not convinced. Now just two years on, MAS has earned the highest profits in its history.
From a morass of low morale and abysmal losses, MAS' makeover – based on accountability, transparency, hard work and thrift –has been nothing short of magical.
The celebration of its 60th Anniversary has shown how Malaysians can aspire to greatness.
[Note: Idris Jala failed badly too! He did not managed to turnaround operation but did creative accounting to manipulate sales of assets as operational profit. He was piling loses in RM100 million per month and camouflaged it with his novice way of arbitraging fuel.]
That is the past and now the present.
The rumour mill is claiming MAS will be cheated and forced to purchase Airbus A320 NEO ordered by Airasia, rent flight simulator owned by "Airasia", forced to give "free" D and E check on Airasia planes, etc.
However, there is no agreement or collaboration signed between MAS and Airasia yet. Hopefully there is still room for MAS to negotiate for a better collaboration than one that only serve the interest of Airasia.
Nevertheless, it is tough for Managing Director, Ahmad Jauhari with Danny Nanny still in the management team, WAU and Tun Abdullah-linked members of the Board in control, Airasia proxies in MAS management and Tun Abdullah on MAS paid RM30,000 per month pension.
If AJ failed to do so, he will face a tough time ahead to get staff and union cooperation. He could even have his past dig up too.
All the while, the PR message on the CCF is that only MAS is in trouble and Airasia is there to help them. The truth to the matter, which many pilots, engineers and those in the know of industry development are aware, is that Airasia is heading for a major problem.
Don't talk of Airasia's fabulous growth, even for the near future, because that is history.
The industry talk is Airasia will face increasing competition from other LCCs, financial problems in servicing and maintaining their planes, failed long haul low cost model for Air Asia-X, stuck with large order of 200 Airbus over 15 years and caught with a "must grow" business model.
Save any unrelated comments for the real conspiracy to be unveiled but never realised by many.
Airasia is in bigger trouble and MAS is already in trouble. Both must work together and honestly or both will be ruined. Not only that, groups like Nazir's CIMB will be ruined too!
Sunday, May 20, 2012
This blog have no qualms about anyone giving opposing opinions as long as it is fairly argued without too nasty remarks and provocative words.
At times, comments should be replied and sometimes it does not need to. Some should be engage and sometimes it is futile.
For instance, engaging with those that will not fruit into anything positive is futile. Another would be with those that have different motive.
In MAS and Air Asia issue, Olek Skilgannon is one commentator that seldom appear to express his lengthy and well argued view. Not only he (or perhaps she) appears here, but in other blogs.
And he appear on issues that have Singapore interest or have implication to Singapore interest like UDA's Nurjazlan.
This posting is neither to run him down nor to counter him. He is best left to his own elements. He highlights an example to show the perspective of ones viewpoint is more relevant than the strength of the arguments.
Over time, Skilgannon view and argument on MAS will appear in three forms:
First, the CCF between MAS and Air Asia is the way forward. Despite the critics and shortcomings of the management of MAS, he insist they are on the right track.
Second and in contradiction with the first, MAS and KLIA does not stand a chance to SIA and Singapore as being more superior in all aspect.
Thus, although not mention, he is sending the message that MAS and Malaysia can forget about attempting to make a comeback.
One can guess he is a Singaporean.
Third, another area not mention but is obvious in his comments is that he never take consideration the wrongdoings of Tony F. He argue purely from his "anything goes in business" angle.
Usually he would brush off any critics of Tony F after he has argued his points.
Despite Skilgannon fair arguments, his thinking and inclination will not be acceptable to the likes of us. He does not serve our purpose and we are not jointed by common aspirations.
Frankly, he can be negatively perceived as a typical proud kiasu Singaporean in which bragging about Singapore is second nature.
The likes of us are concerned with Malaysia's nation building agenda, boosting morale of its populace and seeking solution to our problems.
What works for the little red dot will not necessary work for Malaysia and its diverse characteristics and multiple objectives.
