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Sakmongkol ak 47

Friday, 5 September 2014

Saving MAS

Can we talk? (in memory of Joan Rivers). 
Let us talk about a different subject. Let’s talk about MAS. In Joan Rivers’s language- can we talk means, saying the truth about things. So let’s say some truths about MAS.
When people talked about restructuring MAS, I am wondering whether these people understand the airline industry. For example, I would like to simply ask a question at this early juncture; how did the consultants employed by Khazanah come to the conclusion that we need only about 14,000 employees?
Why do we need consultants to draw up a business plan for mas? What about the highly paid people in present day MAS- the Panamara Brigade?  Where are the brainy people at MOT, the PM’s department, the finance ministry? Do these people lack the knowledge to draw up a business plan for MAS?
Does anybody know that in the early years when MAS was operating, the fares were fixed by the government? It wasn’t MAS who set the fare prices. The government people at MOF will go through the detailed costing and then set prices.
When Air Asia began to slowly kill MAS with its low fare operations, MAS went before the government asking permission to reduce its fares. What did the government do? It refused the request. That meant preventing MAS from competing with Air Asia. Or was Air Asia given special treatment?
Let me tell you a bit of MAS history. The man wanting to create MAS was Tun Razak. That is why I hope the son is not stupid enough to do another Felda on MAS- undoing what the far sighted father did. Tun Razak was frustrated with MSA- people had to transit in Singapore before flying to other destinations in Malaysia. Tun Razak wanted to have our own airlines.’ He tasked Tan Sri Aziz Rahman who went on to serve a the longest serving MD of MAS later to draw up the de-coupling of MSA operations. That’s how MAS came into being, with its wau logo and and all.
Now let me tell you a little bit about Air Asia. I thought Air Asia was formed by the late Tan Sri Yahya of DRB. It wasn’t. It was formed by the late Tan Sri Jamil Jan. One day, Doctor Mahathir who was unhappy that MAS didn’t fly to certain routes because they were unprofitable, asked Jamil Jan to look into the formation of an airline to fly to these areas. Jamil Jan of course didn’t know anything about the airlines and so he met with Tan Sri Aziz Rahman who seconded some people from MAS to form Air Asia.
But the airlines didn’t work out because the routes were unprofitable in the first place. Air Asia was hived off to DRB under Tan Sri yahya. Tan Sri Yahya died before the business can be developed farther.
So in came Tony Fernandez. He went before dr Mahathir and bought Air Asia for RM1 assuming the debt at that time. It operated as a regional airlines.
The company lost money. Tony told Mahathir he sold the house , the chairman mortgaged the house and all the usual sad stories which usually moved Dr Mahathir. So he asked for permission to fly domestic as a low cost carrier.
That was the first mistake we made We opened our house and let the thieves in. once in, they took everything. It’s like Kassim Baba taking everything.
If MAS flies to KB at RM200, Tony can do it at Rm100. People don’t want to eat or drink on a 40 minute journey. All they want is to arrive at the destination. So Tony and Air Asia slowly began eating into MAS ‘s business.
MAS on the other hand- is sticky about its fares. The fares as I have told you were all set by the government. The MAS people pleaded to reduce fare to compete, the government refused.  That’s the second mistake.
So what is the rationale behind the reduction to 14,000 staff? We are intentionally making ourselves smaller. Come next year, when the Open Sky policy is implemented in Malaysia- every other airline will virtually be a home-grown airline. SIA can come into Kuala Lumpur, pick up passengers bound for ay destination in the world. No one has to negotiate for landing rights.
Now, can a downsized MAS compete with bigger networked airlines? It should be the other way- MAS must grow bigger to compete under the Open Sky regime. It must operate out of all the capital cities in Asean and the world like any home-grown airline- pick up passengers and fly them anywhere. So how come Khazanah who seems to not know the airline industry agree to cutting down MAS staff?
The first thing we should do, I think is to wean off MAS from Khazanah. Place it under an SPV dedicated to rebuilding MAS. Can it be done? Why not. It’s not Khazanah’s money. It’s government’s money. Don’t just put in RM6 billion- put RM10 billion. We are going to save our national icon.
Get the right people to manage the new MAS.
All those managers with gargantuan salaries? Easy. Re-negotiate their employment contracts. If they are not happy, give them severance pay and ask them to leave. The new managers will be paid prudently and pay must be linked to profitability.
So please tell the Malaysian public, how did you come to the magical number that MAS needs only 14,000 staff?
More to come.


