Air Asia: PM ‘Flip-Flop’ Abdullah’s bail out in the making?

In the world of commercial aviation, the model that many have known by now, Ryanair, the airlines that Air Asia is based on, is not in the best financial status despite making profits for the last fiscal year. The escalation of fuel prices at the global level will be eating into the profits of low cost carriers.

Sources from the airline industry has made known privately that Air Asia is the next budget carrier to go Ryanair’s way. The promoters and directors of Air Asia have amassed huge wealth from the capiltalization and listing exercise of the fledgling whilst the airline is facing acute financial problems with big orders of aircrafts that it cannot fulfill (To date, Air Asia made a commitment of 100 A 320s from Airbus with another 50 more as options).

When AirAsia was listed a few years back, they issued 880 million shares of 10 sen each and they did not really have assets except probably a couple of tables and chairs. They did not own any aircraft as all of these B737s then were just leased. They probably used their over glorified ‘travel agency business model’ to illustrate ability to make money on other peoples’ money, to qualify for listing. In the past, Air Asia have had several mini mishaps, that were not reported in mainstream media. Even though Malaysia Airlines operate the same B737s (probably older), they did not get as many as Air Asia’s tire blow-outs or skidded on runaways during take offs or landings.

So now, when the chips are down, what will happen to the low cost airline? Even when Air Asia were reaping good money from their gimmicky pre-sales, they did not bother to invest in maintenance, repair and overhaul (MRO) facility; a must for an airliner of that operations size. They reason is simple: It is a high investment and the owners of Air Asia probably don’t plan to stick out that long.

Malaysiakini has the story:

Airlines must merge or go bust: Fernandes

Malaysiakini – Jun 16, 08 2:07pm

Budget carrier AirAsia said today that surging fuel prices will force carriers worldwide to merge or face bankruptcy.

AirAsia’s founder Tony Fernandes insisted he will continue with an ambitious expansion plan despite the industry turmoil which he said had sent 27 carriers out of business in the past four months.

“We are seeing a consolidation in the aviation industry. Some will merge while others will go bankrupt. A lot of people are not going to survive this (fuel hike) including Asian budget carriers,” he told reporters.

Fernandes said AirAsia had been approached by other airlines about tie-ups and operating deals, but did not elaborate.

He insisted the carrier would stick to its plan to expand routes, increase flight frequency and accelerate the delivery of the remainder of its 175 new Airbus A320 aircraft.

“There are two ways to deal with the oil prices. You can put your head in the sand and kill yourself. But we believe we need to go out and market,” he said.

“I’m not going to give up now because of high oil prices – we have 6,000 staff.”

He’s optimistic oil prices will come down

Fernandes said AirAsia will mount additional flights to Hong Kong and Guangzhou and open new routes to Ujang Padang and Balik Papan in Indonesia.

“We are still bullish. Ticket sales have been very good in the last few months. A lot of Singaporeans are flying to Kuala Lumpur to use AirAsia. We do not see any slowdown. There is still a big untapped market potential,” he said.

“There is no change in our growth plan,” he said, adding the carrier would not simply increase ticket prices as a means to offset rising costs.

Fernandes said he was optimistic that oil prices would come down but said: “My job is to survive even if the oil price is 200 dollars a barrel.”

Due to the economic slowdown and the introduction of new aircraft, as well as increased connectivity between regional destinations, the corporate sector has been starting to use the budget carrier.

“The corporate passenger segment grew 300 percent in the last three months,” Fernandes said.

In May, AirAsia said its net profits defied escalating fuel prices to leap 86 percent in the first quarter.

AirAsia, launched in December 2001 with just two aircraft, has become the region’s biggest low-cost carrier and been imitated by national carriers and other low-fare start-ups.


So this attached statement by Air Asia “Mr. Wonderman” leaves me wondering if another bailout is on the cards where Malaysia Airlines (MAS) could be asked by PM ‘Flip-Flop’ Dato’ Seri Abdullah Ahmad Badawi and his corrupt cronies to bail out Air Asia by taking it over and hence absorb all the costs of the aircrafts order. All this under the pretext of “merging” to ensure survival.