Skilgannon has an inclination to see 'business for business' sake.
Unlike us, we are not overawed with wealth made from devious means. That is counter productive to the bigger scheme of things than the smaller but selfish interest of business and quest for profit and wealth.
Putting his motives aside, he seemed to give paramount concern with the current external challenges faced by MAS.
We view any collaboration has to be with honest partners and everything else will fall in place. And it will not serve the bigger scheme of things if that partner is part of a grand scheme to decimate a Malaysian institution.
We need more viewpoints and suggestions that is honest, sincere and takes account the reality than well argued views but is driven by other motives.
In that respect, the following article and comment from blog Economic Policy gives a better perspective than any well argued debate:
The Malaysian Airline Business
Now that the "low-cost" airline has successfully crippled the "national flag carrier", it does look like the small fly may eat the big bug, in small snatches.
Introducing the low cost airline cannot be to "increase competition" of the Malaysian aviation industry. You have two totally different products: one "full cost" and the other "low cost". In no way should "full cost" be thought of as "high cost" and "low cost" to be "better value".
It is just the way the competitor has cleverly maneuvered itself into the public psyche that created this perception. If pricing is cost-plus, then one should be getting probably almost the same value for the services rendered.
As a corollary, it is also true that "low cost" means "low price" (which the airline is now trying to reposition itself) but not necessarily "better value."
The apparent disgust that the low cost operator treats its customers must be something that the average consumer must constantly deal with which in more technical parlance means the loss of consumer rights.
It is OK for the operator not to deliver as promised, but woe betide the consumer who happens to try to alter a little bit of the contract. It is this lopsidedness that is the peculiar feature of the "business model" of the low cost flyer, and not its much touted greater "operational efficiency".
If you set a computer system to deal with customers who have not way to communicate back to the system, and if you program the computer system to generate a certain amount of profit from every customer, then obviously you are going to get that profit as programmed.
Once the "parameters" change, as we see the low cost flyer pulling out of Europe, then you know that it is out of its depth to cope with a more challenging environment.
It is not rocket science to know that to get the average price down, every flight must operate at a certain high capacity.
It is this targeting that we see to be promotional strategy of the low cost flyer, as well as the constant attempt to juggle flights in order to pack passengers into a certain targeted "high capacity" which is otherwise termed as operational efficiency.
The national carrier becomes disoriented when the low cost flyer enters the story. How does one compete with a "low cost" competitor?
This is the wrong question.
The correct response is how to redefine the full-cost market now that the competitor is going to soak up all the cheap customers. It is not surprising if the first impact the national carrier feels is that more than half of its customers are all gone.
If we work on the simple Pareto rule of 20% business class and 80% economy class and if the normal capacity on the economy class is 60% and if half of the 80% is lost to the competitor, then you have a mix of 20% business class and 20% economy class. It is instant death to the national carrier.
The objective of the national carrier must be to concentrate on how to get back its economy class passengers.
By imitating the competitor in its treatment of customers, the national carrier takes the risk of alienating itself from its customer base. Its computer system is not geared to dealing with online booking and changes to online booking. It simply does not know how to handling this cut-throat business of low price.
Instead, the national carrier should build up a new market for traditional full-service flying and at the same time overhaul its operating system to lower cost by automating more of its internal operations.
But instead, the national carrier tries to become a low cost flyer and in the process simply cannot compete as the low cost competitor is king in the business of low cost flying.
It automates all its external communications with the customers, an area where the old method should have given it an edge. The national carrier has fallen into a trap, all on its own doing.
At the end of the day, probably one of the most vital factors that determines which airline survives in this globally competitive business is its management of its cost of fuel - supposedly a major cost element. If this is set right, all the other costs are small in comparison. If the fuel cost is too high, then it has to weather it.
The low cost flyer simply pass this down to the average consumer in the form of a "fuel surcharge" which really is one of the most appalling abuses of consumers in the market place.
Unable to get a team to get its fuel cost right, the response to saving the national carrier is to send in a marketing and accounting team to manage the accounts, and probably not the operations. The operations can only deteriorate with neglect.
So how does one then "rationalise" the national carrier with the low cost flyer?
It is as if the low cost flyer has business class travellers to bring to the table, while it will certainly try to soak up the remaining of the economy class passengers from the national carrier.
There is also room for further cannibalism by the small of the big.
What other experience and expertise does one have that the other does not have.
The Malaysian Airline business may just be one episode that shows the general fragility of the national economic fabric.
There is a lot of communications and clever talk, but all those who could do are sidelined and relegated to the dungeon to work in the galley to keep the ship going.
One commentator, Walla gave a supporting comment. The extract below:
What is that extra value in flying MAS over AirAsia?
People who have flown in both will say there is something substantial there, not just from the experiences with both but also when toting up the actual price elements and perks.
MAS should focus on its extra value and build around it a phase one for its recovery, not so much to get back old customers lost to others because it will be costly to do so even if it happens as an incidental bonus.
Phase one is to target new customers, perhaps those who are flying for the first time who are savvy with channels like social media which should be considered as a marketing campaign tool.
In view of its standing debt, this phase one is critical. In fact, MAS can turn threat to opportunity. Perception of MAS is low and morale is down.
It should start a marketing campaign to make positive use of that perception to say "yes we are down and desperate SO that is why we are now offering you fly-two free-one.." or something like that.
The arithmetic needs to be done precisely if to avoid adding to the decline but if don't try, how will know and what else to do? Giving the staff something to work on will also help them help the airline to help them help themselves.
Phase two has to do with internal restructuring based on lessons learned.
Whether it is about decoupling from politics and national objectives, or going lean and smart, or getting to the bottom on inventory, maintenance and cargo, MAS should take this phase as its last redemption to throw-off the yolk of legacy issues.
No more will MAS is being forced to buy three different engine to make for political and other motives.
Phase three should tackle KLIA the place.
On paper it might be separate from MAS but right now it is the hub for the airline's spoke routes. The terminal is underutilized and bleeding.
Despite its location, new features can turn it into a more active and thriving place for people to make money and therefore attract free publicity. Additionally, there should be integration with KLIA2 and Cargo for symbiotic benefits.
Aviation fuel is about new planes and revenue-optimized routes, latter implying landing rights; if blocked, find new destinations which means working with tourist agencies to create new tours and business destinations.
Lastly, phase four is aviation management should be populated by mathematicians, especially those schooled in optimal control and other maths theories.
SIA rose because they took the best from UM in that field. The engine of the airline industry is not Rolls Royce or General Electric but numerical optimization.
Which comes next to MAS as one in the family of other bleeding sub-par local behemoths?
It is only political cowardice that stands in the way of real improvement and progress.
Hopefully someone in MAS or higher power is reading these two views.
Friday, May 18, 2012
Rafidah gone off her rockers
Last Friday, Tan Sri Rafidah Aziz was in the news. After attending Angkasa's 41st celebration, she commented about Open Sky Policy.
She used the opportunity to earn her keeps as Chairman of Air Asia-X to explain the virtues of continuing the collaboration between Air Asia and MAS. On May 2nd, MAS and Air Asia had called off the share swap between Tune Air and Khazanah into each other.
This will effect a potential cash injection via special issue for Air Asia-X.
Rafidah explained that all airlines will face competition when the Asean Open Sky Agreement is enforced in 2015. Thus, she reiterated to justify collaboration between MAS and Air Asia in cutting cost. The few areas for collaboration suggested were procurement, aircraft component repairs, training initiatives and technical and operational efficiency.
The problem with her statement is that she talked as though MAS people are not aware of the Open Sky Policy and as though the public is not aware of Air Asia's unscrupulous hands inside MAS. Rafidah was admired as Minister on trade matters then, but it looks like she seemed to be losing grips and being repetitive like some senile old folks.
