Further thoughts on the MAS/AirAsia issues

We take a break from talking about Azman Mokhtar and Danny Yusof as well as the bungle they and MAS are involved in with Tony Fernandes, AirAsia and QPR. Right now, we can safely say that MAS’ advertising investment is swirling around in the sink and will go down the drain anytime soon.

The position of QPR in the Premier League is now untenable.

They are languishing at 18th place in the relegation zone. The football pundits’ prediction may just come true by the end of this season; that QPR will be relegated into the lower division.

And along with it, MAS’ RM18 million which Danny had given away just to prop up Tony Fernandes’ pitiful football team.

What kind of other excuses can Danny Yusof give to defend his dodgy decisions, misjudgments and his precarious position? It is already beyond redemption.

It is not helping that he remains arrogant into thinking that he is doing a great job and remains ignorant that he is secured as to where he is.

This applies to Azman Mokhtar too. Unlike what he said earlier, advertising in QPR is never a good deal to begin with. Even this share swap is never a good deal.

Eyes are watching, ears are listening. MAS staff have the impression that Tony Fernandes is calling the shots and making decisions for the national air carrier.

A presumption never before seen in the history of MAS; an outsider, worse, a competitor taking charge into dismantling the once proud giant bone by bone, and strip its pride and pound it to the ground.

Whatever MAS has done so far (cancelling routes, advertising with QPR – that’s all they did?),  do not require their shares to be swapped with Air Asia in the first place. One wonders why on earth did they do that? As the result, Danny Yusof is now in MAS and Tony Fernandes and Kamarudin Meranun are the directors of MAS!

In an interview with The Edge last Saturday, Danny gave us the reason on why the share swap is necessary. Here are the excerpts of his replies:

The Edge, 14 January 2012

The report stated that Danny was the main man that brokered the share swap between MAS and Air Asia. When asked why is it necessary for the share swap to happen when MAS could have fixed the problem without Air Asia getting in, he summarised it as the impetus “to access the top minds of the industry. The partnership will come useful when we buy planes, for instance.”

That was his main reason. I find it hard to fathom the intelligence level of this deputy group CEO. In the first place, MAS is not in the business to buy or own planes. That is Syarikat Penerbangan Malaysia Berhad’s (“PMB”) job so why on earth would MAS acquire planes?

Historically it was Danny Yusof and Azman Mokhtar who took away MAS’ power to buy and own planes through their WAU plan back in 2002 and now Danny is speaking as if PMB does not have the expertise to buy planes.

Danny said, “we can learn from Tony and Kamaruddin. After all they placed an order for 200 Airbus in one go and that in itself tells you how powerful their negotiation skills are.”

Is that the reason why the share swap is necessary? For Tony to act as negotiator? Might as well take him as consultant. We have so many other talents around the world that MAS can employ to lead the negotiations without getting its shares and its board of directors being infiltrated by competitor.

There were talks that Air Asia over buying the 200 airplanes to bet on the rising demands of the market in the next few years with the intention to re-sell the planes to other airlines at better price than the prevailing market prices in the near future.

Will MAS buy planes from Air Asia just to ‘help out’ Air Asia then?

It will be helpful for Air Asia to have a friendly party in the form of Danny Yusof controlling the operations.

Or, it can be said that it is easier for Air Asia to sell any unwanted planes to MAS when its owners are also the executive directors of MAS!

If top management of MAS can give money to a company belonged to one of its director without any regards to corporate governance, we will be sure to see another these kinds of things to happen in the near future.

To re-cap, whatever Danny Yusof and Ahmad Jauhari said to justify this share-swap is untenable. The deal should not have happened in the first place.

Their business turnaround plan is in shambles and many people are not happy. MAS lacks the pragmatism and aggression to really overhaul its ailing business precisely because its  own top management and its main shareholder have other interests running contradictory to the survival of MAS itself.

Nobody in its Board of Directors have the gumption to do what is right because no one has a clue on how to do it. They do not have a clue because they are merely consultants who are being conned by their competitor. Danny is smittened with Tony.

In my previous article I said that MAS cannot become successful if consultants like him is managing it.

True enough MAS businesss turnaround plan was scoffed by analysts as simplistic and severely lacking the necessary measures to rejuvenate the airline. Have they looked into renegotiating their highly expensive flight catering cost with LSG Skychef – Brahim Sdn Bhd?

They won’t. Why?

Lack of aggression and curtailed by ulterior motives and interests. In other words, rightly put by analysts – they don’t have any traces of significant entrepreneurial spirit.

RHB disappointed by preview of ‘simplistic’ MAS turnaround plan

By Lee Wei Lian

KUALA LUMPUR, Nov 22 – Malaysia Airlines (MAS) lacks a plan for deep structural reforms said RHB Research Institute following a briefing by airline management ahead of the official unveiling of the national carrier’s turnaround strategy.

The research house said in a report today that the plan lacked cost cutting measures, revamps to the procurement systems or recapitalisation of its balance sheet.

RHB also said that it didn’t detect any evidence that the new collaboration with AirAsia has rejuvenated the airline.

“We did not find any significant ‘traces of entrepreneurial spirit’, if this is supposed to come with the entrance of Tune Air (controlled by AirAsia’s Tan Sri Tony Fernandes) as a 20.5 per cent shareholder of MAS,” said the report.

The report revealed that in the MAS briefing the management had said that they would cut unprofitable routes, improve fuel burn, negotiate better terms with aircraft manufacturers and redeploy capacity based on yield.

“We have to admit that we came out of MAS’ analysts’ tele-conference this morning feeling a little disappointed,” said RHB.

“Dubbed a preview to MAS’ grand turnaround plan scheduled to be officially unveiled next month, we did not find indications of any bold and dramatic moves that will turn things around, but just some logical things an airline will do in its normal course of business.”

RHB said that MAS’ key structural issues include a mature and saturated full-service segment and its main hub Kuala Lumpur not being a natural market for higher-yielding full-service business travelers unlike Singapore and Hong Kong.

It added that it hoped MAS would rope in a leading international airline as equity partner to help strengthening processes, revitalise work culture, broaden market reach and presence, and effect more constructive branding or co-branding exercises.

MAS reported a third quarter loss of RM477.6 million today, bringing total losses so far this year to RM962 million.

The airlines’ lacklustre financial performance in recent quarters had resulted in the share swap between MAS and AirAsia on August 9.

It saw state investment arm Khazanah taking a 10 per cent stake in Asia’s top budget carrier in exchange for a 20.5 per cent stake in the flag carrier.

This paved the way for AirAsia boss Tan Sri Tony Fernandes to sit on the MAS board, ostensibly to help turn the ailing airline around.

The share swap and accompanying collaboration framework agreement raised public concerns that it would give rise to an industry cartel.

Firefly’s budget jet operations were shuttered last month.

The Finance Ministry revealed on November 3, however, that the share swap between MAS and AirAsia is being probed by Bursa Malaysia and the Securities Commission (SC) for insider trading. Source here.

People, passengers and voters are angry. My suggestion is for directors from AirAsia to resign from MAS’ board and replace MAS’ top leadership with people who are serious about MAS. People who has MAS’ interests solely in their hearts.

But I digress.