MAS, credit to Idris Jala, did better than Air Asia with less fanfare but more credibility in the airline industry. His oil & gas experience and knowledge of the petroleum market has enabled him to hedge on petroleum hence putting MAS on firm grounds despite the spiralling costs of oil.

Kudos Idris Jala!

On the same note, Malaysia Airlines decided to withdraw all ‘interline’ perks accorded to Fernandes, for inter-industry professional courtesy (despite that Malaysia Airlines do not have interline and reciprocity arrangements with Air Asia). This is a reaction for Fernandes ‘unprofessional conduct’ shown in their over-zealous “greediness” statements in the guise of ‘industry competition’, especially after MAS succesful zero-fare promotions. MAS as a ‘five star value carrier’ airliner has managed to compete against Air Asia’s low cost carrier segment, but with full 5 star airlines services.

The Star has the story:

Tuesday June 17, 2008

MAS terminates travel privileges for AirAsia CEO

By LISA GOH

PETALING JAYA: The war of words between AirAsia and Malaysia Airlines seems to have moved to a personal level with the latter terminating discount benefits for the former’s group chief executive officer Datuk Seri Tony Fernandes.

In a letter dated May 28, MAS managing director Datuk Seri Idris Jala said the MAS management team had decided it was “best to withdraw” Fernandes’ travel privileges following protest letters from many MAS staff.

“I thought I should let you know that there have been numerous complaints from MAS staffers questioning the special privileges granted to you since 2006.

“Many of them feel hurt and frustrated with what they read in the news … in the wake of your various negative statements about Malaysia Airlines,” he said in the letter.

Fernandes said he had been enjoying 50% discounts for first/business class and 75% for economy class. He said he never used the 75% discount as it was only for domestic routes which he flew on AirAsia.

When contacted, Fernandes said he felt surprised when he received the letter “about three weeks ago”.

He explained that discounted or free seats were a courtesy offered to fellow airline chief executive officers and this was practised even between the “bitterest of enemies”.

“We also offer free seats to Idris, but he’s never taken up the offer,” he said. That offer to Idris, he said, would not be withdrawn.

Asked if he was offended by MAS’ withdrawal, he replied: “No, just a little disappointed.”

“I never complained when MAS launched its free fares promotion. It is nothing personal and I will continue to ask for a level playing field.”

“I’d like to say that MAS has the best crew and I’ve always been treated warmly by MAS staff. They have always paid me utmost compliments on what we’ve done with AirAsia.

“I’ve always preferred to fly with MAS but I guess all good things must come to an end,” he said.

He said he received 75% discounts from Cathay Pacific and Qantas Airlines, and flew free with Virgin Airlines.

MAS confirmed this move.

“We’ve provided the travel privilege out of goodwill since 2006 in response to Tony’s request for interline facility for his own travel on our international routes although AirAsia does not have an interline agreement with Malaysia Airlines,” Idris said.

The statement added that according to industry practice, “only airlines with interlining agreements will consider granting such travel privileges for airline employees”.

Even though the company has good cash position (from the ‘pay first, use later’ schemes that their business model is completely based on), the volatility of escalating operations cost will kill them, probably in the medium term. Not having their own MRO means they have to farm out these services, to third parties abroad, something they cannot control entirely.

Probably when Air Asia start to run into difficulty, they would use their ‘Level Four’ connection (as always) and make the Government bail them out; i.e. nationalised their operations by Malaysia Airlines – ‘in the interest of public transportation, communications and national integrity’.

So please Malaysians, beware the potential of another bailout to save another crony of PM ‘Flip-Flop’ Abdullah’s family!

Please do not forget the speed the LCCT was built and the contract handed out to PM ‘Flip-Flop’ Abdullah’s “Biras”. Air Asia has had its fair share of assistance way more than that given to MAS but in the end, truth will prevail: Air Asia is just pure hot air!