Has she gone off her rockers?
Read The Star report on Rafidah below:
Friday May 11, 2012
Rafidah: AirAsia, AirAsia X, MAS collaboration crucial
PETALING JAYA(Bernama): All airlines in the country must be able to face challenges when the Asean open sky policy comes into force in 2015 and therefore, collaboration efforts between AirAsia, AirAsia X and Malaysia Airlines (MAS) is important, said AirAsia X chairman Tan Sri Rafidah Aziz.
"If airlines do not strengthen now, through what ever way, there will be problems. This is why AirAsia and AirAsia X is willing to continue looking at possible collaboration with MAS," she said on Friday.
She emphasised that the collaboration had nothing to do with the share-swap.
"It is about cutting cost so that we can pass the efficiencies to consumers. We have agreed at the board level to sign a memorandum of understanding (MOU) to continue pursuing this collaboration as long as it does not violate any anti-trust law globally and bring benefits to us," she told a press conference after the Malaysian National Co-operative Movement (Angkasa)'s 41st celebration.
Following the reversal of the share swap deal, AirAsia, AirAsia X Sdn Bhd and MAS, have entered into a supplemental collaboration agreement (SA) to explore areas of mutual-need to realise savings and boost efficiencies.
The SA would focus on specific areas of collaboration while continue to comply with all relevant anti-trust laws.
Under the SA, the airlines have identified key areas for collaboration, which would result in efficiencies and cost savings, which among others, includes procurement, aircraft component repairs, training initiatives and technical and operational efficiency.
Additionally, the airlines will also continue working to further identify and evaluate opportunities to collaborate on a broad range of areas both at operational and strategic levels.
To push forward with the collaboration initiative, the three parties also signed a MOU to cooperate on two initial areas, joint procurement and aircraft component maintenance, support and repair services.
Out of Touch
Few things must be clarified.
Firstly, no sane person would believe Air Asia would pass off any benefit to their consumers.
If they can't remit the airport tax due to Government that they have collected from consumers, cut our fingers like a deviant Yakuza that Air Asia is concerned for their consumers.
In addition, Air Asia would not design their process to have passengers wait additional one hour and a half and cancel flights at will.
Secondly, the major concern of Air Asia as a Low Cost Carrier (LCC) is to keep cost low but MAS's current business emphasis is about raising revenue.
This means that the area of cutting cost on procurement, aircraft component repairs, Engineering and training initiatives is more for Air Asia benefit.
Thirdly, Rafidah is no more a Minister and representing the Government but as Chairperson of Air Asia X, she is under the payroll of Tony F.
Left aside are the questions she raised on the Airline Rationalisation Policy in 2005 that seemed unfair to MAS. She does not act for the interest of the nation but the greedy interest of the slimy Tony F.
Talking about Open Sky Policy and CCF as the preparation for ASEAN Open Sky in 2015, what made the Government, outsider management in MAS, vultures of Air Asia and all those who keep reminding of Open Sky Policy think that people in MAS are not aware of it?
Do they think MAS has not been doing anything about it?
Ponder for a while to those who are overawe with Air Asia and their current boast of growth and claims of unstoppable growth in the future. Whom will strive in such environment?
Full service network airline or point to point LCC?
What is noticeable is that Air Asia felt the effect of MH actions? Under the CCF, they had made the new management undo in six months all the effort made to prepare for Open Sky that have been put in place by MAS.
Perhaps, it is Air Asia that is not prepared for Open Sky Policy.
MAS do not need them for all those claimed collaboration because they will be full member of One World Alliance in middle 2012 and benefit immensely from its various program including:
Since late 2002, Oneworld member airlines have developed common specifications across their engineering and maintenance activities, reducing costs through bulk buying and parts sharing. It was also the first airline alliance to introduce interline e-ticketing across all member airlines' network. - Extract from Oneworld - Wikipedia
For Rafidah and all those talking of Open Sky, they must be damn out of date and bordering on senility to keep repeating an old story.
Open Sky is an international policy concept that calls for the liberalization of the rules and regulations of the international aviation industry, particularly commercial aviation for a free-market airline industry.
It is basically a bilateral and sometimes multilateral arrangement or agreement between two or more nations.
The United States have been pursuing Open Skies agreements through bilateral agreement since 1979, and by 1982 had signed 23 bilateral air service agreements worldwide.
The first unlimited landing agreement was first signed between the US and Neatherland in 1992.
Although agreed on an Open Sky for 2015 in 2009, the US signed the Multilateral Agreement on the Liberalization of International Air Transportation (MALIAT) with Brunei, Chile, New Zealand, and Singapore as early as 2001.
It is rather outdated for those talking about Open Sky now when it had been in discussion and in preparation since early 1990s.
Rafidah's memory must be failing her.
For those that remembered the various Code Sharing pursued by MAS throughout the 1990s, it was MAS's game to penetrate Airports with limited landing and increase MAS frequency in those sectors.
Back then, there were Airlines that had MAS "supplied" the aircraft for them to increase capacity and frequency to enable MAS to penetrate those market.
Rafidah wouldn't know. Tony F and his cronies destroying MAS from inside wouldn't know too.
Yours truly was monitoring the MAS counter when it was making Code Sharing arrangements with KLM, Virgin Airlines, Continental Airlines, Northwest Airlines, British Midlands, etc.
Yes, Virgin Groups is one of the shareholders (16%) in Air Asia-X. Another is Robert Milton's ACE Aviation Holdings the parent company of Air Canada.
To understand Air Asia from this perspective, refer to this extract from Wikipedia:
AirAsia was established in 1993 and began operations on 18 November 1996. It was originally founded by a government-owned conglomerate, DRB-Hicom. On 2 December 2001 the heavily-indebted airline was bought by former Time Warner executive Tony Fernandes's company Tune Air Sdn Bhd for the token sum of one ringgit (about USD 0.26 at the time) with USD 11 million (MYR 40 million) worth of debts. Fernandes turned the company around, producing a profit in 2002 and launching new routes from its hub in Kuala Lumpur, undercutting former monopoly operator Malaysia Airlines with promotional fares as low as MYR 1 (USD 0.27).
Not mentioned was Tony tookover Air Asia with RM70 million contract in hand.
Just like Air Asia established many Air Asia bases in Asia, Virgin Airlines operates from various outfits like Virgin Atlantics, Virgin Blue, Virgin America, Virgin Australia, and Virgin Nigeria. All the Airline is place together in Virgin Airlines.
Singapore Airlines bought 49% into Virgin Group's Airline Holding Company with Virgin Group still holding 51% in 2000.
Is what's happening to MAS since the time of Tun Abdullah fit a certain picture and a certain accusation against him?
Khazanah should know or they pretend not to know these links. When she was Minister, Rafidah should be aware of this or has senility got the better of her?
Wednesday, May 16, 2012
Lazy Melayu Liberal business model
The debate on UDA Holding Berhad (UDA Holding)'s development of the former Pudu Prison land has been on going for quite sometime.
Malay rights group, Perkasa had criticised UDA Holdings Chairman, Dato Nurjazlan for his preference to take the lazy way of sub-"contracting" the project wholesale to a foreign group.
The sentiment then was that Urban Development Agency (UDA), a legacy institution of the late Prime Minister Tun Abdul Razak Dato Hussein was formed to spearhead Malay's entry into urban property ownership.
Though UDA is no more the agency it was before and the power of UDA was curtailed for it's own reasons, the objective remained. UDA has listed one of it's subsidiary, UDA Holding for fund raising purpose.
Nurjazlan was in the news last Monday in The Star's Business column to explain his dilemma. That column seemed to help prepare the ground for potential controversy in his decision to sub-contract the project to a China company. It triggered a property developer friend to comment.
