Mincing Malaysia Airlines

The Malaysia Airlines-Air Asia share swap which was concluded almost two months ago is now moving into new chartered waters. The parties which benefited the most from the most unfair ‘share-swap’ deal in Malaysian corporate history is plotting to carve the carcass of the game they killed.

Even though many could not see the ‘beef for Malaysia Airlines’ for the share-swap and giving so much power to Air Asia CEO Tan Sri Tony Fernandes in Malaysia Airlines, Deputy Finance Minister Dato’ Dr Awang Adek Hussin told Dewan Rakyat this morning the Government had no choice but to go ahead with the merger.

Ministry: MAS, AirAsia share swap only option

2011/10/05
By Minderjeet Kaur
news@nst.com.my

THE Finance Ministry said the government had no choice but to go ahead with the share swap between AirAsia and Malaysia Airlines (MAS) to allow the national carrier to move forward.

Deputy Finance Minister Datuk Dr Awang Adek Hussein said it was part of efforts to improve the financial standing of MAS which was moderately successful, but needed a boost to face new challenges.

Furthermore, he said, MAS lost RM770 million in the first half of this year.

“We had no choice. If it makes more losses, the government will have to inject funds and we will face more anger,” he said in reply to a question from Datuk Ismail Kasim (BN-Arau).

Awang Adek said the share swap was based on the guiding principle that both parties would benefit. He said AirAsia had proven to be a success in other developing countries such as Thailand and Indonesia.

“MAS can learn from their experience to move forward.”

He said the deal would also see both airlines expanding their businesses.

Awang Adek said state investment arm, Khazanah Nasional, was undertaking due diligence before deciding whether to take a stake in AirAsia X.

The deal on Aug 9 involved Khazanah Nasional swapping a 20.5 per cent stake in MAS for 10 per cent in the budget carrier.

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

On the contrary. Malaysia Airlines did learn from their school of hard-knocks. They decided to go for the ‘hybrid-model’ instead of ‘legacy airline’ when they set up FireFly and managed to convince Ministry of Transport to allow them to go for flexible fare model, despite Fernandes-benefited-Level-Four ‘Airline Rationalisation’ plan which was shoved down Malaysia Airlines’ throat in 2005. That was when Malaysia Airlines surrendered many prized-routes for AirAsia, which include the Sabah-Sarawak Rural Air Service which helped to build their business to what it is today.

When FireFly introduced jet service this year, they started to be a serious threat to AirAsia. The new low cost carrier is proven to be likeable and started to become very popular, especially from those who used to travel to Sabah and Sarawak on AirAsia. So part of the purpose of Fernandes making the kill in the ‘share-swap’ is to kill FireFly.

As soon as he got in, the Sapphire Airlines was announced. Fernandes was zest to launch Sapphire Airlines on 11 November 2011. Despite its business model not yet made clear, it received a very strong opposition from the employees. It was rumoured that 80% of Malaysia Airlines employees would be transfered to the new airlines. The Malaysia Airlines Employees Union (MASEU) threatened to go on industrial strike.

However, after a face-off with Malaysia Airlines Chairman Tan Sri Mohd. Nor Yusoff, they decided to put on hold their intention to strike.

Star Biz reported that Sapphire Airlines might not happen after all. Within this week, sources within shared the info that Malaysia Airlines would continue to be a premium intercontinental carrier using all their wide body aircrafts (A380-800s, B747-400s, B777-200s, A330-2oo/300s) where else all narrow body aircrafts (B737-400/800s) would be operated by FireFly as a regional premium airlines.

The announcement which took many to the feeling of ‘The rug being yanked from under our feet’ is when Fernandes was quick to announce his personal involvement in acquiring mediocre English Premier League Queens Park Rangers and swift as lightning, Malaysia Airlines sponsorship of RM 18 million to QPR’s home games.

12 September 2011 Last updated at 14:44 GMT

QPR sign sponsorship deal with two Asian airlines

QPR's new sponsored shirts
The new sponsored shirt will be worn for the first time against Newcastle

Premier League team Queens Park Rangers (QPR) has announced a new shirt sponsorship deal with carriers Malaysia Airlines and Air Asia.

Malaysia Airlines will appear on the home kit, while Air Asia features on the west London side’s two away kits.

Both airlines are connected with club owner, Malaysian businessman Tony Fernandes, who took over in August.

QPR had been without a shirt sponsor after a three-year-deal with Gulf Air ended in the summer.

‘Positive’

The club returned to the top flight of English football this year for the first time since the 1995-96 season, and they currently sit 15th in the Premier League table.

The new sponsored home shirt will be worn for the first time against Newcastle United on Monday evening.

The club did not reveal the financial figures behind the new deal, except to say it was “a multi-million pound shirt sponsorship”.

“We are extremely positive about building a thriving relationship with both businesses in a bid to broaden our exposure,” said QPR chief executive Philip Beard.

Malaysia Airlines’ executive director, Mohammed Rashdan Yusof, said: “Malaysia Airlines is elated to be associated with QPR’s ascendancy to the Premier League.

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

So many questioned why Malaysia Airlines bought into the sponsorship of QPR. The wittiest remark from this really bad deal is “If they really felt QPR sponsorship is commercially good decision, why for jersey of the home stadium games? Why not away games? Wouldn’t more British footies would see Malaysia Airlines in Old Trafford, Stamford Bridge, Anfield, Emirates Way, White Hart Lane and St James Park?”.