Anonymous,  6 September 2014 at 00:43  

Dato, am beginning to understand the sad history of MAS. As soon as it became successful, the sharks circle round for their share. A great article, you write for all to understand. The reality is we don't have the right people with the right stuff inside them, and the 6 or 10 million dollars aid is already attracting the predators.
It may be better to close shop.

Anonymous,  6 September 2014 at 08:17  

Tq for clarity made to me so we move on now.

Mat Bon,  6 September 2014 at 09:37  

Dato', what is the rationale of decoupling MAS from Khazanah? We will end up creating another expensive behemoth. What would the behemoth do? Decide on policy matters? Then what is the MAS' BoD does than? It is not that I am supporting Khazanah though.

There is a CEO who have spent very long hours studying MAS' issues and who have the political clout as a Minister. Unless we have a very strong conviction that his BTP is gonna fail, let him completes the job.

Job layoff and renegotiated contract is unavoidable. Think of it as a person with breast cancer. Unlike other types of cancers; breast cancer can be addressed via removing the breast. So as much as we sayang the breast, the person's live is more important.

Anonymous,  6 September 2014 at 11:09  

National Mould must change before we can even look into your suggestions.

Anonymous,  6 September 2014 at 12:18  

CONsultants are like a postman.

My experience tells me that they will come in, grill and squeeze the brains of the "hands-on experts" (mostly staff of the client as they know better), present the findings/solutions and get paid.

hurricanemax 6 September 2014 at 15:04  

BAH! why is there a need for a national airline? Misplaced Pride? 'Boleh' spirit? HAHAHA! Methink FDI do not come into a country just because it has an outstanding airline. Just let this perpetually Mismanaged Animal Sigh to a natural death and allow for a full fledged privately owned airline operate$ on its own $team. Just do well or die.

Anonymous,  6 September 2014 at 17:22  

Sak, nak untung macam mana jika kedua2 'cash cow' MAS ie catering dan cargo di beri kapada kroni.

Apakata kata kita suruh al kutty selesaikan masallah MAS ni.

Cuma saya pasti dia akan suruh kroni beliau Syed Mokhtar ambil alih dimana pereompak ni akan jual semua aset MAS dan akan menyuroh kerajan bodoh Jibby beli balik !!!

Ha Ha Ha

bruno,  6 September 2014 at 21:22  

Once upon a time after the split of MSA,there was only one,I repeat again,only one national airline.Nobody ever envision another airline,especially a low cost airline to be a competitor to MAS.

As a lone ranger in the national airline of their respective gomens,MAS has taken the South route,while their recently divorced spouse has taken the North route.

With no local competition MAS has failed in every categories.With Air Asia it had sunk into the mangrove swamps of no returns.

Now even going private MAS has Air Asia besides other airlines as competitors when new air policies are in effect.The huge bulk of MAS losses are in overpaid employees,catering and spare parts purchasing.

When buying from open bidding by caterers or suppliers,buyers usually get discounted prices because of their huge bulk purchases.But MAS has to pay an extra few hundred percent more to enjoy these royal privileges.

As long as these leeches are in business,going private or being a public company makes no loads of difference.

Anonymous,  7 September 2014 at 02:20  

Not sure if your statement that MAS need's the Govt approval to lower prices but even if so, I'm pretty sure that MAS does not have to do so anymore, else Tony Fernandez won't be complaining on how MAS is lowering prices and operating at a loss because they have the taxpayer's money to fund them (hence not profit driven).

MAS is in trouble because it's bloated. Contracts are signed with politically connected parties that were 1 sided. They're not in a position to compete with LCC when they're handicapped in such a way. There's also too much fat in the company. That, I feel, is their downfall. Not the Govt's policies or intervention.

Greenbug Penang 7 September 2014 at 03:30  

Let me give you one example that I know of personally, Dato Sak... I used to know a young pilot some 30+ years ago based in Kota Kinabalu and he was flying a Fokker Friendship and a also sometimes Twin Otter.. Later he flew B737, A330, B777 and B747.. He was also Chief Pilot and at one time Operations Director. At 55, they chucked him out and brought in an expat...

His name is Dato Captain Nik Huzlan and now he videotapes big bikes on Sundays going up the Genting Ulu Yam stretch... very fit, young and dedicated but they cut him off 10 years too early... such is the problem with MAS!