His inclination towards neo-liberalism is obvious. And it is also obvious that he is a Melayu Liberal and typically is indifferent to national building aspirations.
It only enhance the stigma that Melayu Liberal are nothing more than the lazy native version of the liberalism movement that have moved its rights and freedom mindset from political liberalism to economic liberalism.
That thinking and attitude is not the way for a future leader.
Excuse of a Defiant
The Star's Business column article below:
Monday May 14, 2012
UDA’s dilemma on Pudu Jail project
It needs to follow directive but also needs to consider the best deal for the project
By JAGDEV SINGH SIDHU
KUALA LUMPUR: UDA Holdings Bhd is still evaluating proposals of all parties for the redevelopment of its Pudu Jail land and wants the preferred bid to be the one that is in its best commercial interest.
Even though the board has approved the proposal by Everbright International Construction Engineering Corp last year, the Finance Ministry (MOF) has directed UDA not to consider the company and instructed UDA to prepare a masterplan based on parcelling the land into three.
A special committee formed by UDA's board has included the development model proposed by Everbright in its evaluation to ensure that UDA's long-term commercial interests are protected.
On protecting bumiputra interest, UDA, under the Everbright proposal, will own a significant portion of the assets in the project and will ensure bumiputra contractors will be given the opportunity to participate in all stages from consulting, construction and retail space
Chairman Datuk Nur Jazlan Mohamed said the committee was at the initial stages of developing the masterplan but early indications were that the development model proposed by Everbright gave the best returns to UDA .
“On a commercial basis, Everbright's proposal is the best because it will develop the land as one piece. If the land is cut into three parcels, you know you will lose the value of the land,” he told StarBiz in an interview.
“But we have not come to a conclusion yet.”
MOF has asked UDA to divide the land into three one is for a bumiputra controlled party, another by a bumiputra company in a joint venture with others and the third parcel is open to a non-bumiputra company.
Under Everbright's proposal, the China company will fund the entire development of the land that has been called Bukit Bintang City Centre (BCCC). Its proposal comes with a committed funding of US$1bil and Everbright will take the construction and financing risk, build a contiguous retail space of 2 million sq ft, a car park and a convention centre and hand it over to UDA.
All that time, UDA will retain control of the land and Everbright will, after handing over the assets UDA needs in four years, develop its own properties on the land at its own pace.
Given the amount of commercial space that is planned in Kuala Lumpur, Everbright will have the muscle and foreign connection to handle the flood of floor space that will come on stream in the next few years.
The best option so far for the bumiputra developer will see UDA take on a lot of the risk Everbright is willing to shoulder. UDA, together with the bumiputra developer, must secure the funding for developing the project, which will lower the returns it will obtain.
That means the property will have to be injected into a special purpose vehicle and the ownership of the land will be charged to a bank to get the funding.
The land will have to be charged to the bank in order to raise the funding since UDA does not have the cash to fund the multi-billion ringgit project,
That will translate into lower earnings for UDA compared with the proposal by Everbright.
Furthermore, the floor space it will have to lease out to retailers once the project is completed under the parcelled-out proposal will also be smaller as the land would have been sub-divided among three different developers.
Nur Jazlan said the proposal by Everbright would mean that UDA stands to receive RM300mil to RM400mil a year in income from its property at BCCC, which is essential for a company that has just 400 arces that can be developed.
“The best solution is for UDA to have enough retail space to allow it to earn substantial recurring income to continue to have money to acquire land and grow as a developer.
“What is UDA's long term future and the Puda Jail land provides the only hope for UDA where if developed properly, UDA can get the right quality assets that can give it recurring income.
“That's why the decision on the Puda Jail land is not a normal decision. We need to develop the right quality assets to give us the recurring income for us to have a future,” he said.