Another chap was quick to remark, “I thought Malaysia Airlines is having a serious problem with profitability to a point where they brought Fernandes in and gave away 20% shares for a song, so why are they spending this money?”.

The most important question about this sponsorship deal of QPR is now that Fernandes and his partner Dato’ Kamaruddin Meranun are on Malaysia Airlines BOD, were they present when the decision to give away the RM 18 million? Isn’t that a conflict of interest?

If it is, then Khazanah had sold away Malaysia Airlines to very unscrupulous businessmen. Needless to remind that these were the same men who used most of Malaysia Airports Holdings Bhd’s 39 airports but refused to pay even though they collected the airport tax from the passengers, up front.

So believed the QPR sponsorship was a red herring. The week they announced the deal is when Malaysia Airlines agreed at Tolouse to form a special purpose vehicle (SPV) for maintenance, repair and overhaul (MRO) operations where Airbus would be a joint venture partner. This is very much neccessary for AirAsia as the low cost carrier been farming out their MROs and now their earliest batch of the A32o should need heavy MRO work. Sending it abroad would eat into their profitability.

Coming back to MASEU. The employees grievances have been taken notice by International Transport Workers’ Federationwhere MASEU is an affiliate. This global level attention is coupled by the fact AirAsia is a company without workers’ union. This would prove to be a thorn for both airlines’ expansion program into certain sectors. And now Fernandes is a director to both companies’, especially with executive powers at both.

Not only we fail to see the ‘Beef for Malaysia Airlines’ and even if there actually was some, in has not been minced away.

Published in: on October 6, 2011 at 02:00  Comments (10)  

The URI to TrackBack this entry is: https://bigdogdotcom.wordpress.com/2011/10/06/mincing-malaysia-airlines/trackback/

RSS feed for comments on this post.

10 CommentsLeave a comment

  1. Bro,
    Everything is opaque lately. This is when the country needs farsighted leaders who could see beyond those walls that surrounds him. Able advisers are definitely lacking. The way things are going, the country and the people will suffer. The country needs sincere leaders who can’t be held to ransom. As it is, they are at the mercy of the vultures.

  2. Pengurusan MAS memang banggang… walaupun AirAsia ramai yg complain pasal delay,service tak berapa nak cepat tapi diorang lupa ke.. kena la dengan harga tiket yang korang beli tu.. tapi ramai lupa bagaimana AirAsia berjaya mengurangkan kos operasi (termasuk kos minyak)..
    Idris Jala konon buatkan MAS untung sebenarnya JUAL ASET MAS sahaja..ramai yang tak tau tapi terus sanjung dia..
    Tony Fernandes buat apa yang dia perlu buat untuk perniagaan dia,adakah salah?

    Yang salah adalah orang2 yang ada dalam Khazanah dan orang2 yg kononnya pandai semasa era badiDOL dulu

  3. actually the share swap just to coverup they sell high at 1.90 now mas worth 1.30, they strategy call sell on news.

    they buy back 1 or 2 week after budget when mas worth 1.00

  4. Sickening that Level Four involvement. I wish I know more about those Level Four fellows. The link with the powers that be.

    I suppose that Omar Ong is one of the Level Four fellows. He was hammered into Petronas BOD despite being rejected the first time because he was a Petronas loan delinquent at the material time.

    He must be hell of fellow to have been pushed in and stuck in there the second time. And the well regarded Tan Sri Hassan Merican was replaced by some non-oil & gas personality about the same age.

    Now what exactly is his and/ or any other Level Four fellows’ link with Fernandez would be very interesting to know.

  5. How come the government had no choice but to go ahead with the share swap? Of course the govt could look at as many options as it could. Perhaps it was too lazy to look for a better deal than to allow Air Asia to leech on MAS. Expedience huh? It’s a good thing that MASEU has brought the plight of MAS employees to the attention of Int.Transport Workers Federation. It will open up a can of worms and will expose all there is to know. Then the govt will take notice , if it takes notice. Anyway, face it fellows. Malaysia has been hijacked by a bunch of economic neoliberals and the people dont even know it. Economic neoliberalism has been criticised in the west for it caters to rich elites and powerful corporations. Look at what damage economic neoliberalism has done to economies in Europe and the US. And here in Malaysia the influence of economic neoliberalism on Malaysia’s economic policy has become dominant since 2009. Think abt it.

  6. Although Khazanah team are mostly with excellent educational background but sadly generally they are just extbook people with minimal operational exposure..
    Why dont we just ask them to run MAS and see whether they can turnaround it. Its easy when things go wrong..they just change MAS management without Khazanah team be held accountable at all.

  7. […] is not withstanding the fact that Fernandes ‘sucked’ Malaysia Airlines of RM 18 million for the sponsorship for the home games of this private venture Queen’s Park Rangers, a few […]

  8. […] within a few short weeks, he got Malaysia Airlines to pay RM 18 million worth of home games t-shirt sponsorship for his private venture in Queen’s Park […]

  9. […] more at the ridiculous price it was inked for the ‘baseball card trading’. Quickly, he sucked Malaysia Airlines a cool RM 18 million to pay for the sponsorship of all games at the home st… of Loftus Park, which the acquisition of Queen’s Park Rangers was his private […]

  10. […] team did well and Malaysia Airlines should benefit from his experience and rapid growth” and “Government had no choice”. What came as a surprise that it didn’t take much to prove we us […]


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

<span>%d</span> bloggers like this: