Where’s the beef for Malaysia Airlines?

The snakey-est corporate deal ever: Malaysia Airlines-AirAsia 'share swap'

They say a picture is worth a thousand words. The grin on Tony “Ular” Fernandes  tells a thousand tell. But there’s more to just the grin. If anyone care to look at this picture in almost all dailies in the country this morning, there is one glaring point which a strong message is being sent.

Three versus One even though the one is bigger

There are three Fernandes’s logos in the backdrop; Tune Air, AirAsia and AirAsia X BUT there is only Malaysia Airlines’s logo, stand alone. The organisers of this signing ceremony do not even have the audacity to include Firefly and MASWings logos on it.

Of course, so many persons also asked why should CIMB’s logo on it as well? “They are just the advisers. They are not stakeholders”.

This was and is our all time favourite to remind ourselves who Malaysia Airlines is

On behalf of many Malaysians and our readers here in BigDogDotCom, we only have questions. No answers and most of us started the guessing game. So who ever is close enough to Khazanah Nasional Bhd. management and of course the advisers to this ‘share swap’ deal for Prime Minister Dato’ Seri Mohd. Najib Tun Razak, please answer these questions:

1. Where is the beef for Malaysia Airlines in this ‘share swap’ deal?

Seriously, Fernandes and friends get to own 20.5% of Malaysia Airlines, two very strategic seats on the BOD as non-executive and non-independent directors, seats in the Exco which will decide on operations and all decisions involving money and almost help themselves to the entire Malaysia Airlines as they like.

They already wanted to ‘kill’ the growingly popular Firefly, which is Malaysia Airlines’s low cost carrier as a direct threat to AirAsia.

2. If this is ‘share swap’ deal, why isn’t any of Malaysia Airlines BOD member(s) get to be on AirAsia BOD?

This is something strange. If this is a true ‘share-swap’ deal, then who is representing Malaysia Airlines’s strategic interests in AirAsia. If there is none, how come?

3. How come Khazanah did not appoint anyone who have had relevant airline industry experience as non-executive-independent director in Malaysia Airlines BOD?

There are very experienced former airliners in likes of Tan Sri Bashir Ahmad Abdul Majid who is now MD for Malaysia Airports Bhd., who was an Executive Vice President in Malaysia Airlines not so long ago and persons like these wealth of experience must come very handy for Malaysia Airlines. Unless Khazanah feels that a long time retired banker or satelite broadcaster is a more valuable personality and/or relevant experience to be in the BOD.

4. What is the ‘value add’ for Malaysia Airlines in this ‘share swap’ deal?

Malaysia Airlines have bigger international networks across five continents,codeshares and recent membership to One World alliance. That is without considering the fact that MH flies to very sassy destination like London Heathrow, Tokyo Narita and Los Angeles International, which AirAsia don’t. So what is it with AirAsia that Malaysia Airlines would benefit from?

5. What is it in for Malaysia Airlines’s 20,000 employees?

What would these people get from the ‘share swap’ deal and what will become of them. Will they still have a job after Fernandes are done with his ‘butchery’?

6. Who else benefited from this ‘share-swap’ deal?

Last but not least, who are the parties that benefit from this beside Fernandes, his partner Kamaruddin Meranun and the ‘advisory’ fee CIMB?

AirAsia's stock the last six months

It suspiciously looks like this ‘raid on Malaysia Airlines’ was planned carefully. First it was the appointment of former MITI Minister Tan Sri Rafidah Aziz and PM’s blue-eyed-boy Omar Ong into the BOD. Then it was about trying very hard to get the ‘replacement Labu’. Rumour has it that Fernandes ‘threatened’ to move his HQ to Jakarta was calling a bluff, as the prepatory work for the kill. More rumours about some people pushing up AirAsia’s shares from RM 2.40 six months ago to RM 3.90 last week, so that they ‘share swap’ deal could be two-for-one.

Malaysia Airlines

Now compare that to Malaysia Airlines’s six months ago price level. It was almost the same.

From where we are standing, it looks very suspicious. The modus operandi was similar when ECM Libra wanted to ‘eat up’ four times larger Avenue Capital Bhd, ‘The sardine going after the shark’. Well, they were very successful with the authorities backing them up. Santayana said that people who did not learn for their past mistakes are doomed to repeat that again. In this ‘share-swap’ deal which was almost like a pirate raid, was inked in a manner probably because the majority of us failed to take note of what had happened in the past.

There is one thing peculiar about Malaysia Airlines, which should be pondered. For all the conspiracy theory pundits; former Chairman Tan Sri Dr Munir Majid was sent in a few months before AirAsia went listed on Bursa Malaysia. Conveniently, he exited a few weeks back. Please do the math.

We would like to quote The Edge’s reporting on what Khazanah Managing Director Tan Sri Azman Mokhtar’s take on the ‘share-swap’ deal:

Azman said the transaction has been pragmatically structured in that the business models, brands, boards, governance structures and cultures will remain distinct and separate, but is now complemented by the comprehensive collaboration frame (CCF) work.

