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Sakmongkol ak 47

Monday, 8 September 2014

Saving MAS- Khazanah doing an Al Chainsaw Dunlap move.

We must have a clear objective in our mind. To save MAS. All other considerations are secondary.
How do we find ourselves losing RM7 million a day? Board members meet each month, why were the problems not addressed? When Tan Sri Aziz was the MD, the board meets every week and any red flags would be discovered quickly.  I assume the board currently meets as frequent as they did in the past, why was the situation allowed to deteriorate?
In my opinion, saving MAS must involve the following steps.
·        Expand MAS- not downsize to compete under open skies policy. We need to have more pilots, more crew, and more support staff.  How can a leaner company compete under the open sky regime? You don’t have enough planes, pilots and support staff to support expansion.
·        Streamline top management- eliminate those high income managers and executives who are not productive but drive around in their panameras. Renegotiate all employment contracts. Why pay executives up to RM200, 000 a month but MAS is bleeding?
·        Don’t hive off businesses- turn them into profit centres. Do you know that MAS negotiated more than 4 years to get license from US –FAA? Which means MAS engineering can service American planes. We want to hive off this business? It can be a revenue earner. MAA Cargo is also  profitable.
·        All the parts that make up MAS, are all core businesses.  These contribute to making the whole profitable. These have made loses due to lack of managerial supervision. The problem starts when these smart alecs define the essential businesses as non core businesses and hive them off to cronies. MAS IT business was hived off to Azman Symphony.
·        Strengthen Firefly- make it wholly owned by MAS and turn it into a low cost fighting machine. Compete and duplicate Air Asia’s routes. Air Asia has done it to MAS- it should not complain when others do it on them.
·        Form task force committees to look into embezzlement, leakages, false invoicing, corruption. These issues are never addressed by Khazanah.  
·        Procurement procedures must be streamlined- why buy 6 unit of A380s? When smaller planes are suitable? Somebody made money here or what?  Buy smaller planes.
·        Renegotiate one- sided contracts such as MAS catering. MAS started its own catering from scratch, bringing a chef from Switzerland. It’s ridiculous to have a 25 year contract earning billions for contractor.
·        Unless structural changes take place, then spending any amount of money will be wasteful.
·        The main hurdle is to find executives and managers with integrity. Complete knowledge of the airline industry is not absolutely necessary because the manager with integrity can seek advice. The people at Khazanah are fund managers anyway.
·        Appoint Tan Sri Abdul Aziz Rahman as advisor. Even though he’s in the 80’s he may work part time as national service. Why wasn’t he approached all these years? Because the thieves knew what he would do if he were brought in.
The title of my previous article was ‘Saving MAS’. The intent was clear. The focus is on taking measures to save MAS. The title was not as FMT puts it- Air Asia Killed MAS. Those are the words of the FMT staff- not mine. I am not responsible for this kind of not so clever re-title. This is the kind of garbage in-garbage out narration of the original article. If you don’t understand, please don’t re-tittle. Air Asia does not need defending. It’s doing well already.
The comments that came of course were tailored to meet the changed title. I did not put it that way. The lesson here is- if readers want to read what I wrote please come directly to my blog. I am not responsible for the tenor of comments generated by not so clever change of title of my article.
Be that as it may, many of the readers don’t seem to understand the purpose of a low cost airline. It wasn’t meant to fly the same routes as MAS did. It was supposed to fly to areas where MAS- the premier airlines did not fly then.
That’s why it flew regional at first where MAS did not fly. It did what Dr Mahathir wanted Air Asia do in the first place- fly passengers to routes not flown by MAS.
Expectedly, AA made losses.
When did it begin making profit? When it undercut MAS routes. Mr Tony came crying before Dr Mahathir telling all the sob sob story about having to sell off the house, others too (like the chairman) were doing the same thing. And then he asked Dr Mahathir to allow Air Asia to fly low cost on the same routes like MAS.
MAS cannot charge the same fare as Air Asia because it is premier. The air fares were determined by the government then. But when it asked to reduce price, the government did not give permission. I clearly said that was our first mistake.