Just hope that all of these will be proven wrong so that no more of the Rakyat’s money is robbed by these robbers in government clothing!


Published in: on June 17, 2008 at 21:04  Comments (14)  

Riong Kali: The Liar’s agenda to demonize Tun Dr. Mahathir as a ‘racist’

Today, Former UMNO President and BN Chairman Tun Dr. Mahathir Mohamad proved that he was right. He was lambasted by so many for his call in Teluk Intan that the Malays have right to demand part of the economic pie, especially from activities created after the New Economic Policy (NEP) was implemented.

NST has the story:

008/06/16

Dr Mahathir’s ‘racist remarks’ draw flak

By : M. Husairy Othman, Ridzwan Abdullah and Eileen Ng

 

KUALA LUMPUR: The Malays have every reason to fight for their rights, said Tun Dr Mahathir Mohamad, as non-Bumiputera groups again lamented over the former prime minister’s apparently racist line.

 

He claimed Malaysia was the only nation in the world where the main ethnic group had admitted other races and endowed them with rights.

“We (the Malays) are not the type to protest and have accepted those who came to the country.

“We even accorded them rights unlike other countries,” he said at a talk titled “The Future of Malaysian Malays” organised by Warisan Pekembar, a non-governmental organisation, in Teluk Intan on Saturday.

Some 2,000 people attended the hour-long event.

In an immediate response, Gerakan secretary-general Datuk Seri Chia Kwang Chye said national unity was crucial to meeting the challenges of the present day.

“It’s time we thought like Malaysians and as Bangsa Malaysia to work together to forge a united country and face future challenges as one.

“Global challenges like the fuel and food crisis are best tackled and handled together. In light of these challenges, it is inappropriate to start questioning each other’s contributions and rights.

“It is more important to treat everyone as Malaysians, regardless of race, in order to contribute effectively to the country’s development.”

Dr Mahathir expressed sadness at being termed a racist each time he spoke on the rights of the Malays.

“When they speak of their rights, people say it is all right as we live in a multiracial country.

“I am extremely sad but we have every right to speak in defence of the Malays,” he said.

Malaysian Associated Indian Chambers of Commerce and Industry president Datuk Kenneth Eswaran said the special rights of the Malays had never been questioned, at least in Barisan Nasional.

“There is no basis whatsoever to Dr Mahathir’s claims. The Indian community, at least those in BN, has never questioned the economic rights of the Malays.

“Dr Mahathir should know this better as he was part of the system at one time,” he said.

The former prime minister also demolished the notion of a Bangsa Malaysia, which he had proposed.

“We have failed to create a Malaysian race and must accept the fact that we are made up of different races and religions.

“Malaysia is not like other countries. We have come up with policies to help the Malays without sidelining the interests of other races.

“The New Economic Policy was designed not to deny others of their rights but to improve the economic status of the Malays.”

He said peace and harmony in the country could only be achieved when the economic divide between the races was narrowed.

“If the gap is too big, it might lead to dissatisfaction by certain groups and to untoward incidents like the May 13 riots in 1969.”

MCA vice-president Datuk Seri Dr Fong Chan Onn said: “Now is not the time to distinguish between Malays and non-Malays.

“We are first and foremost Malaysians and we (MCA) articulate our views as Malaysians.

“As MCA leaders, we are responsible for everyone and are constantly aware of the sensitivities of Malaysians and the multiracial context we live in,” he said.

 

***************************************

Tun Dr. Mahathir articulated his call on Saturday. The Malays, being the majority were systematically marginalized and deprived from development, which include basic infrastructure, education and health services and thus, comprehensively and economically left behind.

Therefore, the NEP was designed to correct this and ensure harmony and stability; ingredients for growth and eventually prosperity. This strategy was proven right. After NEP, the country managed achieved stability after the bloody 13 May 1969 racial riots and this created a conducive environment economic growth, where the Non Malays benefited tremendously with opportunities made available and economic pie expansion.