Shopping centres need to be of a big size to attract the traffic to be successful. He said the retail space at the Puda Jail land will require a contiguous space in order to compete against the like of Pavilion and Mid Valley Megamall.
If the carved out proposal gives UDA retail space in three separate locations, Nur Jazlan said it would be hard to attract retailers and shoppers to the retail parts of the development.
“If it is not integrated, it will be hard to attract people. We won't achieve the rental yields.”
Nur Jazlan said the Government had not pumped money into UDA after it got listed in the 1990s and he did not think it would do so in the future. UDA has been asking for more land since it has been privatised but has yet to be allocated any.
Nur Jazlan said it was also easier to stratify the assets if the property was built by a single developer.
“It will be a problem if the land was parcelled out as you will be dealing with three different parties,” he said.
Nur Jazlan said it would not be easier to REIT out at a later date if the assets were jumbled up with different developers. - The Star
Sulking Tok Mat family
The article actually reflects Nurjazlan's stubbornness and defiance towards his superior, the Minister of Finance cum the Prime Minister himself. Such discussion on something undecided should not have been disclosed and made open.
More so, if Nurjazlan intend to negotiate. The Prime Minister Office would need to do some prepping.
Such action is not wise but reflects his immaturity. Instead of being a Chairman appointed by the Government to carry out Government policy, his behaviour is that of a sulking spoilt brat wanting things his way without respect for protocal and decorum and being indifferent to nation's agenda.
This reminded us of his late father, Tan Sri Mohamad Rahmat who have been sulking for several years before he passed away.
He wrote a book to criticise his former boss because he privately claimed he should be rewarded for his so-called "sacrifices" to the party and nation and was openly disappointed with Dr Mahathir's decision to sack him.
Don't accuse us of attacking the indefensible dead, because the same was said when he was alive but decided to ignore blogger like us as insignificant.
Sacrifice is sacrifice, thus there is no reward for sacrifice. There is only gratitude of others towards the person.
For that matter, Tok Mat and Nurjazlan owe Dr Mahathir gratitude for giving his floundering political career a second chance. It is ridiculous for him to not accept the termination of his political career.
Since Tok Mat's death, Nurjazlan have been expressing vengence against Dr Mahathir within his closed circle.
But Nurjazlan's sulking did not end there. He has problem with his Division too. He claimed the Division's office building as his family's. On the other hand, there are those that claimed his father donated it to UMNO.
It could well be Nurjazlan's way of threatening the Division against challenges against him. Keep him as head of Division or UMNO Pulai will be homeless.
Returning back to Nurjazlan's tantrum in The Star, our friend, whose held various levels of management position in many property development companies, including public listed ones questioned Nurjazlan's view and attitude.
Unlike Nurjazlan who rose to be Director of PLCs and Head of pulai UMNO Division by virtue of his father, our friend is well grounded in experience and rose out of his own effort and hardwork.
He found Nurjazlan's view to be bewildering and surprised that he could oppose to the Ministry's clear directive against preferring a China company to develop the former Pudu Prison land, to be known as Bukit Bintang City Centre (BBCC).
The nation building agenda and benefit for UDA Holding to give priority to Malaysian companies to develop is obvious and does not need elaboration.
Such statement and excuse should not have come from the Chairman of an establised property development company or a development agency with history that spans many decades more than many other active property developers within the industry.
UDA Holding was given the land, not just to be landowner but to play many other strategic roles in developing and contributing to nation building.
In his view, Nurjazlan was doing the lazy way of acting like a broker of development land. Not only are UMNO politicians being generally perceived as "broker" for quick gains, so-called educated Nurjazlan is playing the same embarassing role in his capacity as Chairman of UDA Holding.
Thus, what is the point of appointing him for his so-called experiance as Executive Director of UM Land Berhad?
By sub-developing it to Everbright of China, UDA Holding does not contribute any resources - be it money or expertise or management - into the development of the valuable large piece of urban land. Other than quick and safe monetary gain, it does not contribute to the future company capacity and capability. Neither does it benefit the local industry or serve any economic role the development was set out to do.