“They (the two airlines) are not combining, but competing in some cases and collaborating in some cases. Can you imagine the power of MAS’ 13 million passengers and AirAsia’s 39 million passengers a year. This is a very powerful combination.

“We don’t have time anymore to look at petty things and differences. It’s time to go forward,” he added.

In addition, Khazanah also proposed to acquire 10% of AirAsia X on terms and at a price to be mutually agreed later. Azman said this would be done “quickly”, adding that its investment in the aviation sector currently accounts for about 3% of its portfolio.


This 10% acquisition of AirAsia X is outside the ‘share swap’ deal. So the “Thirteen Million Plus Ringgit” question is:

1. How much is the acquisition will burn Khazanah’s coffer?

2. Will CIMB be part of this acquisition advisory?

3. Will this acquisition, if and when it happens, be made known to public?

Malaysia Airlines’s tagline used to be, “Going beyond expectations”. Khazanah really gave Fernandes this tagline to come through. And for PM ‘Flip-Flop’ Tun Abdullah Ahmad Badawi to play this ‘adviser’ role in seeing both parties get to deliver what they are supposed to is a really pathetic joke.

*Updated 2330hrs

*Updated Thursday 1515hrs

Conveniently after this ‘share swap’ deal went through and Khazanah anounced that they will take up 10% of AirAsia X on a price yet to be determined, an announcement for paveway for an IPO is made.

Thursday August 11, 2011

AirAsia X picks IPO adviser


SEPANG: Long-haul budget carrier AirAsia X has chosen Morgan Stanley as its adviser for its proposed initial public offering (IPO) for which listing plans, targeted for next year, were underway, said AirAsia group chief executive officer Tan Sri Tony Fernandes.

In an interview with StarBiz yesterday, Fernandes said he was informed that a foreign investment bank had been appointed for the IPO; he also indicated that Khazanah Nasional Bhd‘s proposed plan to take up a 10% stake in AirAsia X would be executed “very quickly”.

“Khazanah will be issued new shares in AirAsia X,” he added, without specifying valuation details.

Fernandes: A foreign investment bank has also been appointed for the IPO. – AP

Khazanah expressed interest to take up a 10% stake in AirAsia X at the signing ceremony of the landmark airline deal on Tuesday which sawMalaysia Airlines (MAS) and AirAsia’s major shareholders – Khazanah and Tune Air Sdn Bhd – swapping shares and signing a collaboration pact.

Tune Air, which is the investment vehicle of AirAsia founders Fernandes and Datuk Kamarudin Meranun, will own a 20.5% stake in MAS while Khazanah will have a 10% stake in AirAsia.

AirAsia X had sent out the request for proposals for its IPO exercise to local and international banks in May and were looking to appoint the advisers after a board meeting in June. AirAsia X Sdn Bhd CEO Azran Osman-Rani had said in April that AirAsia X’s IPO could raise similar amount as its sister airline AirAsia Bhd, which had raised RM863mil through the issuance of 700.51 million new and existing shares in AirAsia’s listing exercise in 2004.

Azran had said a dual listing was still a viable option, but remained undecided as to which market was suitable for the airline. Some of the suggested markets for its dual listing included Europe, the United States and Hong Kong.

The listing of AirAsia X has been on the cards since last year, following the separation of its commercial operations from AirAsia.

However, AirAsia X had deferred plans to proceed with its listing on the local bourse this year as it was unclear over its future growth, which relied heavily on route allocations. AirAsia X has lobbied relentlessly to fly selected routes that have strong passenger traffic such as KL-Sydney but had its pleas fall on deaf ears.

Without a route allocation policy by the Government, the fear was that investors would not have the clarity needed to invest in AirAsia X.

Azran said the airline needed to be able to chart its growth strategy and be certain of the routes it would be receiving before investors would pump money into the company.

With the collaboration agreement signed by MAS, AirAsia and AirAsia X, the idea was for MAS to focus on being a full-service premium carrier, AirAsia on being a regional low-cost carrier (LCC) and AirAsia X, a medium-to-long haul LCC.

Fernandes said another impediment was removed for AirAsia X, with the signing of the collaboration agreement and Khazanah looking to take a stake in AirAsia X.

“Another concern has been removed completely, as investors now have clarity and know the vision of the airline which helps tremendously in AirAsia X’s listing,” he said.

The collaboration signals a changing of tides for the AirAsia group, as it can now minimise its lobbying for routes and concentrate fully on the growth of its airlines.


Now that there is an ‘anchor tenant’ and it is a Government investment arm, prospect for Fernandes and friends are shining much brighter. Easier to sell in the international market, especially lucrative intercontinental routes opening up for them in much shorter time otherwise.

Hence, the plot thickens!

Published in: on August 10, 2011 at 20:46  Comments (42)