Del,  7 September 2014 at 13:38  

So let me get this straight you want to waste even more PUBLIC money than the government already wants to waste on a failed company that hasn't made so much as a cent in the last decade? You also lament the fact that Malaysian now pay less for domestic airfare than the usurious prices MAS used to charge? Thank goodness no one will actually listen to you with economics like the country would go broke!

Anonymous,  7 September 2014 at 14:32  


There is no justification to sack 6000 workers.There was no diagnosis done to identify the problems nor a pro-forma business plan to justify a work force of 14000 people in the new MAS. How the number of MAS staff to be axed is derived is discussed in the mas troubleshooters site.

Alias Dasuki 7 September 2014 at 14:32  

I see no difference between MAS and BBMB, which was made to go bust some 15 years ago. In MAS loss accumulated through mismanagements, whilst in BBMB hard cash was freely dished out and subsequently machineries were set up to ensure that the money cannot be collected. The common factor in both is the fact that no one was made accountable for the mess.

Wan Zamzuri Wan Hasenan 7 September 2014 at 20:44  

Dato' Sak,

Very good article on national interest. WZWH like Dato' produce more articles like this for the best interest of our nation.

bumi-non-malay 8 September 2014 at 04:41  

MAS = MALAYSIA...... led by inept, incompetent, and an UMNO-BN-ISIS, Boko Haram, Hamas Corrupted racist government agebda only interested in How much of that $6 Billon & 4th Bail out, can these Scum of the Earth Pocket for GE14 and the Sort of money to BUY OUT MP, MB, ADUN + some overseas house, apartment + Scholarship for their precious children of mediocre result in private English schools!!....I know...because I encounter them daily...getting driven in POSH - Expensive Cars heavily tinted!!

Don't get too ROMANTICS with the 4th Bailout....One that is coming and UNSEEN by BLINDED Malaysia is the Bailout of Proton, government servants align to Pakatan and the tune of 25,000 workers with tax Payers money of course and UMNO-BN Boko Haram, ISIS, Hamas, Al Qeada...will blame Pakatan for that somehow!!

Everything UMNO-BN touches is a DISASTER......because Allah have CURSED Racism in Malaysia.....

War in Sabah, Crime Spree, corporate crime spree in UMNO-BN control states ...... ask for the Statistics and MAKE SURE EVERY Little PETTY Crime is reported to Police EVERYTIME.......then ADUN and MB, MP can Hold police & their cahoots in UMNO-BN to task....Soon your EPF Money can only be withdrawn by 5% a year until you DIE!!....Malaysia is Economic Disaster Bound.....Ringgit = Zimbabwe Dollar......start trading in Foreign Currency soon...Singapore, Australia and USA dollar...

Wan Shamsudin 8 September 2014 at 11:29  


MAS is losing money, what's about Proton. Companies need to be free from politics/involvement of politicians only can be managed properly and make profit.

MAS need to review all the service contracts, renegotiate or call for new tenders. The most crucial is the catering contracts. Who is the person responsible to award that catering contracts,and the period of contracts is questionable, which is loop sided and only benefited the catering company. I believed there are so many contracts like this in MAS.

The same goes to Proton. Proton is losing money but all the vendors/suppliers are making money..SO WHO IS TO BE BLAMED. Who is responsible, yet no action taken..What is MACC doing???

Anonymous,  8 September 2014 at 14:07  

Slight clarification Dato'. Tan Sri Jamil Jan was given the license to start off Air Asia at the insistance of the Good Dr. Mahathir, But Tan Sri JJ after consultations decided not to. It was then Dr, M handed Hicom over to Tan Sri Yahya. Wanting to please Dr, M, Tan Sri YA, in one of the first thing that he did on amalgamating DRB with Hicom, did was to start off Air Asia.
As foreseen by Tan Sri JJ, the airline ran at a loss. This was as exp;icitively stated by you was due to the poor routes given to AA. All profit making rutes had been taken up by MAS. Furthermore AA had to operate from Penang. Just imagine passengers from KL flown to Penang first before leaving for their final destination.
Tony Fernandez stepped in and he was given the nod to go into more lucrative routes that were denied earlier. During Pak Lah's time Tony scored again when routes used by MAS were taken and given to AA. The rest is History. AA made millions while MAS went into debts.

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