If UDA has nothing to add and contribute but only seek to own "some' of the property for free by riding on it's Bumiputera status and GLC ownership, it shows UDA has not gained and progressed from the years they developed the land plot which sits Sg Way Shopping Complex and Bukit Bintang Plaza.
Our friend felt that the Government should not give the land to UDA Holding to develop in the first place. The land should be given to other property developers in Malaysia who has the right attitude and aptitude to develop it themselves.
By Nurjazlan's talking of development risk in developing one of the last big piece of Government land in Kuala Lumpur City Centre, it shows Nurjazlan to be an unreasonably risk averse and incompetent.
Given the chance to other property developers, they would just grab it without making much fuzz and ludicrous complain of Government not pumping money to UDA since 1990s since it's listing.
All other GLC property development companies are not financially supported and aided to develop their land.
Lazy Melayu Liberals
As a public listed company, UDA Holding need to make reasonable return for it's shareholders.
On the other hand as Nurjazlan should be aware, if he has been keeping track with Government policies since Tun Abdullah Badawi's days, UDA was assigned more social obligation role, thus for oppurtunity to get the development right to the valuable land.
Nurjazlan should have known of this as he cannot argue that he is only serving the interest of shareholders. Even on that argument, the controlling shareholders of UDA Holding is the Government.
Off late, attitude like Nurjazlan seems to be spreading among many other GLC property development companies. Yet the CEOs are paid millions in salary and perks.
If not, why would UEM be doing JV with Sunrise to develop it's land? So is the case of Sime Darby taking over E&O and allowing existing management to continue to manage.
Also the case with PNB controlling intrest in SP Setia. There is a believe that TTDI was doing something similar.
The common factor in all these one can observe is the "Melayu" GLCs giving management control to "Cina" property development companies. But this is not another Malay versus Chinese rivalry but the issue of lazy natives taking the easy way out and doing nothing.
One wonders why the Malays being given position to do things are lazy at dirtying their hands. Might as well change this Melayus.
In the midst of neoliberalism ideas pervading the younger generation and penetrating Government thinking, as in the claim they do not need affirmative actions, what has happened?
Nurjazlan also used to make such bold claims.
The Melayu Liberal wants to think and preach along the Adam Smith of the world but being "given" a land to develop, they behave like the pro-affirmative action Malay asking for handouts.
At least, the tongkat Melayu wants to do something, wants to get out of the tongkat dependence and wants to see the Malay be at par with the other races and preparing to stop needing tongkats.
The Melayu Liberal advocated the abolition of government intervention in economic matters. No restrictions, no barriers, no tariffs, they said; free trade, meritocrasy and nature (another term for competition as once said by Tan Sri Azman Mokhtar) is the best way for a nation's economy to move forward and the Malays to develop.
In this and many cases, the Melayu Liberals are not as independent as one is led to believe they are.
Now it seems the liberal ideas of freedom and rights in politics and individualism in "free" enterprise, in "free" competition are merely being applied by Melayu Liberals for the capitalist's pursuit to feather their own nest as they wish without consideration for fairplay and the nation in mind.
Looking at the proponents of neo-liberalism amongst Malays like the Tingkat 4s, the Khairys (Air Asia, ECM Libra, etc), the ISIS, the Ethos Consultings, the Khazanahs, the GLCs, and last but not least, the Nurjazlans, neo-liberalism for these Melayu Liberals is only about easy money without responsibility and hardwork.
The Melayu Liberals are justifying their commission taking or bribery practices, lazy ways to refuse dirtying their hands, unashamedly abuse of power and self serving agenda behind pro-globalisation neoliberalism ideology.
And it is not because Nurjazlan is only half Malay.
The problem is that many Malay leaders, from both side of the political divide, bought the idea hook, line and sinker, without understanding its destructiveness.
* Edited 7:20 AM 17/5/2012
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