Mazlan,  8 September 2014 at 14:03  

Your ideas are too logical for those 'investment bankers' at Khazanah and their consultants. All they see are balance sheets and red lines - thus like any banker they think saving means cutting. If you propose an M&A they they would get excited as they can make money on the fees.
Usually in any turnaround plan - you hire a new experienced CEO and get him and his team to plan and implement.
Unfortunately Khazanah comes up with a plan (which is as you say a repackaging of the same failed plans) and then hire a good buddy to implement that plan. When that plan fails blame the staff....

bumi-non-malay 8 September 2014 at 14:14  

while the Focus on MAS... Proton and Kancil is on ETERNAL Bailout mode.....Suprising no one bothered with another of DR Kemerosotan Malaysia Pet projek.....perhaps because Petronas $$$$$$$$$ have not run dry yet.....

Projek UMNO Sultan Dr M semua macam Krisis MAS....hanya tergantung dengan TAX Kereta Asing...Dah LUPA Projek AP...kayakan Kroni UMNO dan Keluarga UMNO?? Rafidah, NAZA....cium ,,mmmmmm Hidup UMNO.......Felda pun kayakan orang Melayu..... Tanah Melayu Kat Johor Jual kepada Usahawan dari Negara Cina..... SATU Keluarga Hidup dengan Mewah....Yahoo!! Puak UMNO berteriak Hasut, tangkap mereka yang Hina Sultan, Islam..... Siapa Teriak LAPAR, MISKIN, sakit, bunuh, ZALIMI 60 Tahun???...PAS?? DAP?? PKR?? NGO?? Itu sebab Ekonomi Malaysia akan RUNTUH tak lama lagi.....ringgit makin hari akan jadi macam duit Zimbabwe.... Yang cerdik akan tukar sedikit wang Singapura, Australia, USA....yang tak erti boleh terus simpan banyak lagi duit Pisang Ringgit-Zimbabwe!!

Anonymous,  8 September 2014 at 15:32  

You are absolutely correct. MAS needs to expand instead of downsizing. All these thirty something MBA's will advocated downsizing when MAS is not making money. The fact is that the reverse is true. What this will ultimately achieve is killing MAS.They have no idea how to run an airline business.
The airline business rests on the expanse of its network. Travellers don't come and go from Kuala Lumpur alone. The airline needs to carry passenger worldwide. Yes joining the alliance helps, but you have to do it yourself too and project your own branding. Singapore Airline has successfully done that.
For a while there they seem to be on the right track. Its crew and cabin service is second to none. The mantra of cost cutting has virtually destroyed that too. You can't achieve exemplary service with substandard product. Its aircraft are poorly configured and its food is much to be desired. Its marketing team is quite useless.
MAS needs to be of certain size to achieve a critical mass. Its international network is too small. To do that it need a very much larger long range fleet. This is what Emirates, Qatar and Etihad has done in recent years. They have taken a leaf of Singapore Airlines playbook.
The issues with MAS has always been leakages due to political patronage. Recently Pak Lah had to go to MAS to ask them to forgive hundreds of million of debts owed by Brahim. How is this possible when they are the contractors to MAS. Its MAS who should be owing them money.
There are bigger issues too with MAS paying commission on their fuel purchases and aircraft spares. Its costing MAS billions every year.
This is a perennial issue that cannot be solved with Khazanah dictating the terms.

Erik N

Fairuz Lee,  8 September 2014 at 16:47  

Hi Bro, You can write till the cows have gone home or the world is on the last day, nothing will change as long as a GLC or government institution takes over. There are strong cable (not string )attached to their interest for the assistance ( bail out ). Save your breath as there are no sincere effort to really take MAS high up to the air for success and if it does it will only be a short spell as the opportunity for rent seeking process and loots distribution will plunge it back to the ground. Mahathir is right. Khazanah will not be able to help as it is only a charade. Only when MAS is sold to private bidders but still retain the identity as national airline and a top working executive consist of Malaysian race will it see the MAS flying majestically.

Anonymous,  8 September 2014 at 16:47  

Pay no heed to FMT. I think it has been compromised, infiltrated by BN goon reporters. Notice it pays more attention to what MCA/Gelakkan says nowadays? Read it's page today and you can see it.

Anonymous,  8 September 2014 at 18:29  

I agree on all points except bringing back Tan Sri.

Anonymous,  8 September 2014 at 18:54  

I feel like crying

Anonymous,  8 September 2014 at 20:49  

Today, I visited their site after clicking their ad on an online portal. Guess what? I have to abandon the checking of the flights availability - server busy! Such a waste of ad money.

Anyway, their site is so rudimentary (no packages i.e. flights, hotels etc. to make it convenient for people to plan their holidays and thus blur their flight rates) that it does not entice visitors to book through them. It will only make visitors compare their prices with other airlines, which is the wrong way to compete. In a nutshell, they are like a dinosaur who do not use the web to build their marketing reach

I guess they want to take the shortcut by relying on travel agents to bring in the business which at the same time eats into their margins.