 

Lately, whenever the Malays openly discourse about their affairs and rights, which include provisions within the Constitution of the Federation of Malaysia, many turned their guns towards these claimed ‘racism’ remarks. However, when some of these Non Malays talked about their affairs and interests, they say it is completely alright, appropriate and even timely. Then they went a step further to provoke the Malays, which include questioning the ‘social contract’ achieved by Malay leaders led by Tunku Abdul Rahman, Non Malay leaders and the Rulers, and provisions made in the Constitution, such as Article 153.

 

Why NST highlighted these remarks and reaction against what the Former Prime Minister said in Teluk Intan when they did not even bother to report the latter’s call in the first place?

NST also went on the mode of ‘promoting’ the dismantling of the NEP, something many even urbanite Malays nowadays advocate. The arguments raised by the Malay urbanites are utterly blinkered as NEP was designed to correct the systematic socio-economic deprivation of the Malays, eradicate poverty through education and economic development programs. Just because these urbanite Malays no longer in the poverty trap and managed to get comprehensive education all the way, they advocate the dismantling of the NEP. Riong Kali connivingly use this narrowed perspective as a agenda to further refute Tun Dr. Mahathir in his Malay nationalist mode, for the continuous betterment of the majority in this Tanahair.

Then Riong Kali went on a step further. He reported MIC President Dato’ Seri Samy Vellu’s grouses against Tun Dr. Mahathir as being racist.

2008/06/17

Samy Vellu: Dr M failed the Indian community

 

KUALA LUMPUR: Tun Dr Mahathir Mohamad did very little for the Indian community when he was prime minister, MIC president Datuk Seri S. Samy Vellu said yesterday.

 

Samy Vellu said the Indians had to struggle on their own for more than 140 years and achieved success only through sheer hard work .

“Despite the MIC appealing again and again for help, he refused to budge,” Samy Vellu said in response to Dr Mahathir’s remarks during a talk in Teluk Intan on Saturday.

The former prime minister had said the Malays were willing to admit other races into the country and endowed them with rights.

He had also demolished the notion of a Bangsa Malaysia and said Malaysians must accept the fact that they were just too different to be known as one race.

Dr Mahathir’s remarks have drawn flak from non-Malay groups, who felt that national unity was crucial for the country to meet its future challenges.

Samy Vellu said Dr Mahathir should not be taking a racist approach at a time when Malaysians were working hard towards unity.

***********************************************************

 

Why can’t the NST do their research properly before publishing this piece? Was Tun Dr. Mahathir as what Samy Vellu said he was, “Unhelpful to the Indians’ cause”?

During Tun Dr. Mahathir’s time, Indian ethnic businessmen flourished and achieved positions even within Government more than any other era. Some even managed to become billionaires, with the opportunities Tun Dr. Mahathir’s leadership allowed them, instead giving them just to the Malays. Even Samy Vellu’s own family benefited tremendously from the prosperity created by the economic growth.


The Indians, through MIC was granted university college licenses, which include a dedicated medical college. On top of that, in June 2002 MARA, an agency enacted by Parliament to specifically develop the Malays via education and entrepreneurial development programs, opened the MARA Junior Science Colleges doors to the non Malays and unprecedentedly gave a specific quota. MARA also trained Indian youths under the Giat MARA schemes, when they faced grave issues of gangsterism amongst the Indian youths as MIC failed them.

Could this be on top of systematically fanning the racism remarks against Malay nationalism and nationalist like Tun Dr. Mahathir, this is also Riong Kali’s persona non grata agenda to demonize the highly respected statesman?

Conveniently, six days ago was the second anniversary Riong Kali lied to the world about the ‘so called’ Tun Dr. Mahathir’s meeting with PM ‘Flip-Flop’ Dato’ Seri Abdullah Ahmad Badawi in Tokyo.

Published in: on June 17, 2008 at 09:35  Comments (20)