Furthermore, they do not bother to look at all their touch points and seek to improve them, either to reduce costs or make profit out of it.

Overall, a lazy airline (not dynamic, complacent) who does not want to put in the hard work to build their business and thrive. They must have a "who cares" mentality as they can never close shop with big daddy around.

The only solution is to bring in new blood (those no-nonsense kick butt people who are hungry for success) for their top level positions.

Anonymous,  8 September 2014 at 23:02  

Senarai terkini ahli parlimen Melayu Singapura

1. Abdullah bin Tarmugi (Sarjana Muda sains Sosial, Universiti Kebangsaan Singapura; Diploma Lepas Ijazah Universiti London)

2. Halimah bt Yaacob (LLB, Universiti Kebangsaan Singapura; LLM, Universiti Kebangsaan Singapura)

3. Hawazi bin Daipi (Sarjana Muda Sastera dengan kepujian, Universiti Kebangsaan Singapura; Diploma Pendidikan, Institut Pendidikan)

4. Dr Mohamad Maliki bin Osman (Sarjana Muda Sastera, Universiti Kebangsaan Singapura; Sarjana Muda Sains Sosial dengan kepujian, Universiti Kebangsaan Singapura; Sarjana Sains Sosial, Universiti Kebangsaan Singapura; PhD, University of Illinois at Urbana Champaign)

5. Muhammad Faishal Ibrahim (Sarjana Muda Sains, Universiti Kebangsaan Singapura; Sarjana Sains, Universiti Kebangsaan Singapura; PhD, University of Manchester Institute of Science and Technology)

6. Dr Yaacob Ibrahim (Sarjana Muda Kejuruteraan Awam Universiti Kebangsaan Singapura; PhD, Stanford University; Post Doc, Cornell University)

7. Zainuddin bin Nordin (Diploma Kejuruteraan Elektronik, French-Singapore Institute; Sarjana Sains, ESIEE)

8. Zainul Abidin M Rasheed (Sarjana Muda Sastera dengan kepujian, Universiti Kebangsaan Singapura)

9. Zaqy Mohamad (Sarjana Muda Kejuruteraan(Elektrik dan Elektronik), Universiti Teknologi Nanyang/ESIEE; Sarjana Sains, Universiti Teknologi Nanyang/Carneggie Mellon University)

Anonymous,  8 September 2014 at 23:32  

No need to be a nuclear scientist to figure out a way to get MAS back to profitability. What you have here is more than enough!

Greenbug Penang 9 September 2014 at 02:04  

The MAS Online Booking is a mess Dato. Two days ago, I went online to book a flight from Penang to KLIA to Jakarta... I was able to get RM896 which was pretty decent compared to Air Asia asking for RM1,378 but as soon as I was ready to make my payment via my credit card, the price changed to RM3,438 due to additional surcharge... so I booked Air Asia.

The MAS Online has been screwed up for few years now. I was once informed to do my booking online by accessing the site only via Google Chrome as the site is not compatible for Internet Explorer search engine. But 80% of the world internet people are with Microsoft's Internet Explorer....

Then there is the Twitter account @MAS... it doesn't respond to anybody... it is there only to attend to VIPs... for eg when Khairy Jamaluddin recently twitted a broken down escalator, @MAS responded within 2 minutes and promised immediate attention.

I twitted a problem booking a family holiday and the @MAS don't even give me a fart!

Sam (,  9 September 2014 at 10:26  

"Renegotiate one- sided contracts such as MAS catering. MAS started its own catering from scratch, bringing a chef from Switzerland. It’s ridiculous to have a 25 year contract earning billions for contractor."

Excerpt from MAS 2002 AR,

Inflight Catering at Kuala Lumpur
International Airport undertaken by MAS
Catering Sdn. Bhd. (MCSB) reduced
operating losses by implementing
numerous cost-saving measures like staff
productivity, maximising in-house capability,
re-introducing active kitchen utilisation,
wastage reduction and increased revenue
from the sales of uplifted meals through a
more dynamic marketing strategy. For the
year ended March 2002, the total loss was
thus reduced to RM35.2 million or a
negative return on revenue of 18.74%
from a total revenue of RM204.4 million.
This was an improvement of RM34.5
million or 49.48% over the previous year.

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